Can a manufacturer maintain pricing strategies by location?

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Profile picture for user Ángela de la Vieja

Ángela de la Vieja

One of the major trends in marketing for the next few years is based on the provision of services by location.  The trend of geolocation is booming even for organic positioning ever since Google recently announced the improvement of search results based on the place from which the query was made.  In the same way, we already know that many retailers already apply geolocated pricing strategies in their eCommerce, or even within marketplaces such as Amazon.  However, when it comes to manufacturers that do not have direct sales to the consumer is it going to be possible to maintain a localised pricing strategy?

First, we must consider the first handicap that can be identified when selling as a manufacturer: the lack of a direct sales channel.  Although we have already talked about why a brand should be interested in having its own online store, we must begin with those who have not yet implemented this stage of their business (whether due to technological or market limitations).

When considering a localised price strategy for manufacturers, it is very important to delimit the boundaries within which it will be extended.  For example, when designing MSRP for retailers, it is fundamental to have already made clear what will be their direct relationship within the localisation of the sale.

In this adaptation of prices by geolocation, manufacturers must take into account the type of strategy to be implemented.  We highlight the following:

- Price per base point.  Taking as a reference the place where the brand is located.  In this way, the manufacturer can establish their prices depending on the distance to the user, thus covering, for example, logistics or transport costs.

- International pricing, which we can differentiate as the one that directly applies the different tariffs, taxes and currency changes according to the user's location.

- Destination price.  This is what is usually found in well-founded localised pricing strategies, since in this case the idiosyncrasies of the market where the user resides, and the existing competition, is taken into account.

Collaboration with the eCommerce for geolocated prices

The relationship between retailer and manufacturer is essential so that the brand continues to be present in the market's imagination.  Of course, this is not insignificant when we talk about geo-localised prices.

Technological solutions are constantly advancing, and, after all, the objective is to offer products and services that are continually getting closer and closer to the user, to their real needs.  In this sense, prices geolocated by the ecommerce facilitate the manufacturer to open up additional possibilities within certain markets.

Indeed, one of the challenges in 2019 for online sales is to reach better agreements (or at least a satisfactory midpoint) in which both parties, retailers and manufacturers, can make the most of localised pricing strategies. Manufacturers have to begin to see opportunities, in this new paradigm, to approach the end-consumer via these sales channels, and as the activity of this is optimised, the best sales volumes can be enjoyed by the brand in question.

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