Setting Profitable Prices: A Step-by-Step Guide to Pricing Strategy--Without Hiring a Consultant, + Website

Chapter 15

Pricing New Products/Services, Part 2

Competing with Established Brands

In-a-Rush Tip

You can skip this chapter if you are re-pricing established products or services.

You can also skip it if you need a price today.

But . . . if you are pricing a new product in a marketplace with established brands, this chapter will help you price more profitably.

When Your Competitors Are Established Brands

Unfortunately, new brands usually enter markets where they must compete with established brands. That conveys a whole list (following) of advantages for the established brands and only a couple of advantages for the unknown brands.

Established brands are said to have “equity” in their brand name. One of the better definitions of brand equity is that it represents the difference in consumer response to marketing activity for one brand over another, or over an unknown brand (Keller, 1993; Hoeffler and Keller, 2003).

That difference can be either positive or negative, with the latter leading to negative brand equity.

Following are itemized the many advantages known brands command. It is critical to know what these are before deciding on the price for your new brand, because they affect how consumers will react to your brand and price.

Advantages for Known Brands

Known (and respected) brands command a large number of advantages over unknown brands. They include the following:

Increased ...