Multi Version Pricing Now Playing In Luxury Segment

In a down economy how do you keep price sensitive customers from switching away from your brand without losing price premium? The answer is anything but groundbreaking, multi-version pricing. Offer products at multiple price ranges so you can move customers within your brand family. Price sensitive customers will self-select themselves and buy lower priced products while you keep the price premium of your top of the line products. Nestle, the CPG leader, clearly stated and follows this rule

And you see how we through the brands are allowing the consumer to have different price points.  These are all Purina products.  You see it in dog food; you see it in cat food how we have spread over different price points the product portfolio and yet using the Purina brands there rightfully. Even small businesses like salons practice effective multi-version pricing.

Now the luxury segment, which have just one price, is gearing up for multi-version pricing. As the book Richistan noted, “pricing for this segment was like pushing an open door – no resistance”. Not anymore. The downturn is starting to impact the rich, who are becoming price sensitive in their own level (which is quite different from price sensitivity of a supermarket shopper switching to private label). Financial Time’s segment on Business of Luxury profiled how the down economy is hurting the  price insensitive luxury segment. What do analysts recommend?

most analysts say companies with products spanning price points are more protected than those, like the French silk and leatherware group, that are more tightly focused. A broader portfolio means manufacturers can cater to consumers trading down, and can provide muscle with third-party wholesalers and retailers.

From small businesses like salons to large corporations like Nestle, from canned goods to luxruy goods the business principle is simple, “Keep the customers in your brand family by offering them products across a wide price range!”