Why Every Company Should Consider Good, Better, Best Pricing
Brand strategy consulting provides guidance on maximizing the value of your brand and growth. Developing a strong brand strategy often includes:
- Defining the role of your brand in the company portfolio
- Having a clear and differenced value proposition
- Outlining the roadmap for growth, inclusive of expansion zones, new products, pricing, and marketing strategies
One tried-and-true framework that is used across industries to drive brand growth and also hedge against the competition is the Good, Better, Best priced tiering approach.
Why Does Good, Better, Best Pricing Work?
There are two main reasons why this approach works:
- Grounded on consumer psychology: A good, better, best approach moves customers away from a buy/don’t buy decision and provides them with options that forces them to think through the value associated with the product and their willingness to pay. Research shows that:
- customers prefer to have choices; the key is focusing their attention on key features that matter versus overwhelming them
- When faced with choices, consumers are most likely to choose the middle option in a set of three
- Provides wide market coverage, maximizing brand reach: By having Good, Better, Best product offerings, companies ensure that they are maximizing their reach and hedging against competition by meeting the needs of different consumer income groups
Brand Strategy Consulting: What to Consider When Setting Good, Better, Best Pricing
While it’s a simple framework, knowing how to execute It can be challenging. This is where a brand strategy consulting firm can help. The goal is to maximize growth and reach without diluting or negatively impacting brand equity. A brand strategy consulting firm with strong analytics can help optimize:
- The number of tiers or product offerings. The goal is to avoid overwhelming consumers, so generally three or four is the right number
- Key features to highlight and differentiate products on. This includes understanding what are the most important purchase drivers and consumer value associated with them. Important to note what matters here is “perceived” consumer value and fit with brand
- Cost value analysis and price ranges that will maximize profit. One major consideration here is price elasticity and relative price gaps between good, better, and best offerings. Not getting this right can result in missed revenue
Below are just a few examples of some of the largest and most successful brands, across industries, employing the Good, Better, Best approach.
Electronics: Apple
Apple is a $265 billion dollar brand with an array of electronic offerings, including Apple Watch, AirPods, iPhone, MacBook and other hardware. Within each of these product offerings, the brand does an excellent job at distinguishing their Good, Better, Best product offerings and what features set them apart. Below is just one example from MacBook:
Entertainment: Netflix
Netflix is a $25 billion dollar brand with over 200 million subscribers worldwide. In addition to streaming services, Netflix also produces and distributes original content.
Netflix offers three distinct subscription plans and even calls out Good, Better, Best differences on video quality!
Finance: Chase
Chase is a $122 billion dollar financial institution with products in personal banking, investment banking, commercial banking, and asset & wealth management. Their everyday banking product offerings are just one example of how they leverage Good, Better, Best to distinguish between different types of account options and features.
Retail: Gas Station Fuel
Gas stations are an estimated $430 billion dollar market. Most gas stations have historically used Good, Better, Best pricing strategies at the fuel tank.
Food & Beverage: Nestle
Nestle is one the largest food & beverage companies, with over $90 billion in annual sales. In coffee alone, they have four major brands, each playing in different pricing tiers. Nescafe Dolce Gusto and Starbucks command a price premium.
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