In our article “Own brands in eCommerce”, we show you why it can be useful to establish an in-house brand in your own online shop. In this way, you can distance yourself from competitors and become independent of external retailers and manufacturers. You can also refine your profile here and build a stronger customer relationship. But more importantly, you thus avoid price comparisons and the enormous pressure to provide the cheapest offering of a product. Products of your own brand enjoy exclusivity. This, in turn, offers you greater opportunities in price setting. We show in the following how to create this freedom of design.
The profile of own brands determines the price
To design and establish your own private brand interestingly for customers over the longer term, you will need to position yourself quite clearly. Additionally, you should ask yourself some basic questions before you even start out with your own brand:
- What do you hope to achieve with the brand? Is it a cheap alternative to existing products or a premium variant?
- Which target groups should be addressed?
- How much margin do you expect from your own brand?
The answers to these questions should be reflected in the branding of your own product line. Accordingly, the price is determined as follows: High-quality premium offerings require a corresponding pricing to also be perceived as premium products. It is also worth analysing which product groups are exposed to lower price fluctuations. These product groups are known as potential articles. When you introduce articles of these product groups into your own brand range and intelligently align prices to the market, you then have the option of increasing your margins accordingly.
Justify the price with the launch of your own brand
In his book NeuroPricing, the managing director of the research agency “The Neuromarketing Labs”, Dr. Kai-Markus Müller, explains that customers select brands according to their image. Brands have direct effect upon the human reward system, according to Dr. Müller. This is because they promise the customer a particular experience. You can build up this image by mirroring the profile of the brand with outward appearance. If we refer here to the premium segment, an unusual and exclusive packaging will be most helpful. Likewise, the brand logo itself should be appropriately designed. This justifies the higher price and is perceived accordingly by the purchaser. The marketing expert Dr. Mueller points here to the ‘Chivas Regal Effect’. This whisky sold only moderately in the 1970’s, so the manufacturer then developed a more appealing label and increased the price by 20 percent. Sales of the whisky increased significantly in a short time, since the new image promised customers a high quality – for which buyers were willing to pay a higher price.
Introduce your own brand purposefully
The introduction of your own brand is particularly worthwhile. If you can provide the products in sufficient quantities and sell them profitably. The goal, after all, is to improve your margins. To do this, you have to analyse the purchasing behaviour of your customers and ask yourself in which segments the development of own brands is worthwhile. Crucial here, besides customer information, is the competitive situation. With the blackbee Business Intelligence software, you can keep an eye on the market and also draw decisive conclusions into which segments you should establish an own brand.
It is important that you, as a retailer, find the balance between product quality, branding and presentation. When these three factors are ideally combined together, you then create scope in your pricing. Because of the exclusivity of your own brand, you will deftly escape constant pricing pressure and also avoid the eternal pricing spiral. To find the ideal price, a pricing analysis of similar products will help, as is provided by blackbee.
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