The law of demand states that generally speaking when prices fall, demand usually increases. A pricing strategy of “pricing for share” usually involves lowering the price in an effort to make the station’s inventory more attractive to buyers, thus encouraging them to buy more. This can be a flawed strategy in some instances, but here are a couple of instances where lowering prices to garner higher shares make sense.
A soft market. If business is soft in a particular market, that usually translates to smaller budgets but oftentimes relates to a number of available advertisers. Logic dictates that if there are fewer buyers, we must maximize the revenue we receive from each of those buyers. With fewer buyers, the demand on our inventory is much lower, therefore the strategy here is to lower prices to stimulate demand in the buyers that are available to us.
Ratings challenges. If you’re not one of the top-rated stations in the market, getting our fair share, let alone our unfair share, can definitely be a challenge. You may have to lower rates just to be able to be considered for a piece of business. Pricing aggressively here potentially can help you to achieve your unfair share of the available business.
Pricing for share on every piece of business isn’t necessarily a sound strategy but realizing the situations where it makes sense can help you move the needle on higher shares and revenue. It’s a good reminder that no two buyers are the same and you can’t take a one size fits all approach to your prospects.