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: market median, market leader’s price, discount price
A brand may be positioned as “-8% vs. 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.
A “5% below market” promise that pays off over 24 months
DIY Retail Chain — Price Repositioning on Key Product Categories
in net revenue over 24 months following the repositioning of the price promise, despite a slight decline in average basket size.
Store sales over 24 months, backed by an independent price index
Average cart value, more than offset by the increase in traffic
Why it matters
- 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.
Real-world 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 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 and use it
Defining a pricing strategy requires analyzing the market (where competitors are, what customer expectations are), objectively assessing one’s own current positioning (by category, by store cluster), choosing a target consistent with the brand’s identity, and planning the transition toward that target
. The tools at Pricing Optimization Software allow you to continuously measure the gap between actual positioning and target positioning
. Communicating the positioning is just as important as its operational implementation.
Common pitfalls
- 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.
For more information, see our article on the differences between strategic and tactical pricing.
FAQ
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.
It takes between 12 and 36 months for customers to notice and accept a change
A repositioning that is too abrupt creates confusion and may be perceived as an opportunistic marketing ploy rather than a genuine evolution.
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).
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 based on a specific attribute—will have a very hard time making its mark in a saturated market.
View our solution: pricing strategy development.
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