The Price / Differentiation Matrix and why your brand needs to master it.

Price-diff-matrix-2

Are you missing this important dimension of your brand strategy?

Price has always been a key dimension of brand building. Ever since E. Jerome McCarthy identified the Four P’s of marketing (Price, Product, Place and Promotion) brands have understood the relationship between price and brand positioning. Price your product or service high and you reduce your market size, but establish perceptions of quality. Position your price low and you increase market, but commoditize your brand. The task of establishing the right price positioning is a balancing act. However, Price does not work in isolation. Whether your pricing strategy is driven by market size, profit margin or premium positioning, it’s only part of the picture. Brand Differentiation is the other half of the equation.

We define Brand Differentiation as the positioning of your brand in a unique and valued way that both stands-out from your competitors and connects with a strong need or desire of your audience. As Jerry Garcia (lead singer of The Grateful Dead) says; “It’s not enough to be the best at what you do. You must be perceived as the only one who does what you do”.

It’s only when you combine price strategy with brand differentiation that you can truly establish a sustainable and profitable brand positioning. The matrix we’ve developed below demonstrates the benefits and challenges of each approach from low price to high price and low to high brand differentiation.

Price-Differentiation-Brand-matrix

If you own, manage or market a brand, you will have a price/differentiation positioning. The question is whether you have developed that strategy through careful consideration or whether it has been allowed to evolve on its own as a result of the pressures of day-to-day business.

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