What is pricing? Are there special considerations when conducting market research for a social enterprise?

Question

What is pricing? Are there special considerations when conducting market research for a social enterprise?

Answer 1

Price is the dollar amount your customers pay for your product or service. Pricing is more than a number: it is the process of monetizing your social enterprise’s value in the marketplace. Pricing helps define your social enterprise’s profitability, which has implications for the rest of your organization. At its core, good pricing strategy will reflect your enterprise’s overall marketing and business strategy.

Market research involves trying to gain insights into prospective customers’ core values and beliefs – important information as you develop your marketing strategy (remember, it is not enough to just offer great product features, you will also have to communicate these features to your prospective customers).

It may be the case for your social enterprise that your customers’ values and beliefs are of utmost importance because you are selling them a product/service with great emotional value – you are selling a product PLUS a mission. Thus, determining whether or not you can charge more for your social enterprise’s product will involve asking prospective customers how much they value your mission vs. other features (quality, design, convenience) that your competitors might be able to match or exceed.

In some instances, your social enterprise may be targeting customers who are sold based on the quality of your product/service, coupled with a pricing structure that reflects the fair value in the market.  The mission or social cause may be less valued by your customers.  Market insight into what your customer is looking for will aid in your understanding on how to price.

Answer 2

Pricing is the exercise of determining the appropriate price for you product or service.  A thorough pricing analysis can be very complex, but too often pricing decisions are made arbitrarily.  Important considerations include: your operational costs, your brand image, your target market, and competitors.

An unknown brand often needs to price itself lower to induce trial, and then can raise prices once a loyal customer base is achieved.  For example, in the 1970s Toyota was a low cost/low price brand, but as its reputation for quality grew it changed into a premium priced brand.  Hyundai has been trying the same strategy, with less success.

As far as market research for a social enterprise, the methods you use are no different from traditional product or service research.  However, the questions you ask should measure the perceived value/benefits of the social aspect of the business in addition to the standard research questions.