Dove is a USA-based brand owned by a British multinational company Unilever. They have a vast product line starting from kids to women and men. Even though it is a personal care brand based in America, Dove is produced in 150 countries worldwide. Their demand shows that they are following the appropriate pricing strategy.
Types of Pricing Strategy Applied by the Company (Dove)
When Dove was initially launched in the market, their products were priced higher as they launched as a premium brand. In the USA, one bar of Dove soap was initially $29.99. As the demand for premium toiletries wasn’t that prominent, Dove chose an alternative pricing strategy. They chose the demand pricing strategy. They reduced their price by a huge amount. For example, the soap that previously cost $29.99 is currently sold at $19.99. Their products are still slightly more expensive than the competitors. But as their product’s quality is top-notched, all the consumers love their unique selling point. Even though Dove is slightly expensive, people are still ready to pay the extra penny. Because the quality and packaging entirely justify the price.
Details Discussion on the Dove’s Pricing Strategy
The study elaborates on different strategies applied by Dove below. It also discusses the pricing strategy applied by its competitors.
Pricing of Different Products of Dove and Other Brands
Several aspects affect the pricing strategy of Dove. For example, the changes in the prices applied by the competitor firms. Dove needs to understand the strategy of its competitors properly and then position their brand accordingly. If we look closely, currently, some of the few competitors of Dove are Aveeno, Nivea, Neutrogena, Johnson, and Johnson, etc. According to recent observation, Neutrogena cleansers cost around $4.97, and Aveeno’s one costs $6.68.
On the other hand, Johnson and Johnson’s baby lotion costs $7.89. Dove is slightly more expensive than all these products. Their baby lotion costs around $17.99, and their cleanser costs $19.99. The brand mainly focuses on its high quality and tries its best to maintain its unique features. Hence, they are keeping the premium prices.
Primary and Secondary Pricing Strategy
According to the books, Dove follows several pricing strategies to make sure that the company is maximizing its profit when it comes to pricing strategy. In some places, Dove follows the cost-plus approach, where it focuses on the cost and calculates the ratio of cost and revenue. But this is certainly not the primary strategy of the brand. They mostly focus on the demand pricing strategy, just like other brands. In this case, they analyze the demand and supply curve. After seeing the curve, they detect consumer behavior and make decisions accordingly. In demand pricing strategies, prices change according to the consumers’ demand. For example, if the demand for a certain price gets higher, the brand can slightly increase the price by keeping in mind that if the increased margin is a lot, it might affect the consumer decision.
Other Aspects that Affect the Pricing Decision
When a brand decides the prices for its products, it has to keep many things in mind. In the case of Dove, it tries to manipulate its target consumer’s psychology. People often think that expensive products are premium as the brand uses premium quality raw materials, which increases the cost and hence the price automatically increases, which is correct in a way. Dove provides a high-quality product, and for years they have been able to maintain their quality. They claim to sell moisturizing products, which is their unique selling point. People have positively taken this. As a result, Dove has maintained its loyal consumer base. Dove as a brand has been profitable for understanding consumers’ psychology and acting according to it.
Inapplicable Strategies
Some brands prefer the loss leader pricing, where they lower the price when the demand decreases. It also happens to market leaders. Dove doesn’t need to follow this technique. Even though Dove faced some difficulties setting their price at the initial state, now they have understood the ceiling price and the floor price preferred by consumers. Most brands use the loss leader pricing when they don’t have any products from which they can maximize their profit. Hence, they have to decrease the price to gain a competitive advantage. Another strategy is the price penetration strategy. Dove has been in the market for years, which helped them build up a loyal consumer base. This helps them avoid the above strategies.
Discount Pricing Strategy
Like other brands, Dove also implements the discount pricing strategy on special occasions. It also gives bundle offers to keep the consumers engaged with the brand. Most competitor brands provide discounts during the holiday seasons or special events. This keeps the consumers attracted. Dove also follows the trend and offers package deals and discounts now and then.
Shelf Analysis
This is another crucial technique that helps brands develop a suitable pricing strategy. Here, data from competitor brands are collected and analyzed thoroughly. Based on their prices, the price of different products is set. Dove sometimes follows this technique.
Types of Pricing Strategy Applied by Competitor Companies
There are several types of pricing strategies taken by different companies. They are demand pricing, competitive pricing, cost-plus pricing, penetration pricing, price skimming, economy pricing, psychological pricing, discount pricing, geographic pricing, and price bundling. Most companies choose their pricing strategies according to their objectives and state. For example, Neutrogena follows the demand strategy where they focus on the demand of their target audience.
Recommendation
Up until now, Dove has been following all the trends perfectly. They have been successful at maintaining their profitability rate. But there’s a huge untouched market of people who prefer more affordable products. If Dove wants to grab the attention of these consumers, they can either provide more discounts or provide attractive bundle offers.
Dove’s objective is to sell quality products to its consumers. It never compromises consumers’ safety by providing products at a lower price. Dove understands the mindset of its consumers, and it takes steps by analyzing every aspect thoroughly.
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Nishat Tarannum Mridula is a contributing writer at The Strategy Watch. She has been contributing for last two years.
Nishat is currently studying at the University of Dhaka. Even though her major is in Banking, she enjoys writing on diverse topics, starting from appliances to blogposts. She is in the middle of completing her BBA from University of Dhaka. Alongside that, she writes different types of business articles for The Strategy Watch.