Pricing on Cosmetic Products

Pricing


 There are no guidelines on pricing, thus it’s possible to find differences of between Kshs.
5 and Kshs. 100 for the same product.


 Due to the price differences between wholesalers, two retailers within the same location
could sell the same product at different prices. Alternatively the retailers could sell at the
same price but one enjoys higher margins. Keeping everything constant the retailer with
higher margins is likely to grow faster.


 This is a price sensitive market. Price based competition is at times very intense.


 In major towns there is a lot of price discrimination where the same product is sold at
different prices based on the retailers’ assessment of the consumer’s ability to pay.


 Prices also depend on target market with prices relatively higher when targeting higher
income consumers.


 Shops located near a major popular supermarket or cosmetic shop and without any
value additions price lowest possible. Still they rarely beat the supermarket.


 Competing with supermarkets on prices and major cosmetics can lead to losses.
Compete on value, variety, service, opening hours and marketing. Not that you can
ignore prices.


 For premium brands and where the target is mid income consumers very low prices will
hint at fakes while very high prices imply exploitation. For instance a particular Mac product retails at Kshs. 5500 at a leading city pharmacy and Kshs. 500 at a shop along
River Road. The latter is a fake.


 Hair dressers, who are a significant part of the customers, are extremely sensitive to
prices. It’s very easy to win them with low prices. However there are also very keen on
results; they may not care whether a product is fake or real as long as it gives the
desired results and customers keep coming back.


 Before settling on prices know how much your competitors are selling the most common
and fast moving products. Price the same, slightly lower or slightly higher if you are
having value additions.


 Some wholesalers can guide you on what retail prices but at the end of the day use the
specifics of your location and target market to make a decision.