What should a Marketer know about Pricing? 📚 Podcast Ep. 61
In this episode of Pricing College – we discuss what a marketer should know about pricing.
Fundamentally, we believe they should be willing and able to work effectively with pricing.
To be honest – this happens too infrequently.
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TIME-STAMPED SHOW NOTES
[00:00] Introduction
[00:43] In the last 2 years, pricing become a domain and marketer is becoming disconnected from it.
[02:03] Why do marketers and pricing need to work hand in hand?
[03:17] Joanna explains the tips a marketer can learn from pricing professionals
[05:28] A quite of percentage of marketers do not focus on numbers.
[06:54] To have a good relationship with pricing, marketers need to learn, what real pricing is.
Do marketer needs to know about pricing?
In many of our previous episodes, we have spoken about why pricing or good pricer need to work with other functions, whether finance, sales and very commonly marketing.
So in today’s episode, we want to discuss…
- What does a good marketer be?
- What do they need to know about pricing?
As you probably know pricing is one of the four Ps of marketing. Obviously, over years it’s been part of the marketing department and still is, in some companies.
But especially in the past two years, pricing has moved away from the conventional sort of marketing function. Which would be more involved in branding and content marketing, to some degree, and internal communications and marketing.
Now pricing in the last two years, latest pricing is becoming very much in its own right.
A domain, a discipline of its own. It’s got specialist skills, specialist mindsets, different technology.
A lot of marketers are becoming the sort of disconnected to…
- What that is?
- What does it mean?
- And if indeed they can learn those skills and whether they should?
So, I suppose today we’re going to discuss some of the techniques, mindsets and approaches. That is occurring or evolving in the discipline just to see what you can take out from that. And if you can apply that as a marketer in your business.
Why there’s a much higher chance that the marketer works with pricing on direct response methodology?
I think in some companies especially B2B and probably some more traditional or less advanced companies. You will sometimes see the negativity about marketing whereby it’s seen as dollars wasted.
I’ve even heard it described as the colouring-in department on occasions. Which is quite a disparaging way to look at it.
I look at marketing and I suppose you can either be brand building. Or, I much prefer the direct response methodology where marketers go out there. Put out an offer and expect to get a response from customers or potential customers.
I think a lot of that stemmed from people like Joe Polish. And some of the better copywriters back over the years. Probably from the 40s onwards that put out an offer. Expect to get a response. Get people to put their hand up and get something to happen.
In that direct response environment, I always think there’s a much higher chance that the marketers will be working with pricing. Because there’s a real dollar delivery from that marketing.
When it’s more of a branding thing, sometimes I think you can be two steps away. But if you’re building a value-based business that branding has to be very much interlinked with what you’re doing.
What I’m saying is you need to be willing to work with pricing. They have to work hand in glove.
Many years ago the marketer would do that and in some companies, they do all the pricing.
But I think tips that they can learn from pricers that are in a specialised. And dedicated pricing function, as opposed to a mix of marketing and pricing function, is the approach of value-based pricing. And how to translate value in economic terms in the price algorithm.
A lot of marketers may not have that technical analytical skill set to turn what is fundamentally quite an abstract concept of value into numbers. Especially in terms of optimisation and dynamic pricing…
- Where prices are going?
- And, why it’s becoming a little bit more removed from conventional marketing?
I suppose another area I think that needs to be developed is the understanding of branding. A lot of marketers are very caught up in brand power. And almost forget that underlying that brand power is customer value.
They’re very connected. When you disconnect customer value from brand power, you can’t explain brand power very well. It becomes too abstract.
So I think finally what marketers could learn would be more technology. Better analytics, and using data to justify the market research on customers. A lot of market research is very useful. It’s very interesting. It’s thought-provoking.
But in terms of pricing, it’s very difficult to use and translate that into an algorithm, a price-setting process. A lot of pricing teams have to scratch their heads thinking, what use can we make of this data, this research.
Because there’s not much I can do here. It’s still too high level. So they have to go off and sort of do a lot of tests and learn themselves to make sense of it.
Bottomline: Marketer needs to work hand in hand with different functions including pricing
One thing I’ll say is a lot of marketers like I say a lot, quite a percentage. Do not focus on the numbers. They do not focus on profitability, P&L, those sort of aspects.
In an ideal world, yes we wish they would. But obviously, sometimes that’s not the exact skill set. And of course, there’s a lot of demand also for people in branding, visuals, campaigns that sort of stuff.
What I look for somebody is the mirror image of what we say about pricers.
We always say that a good price needs to be able to work with different functions. The shoe is on the other foot also we need marketers who are willing to work with pricing.
It’s not a one-way street.
You have to have that willingness to work. Willingness is not just to run off with a campaign and not think about how it integrates with the pricing department. It has to work together.
I’ll be honest, from my experience, a lot of marketers just don’t do that. You can argue a lot of pricing teams don’t do that. But I think a lot of marketers are also guilty of that weakness.
And again if two horses are running off in a different direction it will turn the business apart.
You need people to be running pulling in the same direction. Working as a team, without the one-upmanship.
Sometimes when I hear the pricing works in the marketing department. I hear an alarm bell go off. Because it says to me, marketing holds the upper hand.
Then the pricing aspect of it might not get the equal saying or equal listening that it deserves.
I suppose to sum it up there needs to be good working relationships between the pricing departments and the marketing department.
But for that to happen I think the marketing department needs to learn, what real pricing and the latest pricing is. Then they’d be in a better position to utilise that information. To hone in and get an evidence-based understanding of different categories, different brands.
Because as I Aidan says pricing is one aspect of the pie. You need promotions and marketing campaigns to be aligned with pricing and vice versa. To capitalise on the value you’re trying to deliver. And the targets that you have to achieve.
That’s only done through education. Understanding skill sets. Understanding the changes in the market and working well together. Together in terms of teamwork and strategy, and finding the right people.
If any of this resonates with you. Feel free to go on our website at Taylor wells.com.au. And fill in our complimentary pricing audit. We can cover all those things and get back to you.
We look forward to speaking to you. As we always say, you keep your eye on the focus. Keep your eye on the prize.
The reality is for a marketer, the real long term price is not a nice logo or branding or imagery. The real long term goal they should be working towards is company profitability and success. Pricing has to be part of that.
So yeah we look forward to speaking to you. Hopefully, you reach out and we will have a chat.
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