Why pricing strategies during the holiday season
Ho, Ho! Santa Claus is coming to town! Despite the effects of the pandemic on the economy, people are still spending a good amount of money during the holiday season. With the holiday season we mean the period from Black Friday, all the way to New Years Eve. With Christmas in between. In 2020, Dutch spent on average 243 euro on Christmas alone. With a large household this can easily go up or over a 1000 euros!
The holiday season is thus the perfect time for B2C companies to have a profitable month. To drive-up revenues and make as much profit as possible. But how can B2C companies get the most out of this period? They can get the most out of the holiday season with the right pricing strategies ofcourse! Let’s have a look to which people are buying and what products they want.
The “Holiday Season” Buyer
The holiday season is known for having a lot of festive days in a short period of time. For many this time of the year is associated with finishing up projects at work, taking a break and spending time with loved ones. For many families this includes giving christmas gifts.
Next to presents, other products are bought more frequently as well. For example, people buy more christmas decorations for the house and there are more people that are shopping for luxury. When these gift buyers start to look for presents they shop differently than people that want to buy somethinf for themselves.
Most of the time, these buyers have less knowledge on the products they buy and focus on other things. For example, how pretty something looks. Next to this, they will also start to look in new shops because they want to buy the right product. During this time of the year there are thus opportunities to reach new customers. Especially for brands with a lot of brandname awareness or highly specialized knowledge this is a plus.
Next to this it seems that the best price and better value are the most improtant factors for deciding where to buy, according to research by McKinsey.
What products are trending this holiday season?
For the holiday season people are typically spending more money. On Christmas decorations, luxury food, gifts for friends, family and children and much more. According to the Google Holiday Shopping Top 100 – a list with the most trending holiday gifts – there is a lot of demand for tech, gaming, kitchen gear, sports and fitness and toys. It seems that many people will search for a Nintendo Switch OLED, the Breville Barista Express or the LEGO City Mobile Command Center.
Holiday Pricing Strategies Tips
To get the most out of the Holiday Season, B2C companies try to use the behaviors of the holiday season buyer and product trends. Here are some tips for B2C companies to consider for 2021:
Change pricing strategy according to product | For some products it is possible to ask a high price during the holiday season, for example for christmas lights. However, a high price will not work for some other products that are not as in demand. It is best to pick the right pricing strategy per product accoding to the elasticity of each product.
Mixed Bundle pricing | Many people are shopping for gifts online. Now that in many countries Corona is still relevant, many people will likely avoid busy places. They will try to shop somewhere else and many of them will go to online channels.
It would be a good idea to offer customized bundle prices to these webshop visitors. By combining muliple articles and selling it for one price you can persuade people to buy more. This is especially useful when you offer products that work with eachother toghether. For example an electrical toothbrush with the right batteries.
Key-value item pricing strategy | Many people will be looking for gifts and they will want to do so for the lowest price possible. You can’t blame them. Because of this, there is also an opportunity for you to attract new customer audiences! One way to do this is to price your product the cheapest among its competitors. This is especially powerful for a trending product such as the Breville Barista Express.
Multiple sellers offer the Breville Barista Express, including well known brands such as Bol.com, Mediamarkt and Amazon. However, the cheapest is Kookpunt.
By being the cheapest, Kookpunt generates a lot of interest and although their margin may be lower than competitors. Kookpunt can always increase their overall profit by adding complementary products with a way higher margin. This is also known as a key-value item pricing strategy. And it may be key for online shopping during the holiday season.
As always, people will be spending a little more than they would normally during the holiday season. For many B2C companies this is a huge opportunity to end the year on a high. To make the most out of this time, B2C should pick the right pricing strategy for their product(s).
SYMSON helps companies with picking the right pricing strategies with of AI & Machine Learning. We give advice on how to optimize margins and revenues and how to automate mundane tasks. Feel free to plan a call for more pricing strategy tips during the holiday season or for more information about SYMSON.
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