PRICING STRATEGY

Definition

Price positioning refers to the place a brand or product occupies in the market’s price hierarchy. It is expressed relative to a benchmark: the market median, the market leader’s price, or the discount price. A brand may be positioned as “-8% vs. the market,” “at the market leader’s price,” or “+15% as a premium offering.” This is a strategic decision that shapes the entire operational pricing policy and is developed over time: a positioning cannot be changed overnight without a major impact on customer perception.

Why it's important

• Communicate a clear promise to the customer: a well-defined positioning serves as a guide for purchasing decisions.
• Align operational decisions with a long-term goal that is consistent with the brand's identity.
• Differentiating the brand: in a competitive landscape where indistinct positioning makes it harder to stand out.

A concrete example

A home improvement retailer is repositioning its pricing promise from “at market price” to “5% below market price on key product categories.” The rollout will take place over 18 months to absorb the loss in unit margin (-0.8 percentage points). In return, the chain’s marketing communications are centered on the new promise, backed by an independent price barometer published quarterly. Over 24 months, foot traffic increased by 11%, the average basket size decreased by 2%, and net sales rose by 9%.

How to measure/use it

Defining a pricing strategy requires analyzing the market (where competitors are positioned, what customer expectations are), objectively assessing one’s own current positioning (by category, by store cluster), choosing a target that aligns with the brand’s identity, and planning the transition toward that target. Pricing analytics tools enable continuous measurement of the gap between actual positioning and target positioning. Communicating the positioning is just as important as its operational implementation.

Common Mistakes

• Making choices that aren't consistent with the brand's identity: A premium brand that positions itself as a discount retailer without changing its product offerings loses all credibility.
• Changing your positioning too often: this prevents customers from remembering a consistent promise.
• Confusing advertised positioning with actual positioning: if the message promises -10% and the reality is -3%, credibility plummets.

Learn more

• Research & Data: Price Analysis to Objectively Assess Your Current Market Position.
• Solutions: Pricing Analytics to drive convergence toward a target positioning.
• Tip: Developing a pricing strategy, including defining the company's positioning.
• Resources: See our pricing FAQ to understand the difference between positioning and alignment policy.

Mini FAQ

How long does it take to change your positioning?

It takes between 12 and 36 months for a change to be noticed and accepted by customers. A repositioning that is too abrupt creates confusion and may be perceived as an opportunistic marketing ploy rather than a genuine evolution.

Positioning by category or overall?

Ideally, both. An overall positioning establishes the brand’s identity, but category-specific positioning allows for relevant nuances (for example, a more discount-oriented approach for basic groceries and a higher-end positioning for fresh or organic products).

How should a new brand position itself?

It’s better to have a bold, distinctive positioning than a middle-of-the-road positioning without a unique identity. A new brand that doesn’t stand out—whether at the low end, the high end, or in terms of any specific attribute—will have a very hard time making a name for itself in a saturated market.