Your personalised pricing strategy for 2018.
The last theme from our Trending 2018 report focuses on a topic that has been an evolving feature in the consumer landscape, and which we predict to hit the mainstream in 2018. A demand for pricing elasticity has gradually been dismantling the traditional concept of RRP or ticket price, creating an opportunity for dynamic, personalised pricing models. These are time-sensitive and adaptable to the lifestyles and lifestages of consumers, helping to entice new customers and differentiate retailers. Think of it as a data-led and customised marketplace in conventional retail settings. We call this Custom At All Costs.
However, this is not to be confused with simple price discrimination. At its core, Custom At All Costs aims to be inclusive. By bringing in progressive pricing structures, for example, that adjust prices to customers’ specific circumstances, brands can open their offerings to cost-conscious customers who otherwise would not have access to those goods or services. A data-led approach that proactively and sensitively respects the customer’s lifestyle circumstances will appeal.
Other methods might include:
- Complementing fixed prices with the invitation to engage in pricing dialogue (on- or offline), appealing to the 66% of global consumers who say that “when shopping online I would like to be able to negotiate prices with suppliers”.
- Offering flexibility in pricing models to allow for pay-as-you-use, split payments or try-before-you-buy approaches.
As expected, much of this trend depends on consumer willingness to share personal data in exchange for commercial benefits. Our research finds that although nearly half of consumers are happy to do so in exchange for discounts, about 1 in 5 are more driven to share data in return for personal interaction with brands, in the form of advice or broader personalisation. Interest among UK millennials is considerably higher at 3 in 10.
Last year, Virgin Holidays announced new, reduced prices for single-parent families, a group that often has little choice other than to pay the same as a two-parent family. Does this signal the arrival of mainstream progressive pricing? Although flexible pricing has traditionally been commonplace in the travel industry, there is potential for this theme to penetrate into other sectors. Take accessories retailer SavvyWatch, which introduced PriceWaiter software to its website. The tool invites customers to “make an offer” for products and after naming their price, they receive a email notifying them whether the offer is accepted, countered or rejected.
Brands might also consider approaching this theme with the knowledge that voice search and Branding Bypass is on the near horizon. The possibility that Amazon Echo and Google Home may be making basic household purchase decisions based on the best price available could be a challenge to address in your business strategy for 2018 and beyond.
Earlier this week, we launched our webinar on our Trending 2018 report, rated no.1 on the Forbes list. No worries if you didn’t catch it because we have a downloadable recording of it for you.