Which Marketing and Branding Strategy is Best For You?

This article was written by Bernard Lefson, SCORE Orange County Management Counselor

If your marketing and branding strategies target low prices first, you may benefit from unbundled pricing.  This permits you to advertise and stress the best product pricing to your potential customer base.

Should your branding plan stress product quality and service, bundling prices may be the optimum strategy.  What do we mean by unbundled prices?  Think of online buying from Amazon where you find low prices and you pay extra for shipping.  Another example would by the baggage fees imposed by most airlines.  Bundled pricing would be inclusive of the baggage fee as is the case today with Southwest Airlines.  Another good example would be Nordstrom's which provides high quality goods and high service levels such as easy returns.  While both strategies work, the best for you and your company usually depends on your industry, your specific market, and your ability to meet your profit margin and sales volume goals and objectives.  For example, if your marketing and branding strategies target low prices first, you may benefit from unbundlled prices.  This permits you to advertise and stress the best product pricing to your potential customer base.  Should your branding plan stress product quality and service, combining/bundling prices may be the optimum strategy.  Your consumer base is probably more concerned with perceived quality, high level customer service, and simplicity of product purchasing, including delivery and installation.  The Pros and Cons of Both Strategies:

Unbundled pricing pros:

• Lower product selling prices

• Hide small expenses to sell, deliver, and install the product

• Offer best price possible for the product

• Clear gross profit margins on product sales

• Direct expense reimbursement for associated selling costs

Unbundled pricing cons:

• Added Customer complaints that you’re “nickel and diming” them

• Potential loss of customers, since you don’t offer anything “free” with purchases

• Losing sales to competition that combines prices to generate the

perception of convenience

Bundled pricing pros:

• Perception that your company offers something extra

• Simplified purchasing procedure for your customers

• Ability to increase gross profit margins and volume if your combined

• Selling prices are competitive

• Potential increased return customer sales, as buyers may not

• Intensely evaluate competition in the future

Bundled pricing cons:

• Competition may “squeeze” your profit margins as you lower product prices

• Forces your purchasing managers to negotiate lower wholesale inventory acquisition pricing

• Risk of being perceived as having higher prices for products

Business owners must integrate their pricing strategies with their marketing and branding plans. Building a cohesive company strategy, with no components at odds with other objectives, should result in success.  Whether you select to combine prices, the key is to integrate complementary strategies that positively contribute to your company goals.