Two Constants for Retailers’ Pricing Strategies

The secret of success in reacting to this constant is quite different from that associated with the first constant. The prescription here is to thoroughly understand the segments of your market — i.e., know what drives their purchase decisions — to become best-in-class at delivering on those decision drivers.

What does Perlis' quote tells us? There's a fine line between these two constants. A business can suddenly find that it's differentiated offer has become a commodity available everywhere, with their business world shifting to one in which price is the factor that matters most. Many businesses have failed when such a transition occurs.

Sustained success for businesses that are differentiated requires very proactive planning, for the day will inevitably come when the first pricing constant comes into play. There are only two real options: you either have to be prepared to compete and prosper in an environment where price dominates consumers’ decisions, or you have to constantly be a step ahead of the game in learning what will keep your offer differentiated. Either is hard work, but the reward comes from close-to-the-customer strategies that allow you to remain a lap ahead of the competition.

Like every other element of business strategy, pricing is demanding and an arena in which innovation and creativity often pay off. The advice above about the two approaches to sustained success brings to mind another quote from Perlis: "There are two ways to write error-free programs; only the third one works." Remember the two pricing constants, but always look for opportunities to inject a dose of innovation.

George F. Brown, Jr. is the CEO and co-founder of Blue Canyon Partners, a strategy consulting firm working with leading businesses on growth strategy. George can be reached at gfb@bluecanyonpartners.com.