Many companies, large and small, spend years successfully developing a new product with great market promise but do not adequately test their packaging, pricing, and advertising prior to introduction.
Package testing. New products and their packaging should be tested under real-life conditions for:
- storage under varying temperature, lighting, and humidity
- shipping through all distribution channels, with roughest handling
- retail environment tests under sun and fluorescent lighting conditions
- shelf life studies for age deterioration
Price testing. New product pricing should be examined for:
- competitive advantage (i.e., how is your product a better value than the competitor's?)
- parity vs. competitors (i.e., are you getting as much for your product as your competitor?)
- premiums vs. competitors with similar products or substitutes (i.e., are your customers paying more for the extra value they receive?)
- adequate margins for:
- distributor and wholesaler pricing
- marketing spending support
- consistency with brand positioning (i.e., products positioned as "upscale" should be more expensive than similar products positioned as "mass market.")
What about service companies? Service companies are subject to the same examinations of the "packaging of their services" and pricing. While service companies do not always have physical packaging to test, they may "bundle" their services in unique ways to gain a competitive advantage.
For example, financial planning companies often bundle their services together to enable them to compete with other personal service businesses (e.g., tax preparers, lawyers, investment brokers, and insurance agents). Full-service financial planning practices offer a large menu from which clients may choose. You can have them prepare your taxes, plan your estate, design your insurance protection package, manage your investment portfolio, and even prepare and annually update a comprehensive financial plan for you and your family. Indeed, they can also handle the insurance, pensions, and cash management for your small business.
If you had such a firm do only your tax returns, they would probably charge the same as your local CPA. If you asked them to do only an estate plan, the fee would be close to that charged by your local attorney. But since they must gather and process similar data for tax return preparation and estate planning purposes, they could provide a package combining both services at a better price than the total of what your local CPA and attorney would charge for the same services. Not only could they offer you a better price, they can promise you a better "product" since they will have a much better understanding of your overall situation and goals. And if you added insurance and investment services to the mix, you'd realize further savings.