How pricing shapes profit, positioning, and customer perception

Speaker A: People pay attention to price, right? And how new price really tells people a lot about what your product is worth, uh, who you are as a company, um, and how much you value your customers as well.

Speaker B: Right?

Speaker A: So the way that you position your pricing, the way that you talk about your pricing, um, that all tells people a lot about how much you value them as a customer as well as how much your product or your service is worth. So it's really important part of the marketing mix and often something that just kind of gets left to the finance or the commercial team seems to decide, but absolutely somewhere where marketing should really be involved as well.

Speaker C: If you had one powerful tactic that could directly and positively impact your company's profitability, would you leave it to chance? That tactic is pricing and is one of the four P's in the marketing mix where marketers tend to have the least say and often it remains completely under the finance department responsibility. Yet pricing is so powerful and marketers can make a meaningful contribution through consumer insights, market insights, and much more. In today's episode we are exploring the importance of pricing, the impact it can have on the bottom line, where marketers can support pricing strategies and how to position and communicate price increases the right way. If you haven't updated your pricing in the last year, um, or don't really know how you can get involved into your company's pricing strategy, this a very good listen. Um, I am grateful to be joined by Caroline, founding partner of Cookson Partners, a pricing and growth strategy consultancy for value led SMEs and startups. Carolyn began her career at KPMG before moving to Brown Foreman where she worked globally leading pricing, market planning and brand strategy. Her work has included quadrupling the value of a Challenger brand, identifying 40 million of profit opportunities through a new process, growing markets by 50% for three years, and building the case for a 50 million capital investment. Carolyn has a degree in mathematics from the University of Cambridge. I hope you find this episode useful. If you do, please follow the show for more content. I am Elena, your host and I'll

Speaker B: catch you on the next episode. Hey Caroline, welcome to the Value Driven Marketing Podcast. How are things going?

Speaker A: Uh, very good, thanks. Thanks for having me.

Speaker B: Uh, it's my pleasure and I'm very excited about today's topic because I feel as marketers we don't deal as much with pricing. It's one of those tactics that we don't get to touch very often. It's, it's my experience. Hopefully others market, other marketers will be able to contradict me. But it's an important one because it has a huge impact in revenue. Um, and I'm looking forward to discussing more and learning about how we can adjust prices uh, in a smart way m and increase uh, the revenue which is I guess what many companies are looking to do.

Speaker A: Yes, yes, absolutely. Yeah. Pricing is a very important um, it's probably the most neglected P of your marketing mix but actually it's one of the most important because not only does it really impact your revenue, um, and your baseline profit, it's also a key part of your positioning as well because it tells people a lot about what it is that you offer and what you're worth. Um, um, and that is an important element of your marketing mix.

Speaker B: Absolutely. And yeah, good hint. Um, on positioning, before we go into details, I would love to know more um, about your background and about Cookstone Partners. What do you do? Who do you help?

Speaker A: So my background comes from I started out in finance originally. I spent most of my career working uh, in the spirits industry on brands like um, Jack Daniels, Woodford Reserve and a lot of kind of small, smaller and fast growing brands as well. Um, and I worked across um, kind of finance originally but I also worked in general management and commercial roles and strategy and a bit of marketing as well. So I have this kind of breadth of experience across a lot of different uh, parts of the business. Uh, and also a real love like the people I've worked with will tell you that I really, you know, kind of a marketer in disguise. Right. Because I really love the marketing side of things as well. Um, and so um, I was in spirits industry for a long time and then, then I left just over a year ago and decided I wanted to set up my own consultancy, uh, uh, and move into, yeah, kind of helping, taking that big company experiencing and helping smaller and medium sized businesses. And I chose pricing as my topic because pricing is um, a really important part of the business and it's also something that I've worked a lot on in my roles in the spirits company. And I've looked at it from you know, the finance perspective, from the marketing perspective, from the commercial perspective. I understand all of the different elements and also a good dose of consumer psychology in there as well. So it's a great topic, it's really interesting, it's really hard. And so I wanted to kind of take that experience that I had and take it to help smaller and medium sized companies with all things pricing. So that's where I am now. I do pricing and growth strategies for those, those values Led predominantly companies.

Speaker B: Mhm. Sounds amazing. And sounds, uh, you have a very comprehensive experience. You've already hinted a little bit as to why pricing matters. I'm hoping we can detail some more from. As you mentioned, not only revenue.

Speaker A: Yeah.

Speaker B: It's an impact on profit as well and also on positioning. So why is pricing so important?

Speaker A: Yeah, so, uh, so first of all, as you touched on, it increases your revenue. So um, McKinsey study showed that on average 1% price increase means an 11% increase in profit. So it's the one area of your P and L that you can tweak and that gets delivered directly to the bottom line. And um, it really gets magnified by the time it gets to your bottom line. So if you need to improve, if you want to grow your profit, your pricing is really the first place to start to check that that is right. And you know, to maximize that as best you can. Um, from marketing perspective, it is such an important part of your positioning. People pay attention to price. Right. And how you price really tells people a lot about what your product is worth, uh, who you are as a company, um, and how much you value your customers as well.

Speaker B: Right.

Speaker A: So the way that you position your pricing, the way that you talk about your pricing, um, that all tells people a lot about how much you value them as a customer as well as how much your product or your service is worth. So it's really important part of the marketing mix. And often something that just kind of gets left to the finance or the commercial just seems to decide. But absolutely somewhere where marketing should really be involved as well.

Speaker B: Mhm. And I love that you pointed it's about profit because I think in a lot of times we think about revenue and the revenue is great. Right. But if your profitability is low, then that's not necessarily, uh, a good thing.

Speaker A: Yeah, yeah. And I see a lot of companies kind of focus on revenue at the expense of profit. But profit is what drives things forwards. Right. That's what you keep in the bank. So you know, it's the best place to be focused is on that bottom line and not just the top line.

Speaker B: Mhm. Mhm. And you already mentioned you've seen many companies leaving prices in the hands of the finance departments alone. What challenges would you say, uh, you've seen companies have when it comes to managing their prices?

Speaker A: So, um, uh, I mean, there are a few different challenges, I'd say. Well, the first one is if it's just left to the finance and the commercial, you're forgetting about your customer. Right. So the starting point when it comes to pricing should always be who is my customer, uh, what value do I bring them and what is their price sensitivity, how much is my product worth to them? Right. So you know, all of your pricing decisions should really start with a good understanding of your customer and how much are they willing to pay, um, and uh, you know, how much value am I bringing them and what is it that I offer. So that where marketing really should be involved is that kind of starting point. Right. And then, you know, it's got to work financially. Um, you need your, your, your P and L to work and it's got to work commercially because you've got to be able to put through whatever pricing it is that you want to be. So, you know, it touches on all of those elements, but it really should be involved in all of those. And so that's the first thing is just making sure that you're looking at it from that holistic perspective. And then another thing that I see a lot is companies that don't take price or, you know, they set price very early on and they just kind of leave it because it's quite tricky and they don't, or they might be a bit nervous about taking price because they're worried about what that's going to do to their volume. I see that a lot. And that's, you know, something that I really help, try to help companies work through and get that confidence in terms of making sure they're taking the right price at the right time, putting it through that consumer lens and really. Yeah, making sure that you're, you're kind of keeping up with where the market's at. Especially I would say like in these inflationary times, right. If someone hasn't taken a price increase in the last, or you know, three years even, they've been missing out, right. Because you know, costs are going up, everyone else will have been taking price. So that is something that you should be reviewing at least annually.

Speaker B: Mhm. Mhm. So basically look for, start with the consumer perspective. Um, and I think that's super interesting to be able to understand what is the price that your clients are willing to pay. Because a lot of times I feel, at least in B2B, what companies do is that they will of course figure out what is the baseline and add, ah, on top of that and then also kind of benchmark against the competition and not necessarily looking through the lens of, you know, what is the perceived value for my clients and what would they be willing to pay? Well, first of all, I would try and look at the symptoms that kind of indicate you have a pricing problem that you need to address first. Then maybe we can go into the research bit and understanding the consumer better. So what would you say are those symptoms that kind of show you that there's a warning sign here, something is wrong with your pricing?

Speaker A: Yeah, yeah. Well, firstly, if you haven't looked at it in a while, like, that would be my number one flag. It would be like you need to look at this if there's not alignment internally as well within a company in terms of a clarity of positioning so that people understand how much you charge and why. Um, I'd say that's a red flag if your product sells too quickly or not quickly enough. Those are normally signs that either your price too high or too low, uh, and customer feedback as well. Right. If you're getting a lot of pushback on your pricing, then that could be a sign that there's something going on. Or on the flip side, not enough pushback on your pricing. If you put a price out there and everyone's like, oh yes, thank you, that might be a sign that you're perhaps a little bit too cheap as well. So listening to your customers and then understanding your profitability as well. Right. So making sure that you're keeping your profitability consistent as much as you can, that's also really important too.

Speaker B: Mhm, mhm. And in terms of pricing, I've also seen the, um, case with B2B where uh, sometimes companies, you're, uh, submitting a proposal and then the feedback is, oh, this doesn't seem like a good quality service. Right. And that kind of ties back to positioning. So when you're not perceived as you would want to be through the lenses of your prices, then yeah, uh, that should be a warning for sure.

Speaker A: Yeah, yeah, absolutely. And that kind of a situation can be, it can be twofold. So it can either be that your price is too high or it can be a sign that you need to, to work on premiumizing your marketing or doing more marketing and working on your brand positioning to be able to justify that price and you know, really show your value to your customers as well. So it can go either way in those situations too.

Speaker B: Yeah, yeah, yeah, good, good point here. And coming back a little bit to the consumer perspective and trying to determine what is the value that you're producing for them and what, you know, what's their price sensitivity? How would you advise companies to approach that? What, what's a framework or process that they can go through in order to figure Out.

Speaker A: So this is where it actually gets a bit easier when you're talking about product companies, because then you can use your data, right? And you know, hopefully you'd have data, ah, depending on the size of your company, and you'd be able to, you know, look at people's price sensitivities, right? And you. So you don't have that so much in B2B. Well, you'll have a lot of your internal data, obviously, but not that external data. Because where I encourage people to start is always you're looking at, you know, how much information can I get externally about the people who are in this market, their willingness to pay, how much value you're bringing. So if you can put a number on how much, say, money you're saving, you know, what is it that you're selling, what does that, what value does that bring? And can you put a number on that? That is a really good place to start as well, because that's going to really help justify your price and justify your value, um, and put you in the right ballpark. Competitor information you touched on as well, that is really important. I mean, the more competitive information you can get, the better. And if you have a really clear idea of where you sit versus your competitors, then that's going to help you be able to justify your pricing as well, right? So if you know there's a key competitor and you are, uh, wanting to undercut them, you know, maybe you're doing, you, uh, know, a lighter service and you could go under. Or if you say, okay, no, no, we do what they do, but we do it better or we do it with these additional things, then that could be a good benchmark too, because the reality is that your customers are going to be comparing you to other people. So, um, as much information you can get about your competitive set, the better as well. That said, obviously, I know that in B2B, um, that can be hard, right, because people don't always put their prices out on their website. So that's the case of getting as much information as you can, but also acknowledging that might not be perfect information. And actually you might have to make some decisions without that perfect information and, uh, to take a quick step back. But what I always say is that pricing is a bit of art and a bit of science, right? So you take the information that you have, you try and make good, balanced decisions, but at the end of the day, you're never going to have perfect information about your pricing. So there's always going to be an element of art and an element of judgment and just making those decisions and then testing and learning from them. So as much as you can, testing different price points, you know, seeing what works, seeing what doesn't work. I really encourage companies to do that and be experimental and then take that real life data and help that inform your positions as well.

Speaker B: Mhm, mhm. I think you make a very good point of trying to quantify the value that you bring. I'm wondering if it's very difficult to quantify that. Would there be a proxy or some other ways to look at, um, trying to put in numbers in a very raw number, um, the benefit and the extra value you're bringing. If this is something that's not easy to quantify, so it's a customer service and maybe you don't necessarily know how to do that.

Speaker A: Yeah, so they're, they're. I mean it's really going to depend on your situation, right. What it is that you're selling. But there are often ways that you can kind of put a number on something. Is it? I mean the easiest would be, I'm going to save you X amount by doing this. Right. And then that's pretty straightforward. But if it's perhaps a service, are you going to be saving people time? And then, you know, what kind of value does that time have? You know, if you're looking at saving three hours a day, say how much could that be worth? And you could do, you know, approximations on people's costs, how much it costs to employ someone to do this, you know, those kind of things. You can look at it from that perspective. You could look at it from, you know, how much would it cost to do this another way? There are lots of different ways. You can kind of be quite creative with that. Uh, and that, and that's going to be something that you kind of put into your pricing mix. I mean in an ideal world you'd be able to say, this is the value I bring, I'm going to charge you this much and you are going to save this much. Right. But you can't always do that. But what you can do is take that information and have an approximation and then use that as part of the information that feeds into your pricing strategy. So it's not exactly what's going to determine it, but it is an element that you're going to have and you can have that in your arsenal and that's going to really help you when it comes to justifying your value to your customer. So it might not help you necessarily pick the number, but it's definitely going to help you say this is how much it costs and this is why it's worth it.

Speaker B: Mhm, mhm. And I guess this is, as you mentioned, the first steps of having uh, those insights. First looking into the market and then testing, getting uh, used to uncertainty a little bit and with the idea that you'll have to approximate some things. Um, and then the next part is testing with some prices. You're doing a test with a couple of clients, figure out how they react to that. But also it's important to position, how you position and how you communicate the price increase. Right. Because I guess no one enjoys when they receive an email like our services are going to, uh, or our product is going to cost more. Starting from next month, I'm looking to understand what's an um, ideal way to approach communicating that price increase and positioning that to your customers in a way that at the end of the day they feel like, okay, I'm not happy with the price increase, I'm not happy about the situation, but I understand it and it all makes sense.

Speaker A: Yes, absolutely. That's really important. So I think firstly it's about being transparent about, you know, I'm taking this price. If you can justify it as well, that's important. So, you know, give reasons for the increasing cost base, um, inflation, um, increased product costs, you know, whatever that might be. If you can justify it, that's great. But don't go overboard on that. Right? Justify it, but justify it quick, shortly, succinctly. Um, and then it's really important to remind people of your value as well. So you're saying I'm increasing, but then you go into um, so firstly just a reminder of what it is, what value you bring, what you offer. And um, if there are any changes, like if you know, part of the reason your price is going up is because you are investing more in training or you're investing more in a new system or something like that, then really being clear about what extra value it is that you're bringing and then rounding um, it off by saying thank you. It's very intimidating when you're doing it yourself. Right. But you know, if you look around people, especially in today's environment, people take price all the time. So as a business I'd say you, uh, know encourage people to do it annually and if you're doing it every year, then it just becomes kind of more of a process than anything else. It is probably more of a deal, big deal to you than it is to your customer. Right. They have probably got lots of people increasing their prices and to them that might not be so much of a problem as you might imagine it might be. So, so remember that in the wider context it matters a lot more to you than it does to your customer. Customers. But being really uh, transparent and succinct, um, and clear on your value is going to really help you be able to put those price increases through. And then, and then you listen, right. And then you, if you get a lot of pushback then you can have a think about things. You can always discount if you want to. There are tools that you can use afterwards as well if you feel like the price increase hasn't gone very well to be able to address that. But you know, just, just getting it out there and doing it is the starting point.

Speaker B: Mhm, mhm, absolutely. And I feel that over justifying is a thing that companies tend to do and I've definitely experienced it as well where you feel the need to justify it. As you said, it's important to be transparent on why the increase is happening, but without going overboard with details and rather focus the conversation on here's the extra value that you'll get. Price is going up, but then you're also going to get this distance where being faster, uh, bringing more experienced people on board to deliver services for you.

Speaker A: That's it. And I think being clear, you should be proud of your price. Right. I know a lot of people often tend to hide it and that personally as a uh, customer drives me crazy because if you're putting through price increase, tell me what it is, be proud, you know you're worth the money. Right. So I encourage people to just be clear in their pricing and just say what it is that they're doing. But then again remind people of the value and be clear about why it's worth it and make sure you believe why it's worth it as well. Right. You have to have confidence in your own pricing. That's so key. Be transparent as well. Don't hide behind smokes and mirrors because that's just going to annoy people even more.

Speaker B: Yeah, absolutely agree. And maybe you would be able to summarize some mistakes you've seen people making in this process of communicating their price increase.

Speaker A: Well, I've seen instances where people try and hide the price and where they'll send an email saying we're increasing the price and then you have to click through to a website and then click through to another thing to eventually see it. And that's just a really bad user experience, isn't it because they're going to want to know what the price is going up by. Or you have to open up a document and you have to get your calculator to figure out, to figure out how much it's gone up by. Again, that's not a good way of doing it because people are going to look, they're going to want to know how much the price is increased by and by you making them do extra work. They're just going to feel worse about that price than if you just put it out, clearly set out the value and explained it. So I see that, I see that quite a lot. And then not explaining it. Um, a good example is Netflix versus Disney plus. Right? They both sent out price increases this year because things are going up. Netflix just said from this date it will be 12.99amonth. Right? Full stop. Nothing to justify it. Whereas Disney explained it, they said why? And then they reminded you of their amazing catalog. It's going to enable them to do, you know, more tv, more movies. We offer you this, this, this and this. And, you know, you feel a lot better reading that. You're like, okay, yeah, I can see the value here. I understand that versus just a straight price increase when you're like, okay, well, how do I avoid this? Am I going to cancel now? Do you know? Uh, so, yes, I see. I see it a lot.

Speaker B: We discussed a bit about, um, so the symptoms to look at and the process to do the price increase and then communicate the prices. I'm wondering if, in your experience, this process looks different in a B2C company from a B2B company. You've already alluded to not being able to necessarily, uh, find external, uh, information or information from competitors in the B2B space. But other differences that you think are relevant in this process, there's the availability

Speaker A: of the data and the, you know, the number of customers that you'd have in B2B versus B2C. That's really important. There's the, uh, understanding of the market, as you mentioned. Right. Being able to see clearly what it is that other people are charging. B2B can often have the advantage that you can have more, less visible pricing. Uh, right. And that really gives you the ability to be more experimental with it as well. Right. So you can give someone a discount that perhaps someone else isn't seeing. You've got the ability to put people into different segments and offer them something different and the ability to test and learn from that as well. So that's where B2B has a real advantage. It's the ability to be a lot more flexible and a lot more adaptable based on your, uh, customer needs as well. So that could be a really good tool to be able to play with is that kind of flexibility between customers and different segments as well. And then there's discounting as well. Right. Understanding, um, kind of who your customer is and, and what they do. And then another really key tool is, uh, tiering. Okay, so that's a great, I haven't talked about this yet, but it's kind of, you know, one of the most, arguably one of the most powerful tools when it comes to B2B is having different tiers or if you're sending someone a pitch, giving them options. Right. So psychology shows that you should have three, maybe four, but definitely no more than four different options. Ideally three. Um, and by having three, so you'd have a lower one and then one a bit above that and then one that could potentially be quite a lot higher. Um, the psychology of having three means that people are more likely to pick the middle choice than the bottom choice. So it uh, encourages people to trade up and it allows you to adapt to that kind of middle scenario. And not everyone is going to go for that middle scenario. And the joy of that is that that, that then gives you the ability for people who are more price sensitive to go for the more basic option and then people who are less price sensitive to be able to go for that higher option. So you're really catering for a wide range of customers with different price sensitivities as well as nudging them to be able to choose that kind of middle option where they might be kind of going either way. So that's one of the, you know, that's a really good tool to be able to use in uh, a context if you can.

Speaker B: Mhm, mhm. And I think when you're offering different price tiers, it's not about am I making the choice or not, it's rather which of the three am I going to choose. There was this study of having, um, Coke and a Pepsi fridges with beverages. And it's not about do I buy a Coke or do I buy the drink or not, it's which brand do I buy. Right. So I guess it kind of works in people's mind in the same way when you offer three pricing tiers.

Speaker A: That's it. Exactly, exactly. It kind of brings it in and um, yeah, yeah. Makes it easier for people to make that decision for you.

Speaker B: Mhm. And are there any other, you know, tricks or kind of, um. Yeah, yeah, yeah. I guess tricks or advice that could work in B2B.

Speaker A: So I quite get quite excited as the pricing geek here about like looking at 99 versus, like round price points. Right. So I think that's really interesting because the 99 signals, um, bargain. It's when you're trying to. So if you have 199 or 200. Right. So psychologically, um, if you can see the one at the beginning, it makes the price look lower. But also, um, it shows people that they're kind of getting a deal and they're getting a bargain if you've got the nine, nine at the end. However, on the flip side, if you had 200, that's um, a bold, confident price choice, right? So that's saying something about you as a brand. So if you're a premium brand, for example, if you're a premium company, I'd always say put 00 because you want people to know you're saying something about your price. When you're charging people, you want people to know you're worth it. Uh, it's not B2B at all. But my favorite example of this is a cat. So I'd love to get a cat, but we've got allergies in the house. But you know, I sometimes get emails about cats that are up for sale and they are all, they are all round price points. They're all a thousand or 1, 200 or 500, you know, different, lots of different prices, but they're all round price points. And the reason is when you are, uh, committing to something like having a pet in your family, you don't want a, you don't want a bargain, you don't want to deal, you don't want to feel like you're getting something for cheap because you're, it's something that's important that you're bringing into your family. So everything is always around price point there. So taking that into the B2B context, if you're putting zeros at the end, then that is showing people that you are confident in your pricing, that you, you're worth something, that you're not trying to give them a deal, you're trying to give them a fair price. So different contexts for different, different customers. But yeah, that's uh, quite an interesting one from a psychological perspective.

Speaker B: Yeah, absolutely. I've always find annoying the prices, the 99 price, because it feels like I'm not stupid. I know it's a small difference, but I guess very interesting to kind of differentiate between what sort of product or service you're selling and is it the premium one? And if it is, then trust your pricing. So I'm wondering, for a company that hasn't revised their pricing, let's say in a couple of years, they don't feel very confident with starting that process. How would you advise them that they actually kick off the process? What should they do?

Speaker A: Firstly, I would look at as much information as you can get about the market in terms of, um, what have your competitors done, what have the general costs done, have you got any feedback from clients, anything like that? It's the only thing you can get externally about your client base and about your competitive set. That's a really good place to start. I'd check your profitability. I probably don't talk about this enough, but obviously it's very important to keep your profitability, uh, and to make sure that you know, whatever price it is that you are setting is sustainable for the long term. It's giving you the right margins that you need and you know, it's really delivering that bottom line profit. So I would be checking that as well. I would then be looking at kind of your range of prices and saying, okay, you know, what's, what have we got here, what works, what doesn't work? And then I would look at thinking about, okay, do we have the ability to increase our prices here, how much can we increase them by and are there other things that we can play around with? So uh, if you've got different customers who are paying different amounts, maybe you just target the ones that are paying less. Right. And bring them uh, up. Do you bring in a new product offering if you think the prices really do need quite a big shift? Sometimes it's easier to bring in something completely new at a different price than it is to put up the price by quite a lot in your existing products. And I think in B2B you have a lot more flexibility in terms of innovation in your product offering there as well. So that can be a really good way of bringing in a new price and also testing and learning. Because if, if no one buys that higher product then you know that, okay, the price has gone too far and you've still got that baseline there as well for other products. So uh, product innovation is another really good way of doing it and then really looking at uh, making sure that your pricing is consistent across your customers as well. And you know, if you've got different levels of discounts for different people. Mhm. Often that kind of happens naturally over time and sometimes you need to take that step back and say, okay, why, why is this person getting a 5% and this one getting a 10%? And what do we need to do to actually make our pricing clear and consistent? And having a clear pricing strategy to start with is going to help you implement that pricing throughout the company. So it's not just the marketing or just the finance team who say this, but also everyone from marketing to commercial are all aligned on this is what our strategy is and has that clarity so that they know going forwards and how to implement it.

Speaker B: I think a lot of times we just think, okay, I need to increase my pricing, my profitability has gone down. But you don't necessarily think of oh, but I can actually change the product to change the price as well. I was wondering, um, in terms of, I guess roles, what is marketing roles and where can marketing best support in increasing prices or just uh, setting up a clear pricing strategy throughout the company? So what specifically can marketing do?

Speaker A: Yeah, so it's going to vary a little bit by each company. But basically marketing I think is where pricing should begin, right?

Speaker B: Mhm.

Speaker A: This is a part of your marketing, it's part of your product mix. It's an important part of your brand positioning because it says a lot about who you are and it's rooted in the consumer. So the way that I see it is that it starts with marketing. They should have that clear pricing strategy about this is where we want to be positioned. This is why this is what our consumers think and this is what our target market think about this pricing. This is where it is that then needs to be backed up by finance saying, okay, yes, this works from a profitability perspective. M we've got the financials to back it up. This is going to be a good scenario that's going to work for us. And then it needs the commercial team to be bought in and they're the ones who often are going to be the ones that are implementing that price as well. So it kind of flows through all of the functions, but it starts with that clear strategy from marketing, working collaboratively with the others to make sure that it works. But it really should start there, um, and then flow through the rest of the company.

Speaker B: And in terms of the tools that marketers have at hand to gather information, I'm really curious about pricing research and what are the different tools that they have at hand, like frameworks or tools they can use to actually get that information from the customers, the market that I'm also reluctant because I feel like, oh, what if they're not going to be honest with me or it's a difficult conversation.

Speaker A: It is tricky, right, to get that kind of real honest feedback because no one's going to go, I want to pay more. Right. They're not going to tell you that, are they? Uh, so that's what that does make it harder. Uh, um, and often the way that people behave and the way that they say they will behave can vary. I mean, you know, you know that, um, and what I've seen a lot in the past actually is doing work on price sensitivity. Right. And a price increase goes up and you've got certain elasticity. And what often happens is you might get a dip in your sales from the elasticity, which the elasticity will affect. But then it normalizes over time because people forget what it used to be and then they just get back into a normal habit again as well. It becomes the new normal. So pricing elasticity is good information, but always taken with a pinch of salt and very hard to get in B2B anyway, you can do consumer market research surveys. I wouldn't necessarily advise going to your customers and saying how much would you pay? Because they probably won't give you a good answer. I think there's some really interesting innovation coming through in AI as well where they are setting up, doing market research, companies who set up Personas and you can ask them, uh, and then you're not asking your actual customer directly, but rather, uh, an AI version. And from what I've seen that it can have some really high accuracy as well. So, you know, definitely worth investigating. But I think that could be a really interesting area of um, pricing research going forward, is using those, those AI models which are based on real life Personas and the informations that they have. So that can be a really good tool to have as well. Yeah. And then there's lots of other ways that you can approach market research on pricing. Yes. It would have to be kind of via, via something different. It's going to be really exciting, I think. And with that that comes a lot of ethical questions as well. Right. Because then once you, you know, once the AI get, the AI is getting cleverer every day, isn't it? And so we can get smarter and smarter in our pricing decisions. And then companies are going to have to really think about how do I want to approach this, where do I draw the ethical line in terms of, you know, understanding people's profiles, optimizing the pricing, but then not taking advantage of people as well. So that's going to be something that's going to be really important to watch and I think it's also really important for marketing as well because you want to make sure that your brand is protected. Right? And I've seen it a lot online, um, more broadly in the B2C sector, uh, but where people make pricing mistakes and it goes viral because pricing can be a very emotive topic, topic as well. People don't want to feel ripped off, they don't want to feel taken advantage of. It really gets people right. And so if you do it badly and if you make a mistake that can be really bad for your brand and uh, for your reputation. So as we get cleverer, uh, I think the risk of people making mistakes like that gets higher and that's going to be something that especially the marketing teams want to watch. Because you don't want to damage your long term brand reputation. You want to make sure that you're on the right side of treating your customers well.

Speaker B: It's encouraging to hear there are options out there but do use them with care uh, and consider the whole brand experience uh, when you're actually putting out new uh, prices and prices increases. I do want to go back a little bit to the beginning, uh, where you mentioned that the 1% um, increase in prices resulted in 11% uh, increase in profitability, if I remember right. Um, um, the question I wanted to ask is if you have examples of um, companies that have gone through a um, price increase or they've reshaped their pricing strategy and how that has impacted uh, their numbers, um, their profitability.

Speaker A: There are uh, clients that I've worked on in the past who have had a look at their kind of top line pricing, uh, and their positioning and been able to confidently understand where they are positioned now or what the brand stands for. Right. And therefore where it should be priced. Priced and understanding. You know, one brand I worked on, um, the price was, it was too low compared to the positioning. Right. When you kind of took a look at the brand, it's the marketing, it was a drink. So the liquid inside all of these different things, it was priced too low. Knowing that, knowing where it sat versus its competitive set, we were then able to put that price up confidently and consistently. Um, and then see that not impact the volumes too substantially because we, you know, it was worth it and the, the evidence was there to show that that price was sustainable and that was where it should have been priced. Um, and then you see that kind of drop through to the bottom line.

Speaker B: Right?

Speaker A: Because it's just pure profit that comes from that. That top 1% and it drastically improved the profitability in the bottom line, you know, and again, from a marketing perspective, that then gives you more marketing dollars to be able to invest and further premiumize the brand and further grow that brand. So yes, I've seen that.

Speaker B: It's like a flying wheel.

Speaker A: It is, it is. And that's why it's so important to get your pricing right as well. Right. Because it enables you to, it gives you the power to invest in other ways as well and really build that momentum.

Speaker B: Yeah, yeah, absolutely. Carolyn, one final piece of advice you would give marketers who deep down feel that, uh, they need to revise their pricing, uh, that they can have a role in this process. What would that advice be?

Speaker A: Be brave. I know that it can be quite a, um, quite an intimidating topic often. Right. But start with the, uh, start with your customer. Start with your consumer marketers. You know, they're at the heart of that. Right. They really know that and they really understand it and their positioning. So, you know, they have the tools to be able to do this, um, and the knowledge. So it's, it's kind of starting there. Start there and face it. And yes, it often leads to uncertainty because taking a price increase, you never fully know what's going to happen, but you know it will be worth it. Right. And just approach it confidently, um, and make sure you're part of that decision process as well and really be as involved as you can be because you should be in those conversations.

Speaker B: Absolutely. Very sound advice, Carolyn. Thank you so much. This has been, ah, an enlightening conversation. I've learned a lot and a lot of new info for me and hopefully for the audience as well.

Speaker A: Yes, absolutely. Yeah, happy to help.