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Pricing vs. Promotions: Which Adds More Value to Your Brand?

27 October, 2022

Pricing strategy is an ongoing conversation in both B2B and B2C businesses.

Should we raise the price to increase our profile as a premium product? Or offer discounts to build loyalty and good will with our customers?  

In this post, we’ll dig into the science and the art of pricing strategy with a focus on one key learning: adding profit to your bottom line starts with adding value to your brand. 


The Data Doesn’t Lie

When in doubt, look at the research. 

Like this often-quoted study from McKinsey:

The study found that a 1% increase in price resulted in an 11.1% increase in profit, while cutting costs by 1% only led to a 2.3% increase. Simply put: The race to the lowest price point is not one you want to win. Not only does it diminish your brand equity, it puts a massive strain on your bottom line.

The race to the lowest price point is not one you want to win.

So how can a business set and maintain a solid price point while still attracting new and loyal customers? By focusing on adding value to the customer at every turn. 


When Value Exceeds Price, Everyone Wins

When talking about the “value” of your brand to your customers, we’re really talking about how much worth they place on your product or service. And the greater that worth, the greater the price they’ll be comfortable paying. Brands that understand this math can charge more AND maintain happy, loyal customers.

The greater that value is over the price, the more important and relevant that brand may actually be to the buyer.

Here at Huebner Integrated Marketing, we believe so strongly in the impact of this truth that we’ve made it one of our Four Pillars of Brand Relevance, represented by the acronym GIVE. V stands for “Value Exceeds Price.” 

When applied to your marketing strategy, increased value can lead to:

  • Increased margins through higher and more stable pricing
  • Increased brand loyalty through positive association and buyer affinity
  • Expansion opportunities through brand recognition in new markets
  • Negotiating power with suppliers, distributors, and sales networks

So how can you practically put a greater emphasis on value in your pricing strategy? 

  • First, you can invest time and research in building a product and brand that truly meets a need your customers have.  
  • Second, you can add value to the sales process through marketing and promotions that resonate with your customers.

Increased value provides increased opportunities


Promotions that Add Value

The right mix of promotions will depend heavily on your product and target market, but here are a few tried and true approaches that we’ve seen work successfully year after year.

Increase the Benefits of the Purchase

Consider adding value to standard purchases, via add-on products, sizing up orders, extended warranties/customer support, etc. Research suggests that premiums (value adds) are just as effective as small discounts (5% – 20%) when it comes to consumer satisfaction.

Enhance the Purchasing Experience

Experiential promotions work great in brick and mortar stores, but they can also be effective as a digital experience. More importantly, these types of promotions offer a chance for a brand to express itself, and prime consumers for a positive experience. 

Consider these opportunities for adding some fun to the purchasing experience: 

  • In-store samples
  • Online samples with purchase
  • Gamification 
  • Lottery drawings
  • Online wheel spins and other pop-up gaming experiences

Personalized Promotions

Research backs up the notion that people respond better to exclusive sales and discounts if they associate themselves positively with the group receiving the offer. They want to be a part of the in-crowd.

Consider experimenting with easy-to-execute personalized offers to new users, specific social groups (military, medical, etc.), or long-time customers (loyalty programs).


Add Value with the Data in Mind

With a little thought—backed by a lot of research—you can add value to your brand without cutting your prices. Build promotions that encourage repeat sales and enhance your brand relevance to your ideal customer. 

If you are not sure where to start, look around for inspiration. Brand loyalty programs, minimum-sale incentives, and add-on perks are all easy-to-implement promotions that can boost sales, loyalty, and brand value. Test new promotions and measure the impact through participation, engagement, and of course, sales!

As you experiment with pricing and promotions, be sure you’re building on a strong understanding of what truly matters to your customers. A brand positioning study can help you discover your audience preferences and tendencies, and can help you make informed decisions on which value adds to offer. 

Once you find distance between cost and value, you’ll discover you have more room: for profit, growth, and brand sustainability.

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