SOSTAC: Transforming a Marketing Strategy into a Pricing Strategy

By Thomas Bennett Financial expert at Priceva
Published on June 22, 2023
In the realm of marketing strategies and business planning, numerous concepts and models exist to guide and support business operations. Among these models, SOSTAC is one of the most renowned and effective, a framework recognized by leading experts in the field.This article explores the components of the SOSTAC model and demonstrates how it can be applied effectively to develop a pricing strategy.

Understanding the Core Elements of SOSTAC Model

The SOSTAC model was developed in the 1990s by British expert and fellow of the Chartered Institute of Marketing, Paul Smith. Detailed extensively in his 2004 book, "Marketing Communications", the SOSTAC® model is a registered trademark and is held in high regard, securing a spot in the top three global business models as per the Chartered Institute of Marketing.

This model for effective planning of marketing strategies consists of 6 components:
The SOSTAC model is widely utilized in the development of marketing plans. It aids in the setting of realistic goals and finding the means to achieve them in marketing.

However, it can also be successfully applied to one of the 4Ps of the marketing mix (Product, Price, Promotion, Place), specifically for planning pricing strategy. Let's examine how to use it.

The development of a pricing strategy requires a series of tasks, calculations, and actions. These should be reviewed and revised as necessary when new products are launched, or when there are changes in market conditions or the competitive environment.

Applying the SOSTAC Model to Pricing

1) Situation Analysis

1.1. Analyze your current pricing situation. Ask yourself: in which pricing segment do you intend to compete?

Globally, four types of pricing segments are generally recognized:
  • Low-priced segment or economy offerings
  • Mid-priced segment
  • High-priced segment
  • Luxury segment

1.2. Assess the current market situation, the competitive environment, and your target audience.

1.3. Identify key competitors for benchmarking your price positioning.

1.4. Conduct a pricing audit and an assortment matrix audit; identify your strengths and weaknesses.

2) Objectives

Formulate your objectives. Common business objectives include profitability, promoting a new product, retaining a customer base, brand development, and market share acquisition, among others.

3) Strategy

Break down your goals into tasks:

  • identify your primary target markets;
  • find your unique advantage;
  • formulate the product positioning;
  • define the overall pricing strategy for the company.

4) Tactics

  • Conduct a critical price analysis for your products. Define the pricing structure of your product range, form pricing baskets.
  • Set the principles of pricing. Create separate rules (price optimization formulas) for categories, brands, individual products.
  • Specify the key performance indicators for each product group or category.

5) Action

Plan what needs to be done to implement the plan.

  • create a schedule of pricing activities;
  • assign responsibility for pricing;
  • allocate a budget for the implementation of the plan (payment for price monitoring services, repricing, CRM and ERP system setup),
  • organize the process of regular price monitoring and repricing.

6) Control

Check whether the prices you have set lead to the achievement of the set KPIs.

These can be sales volume, revenue, gross profit, turnover, etc.


The SOSTAC strategy planning model is a valuable tool that enables systematic pricing work, clear identification of key stages, and outlines the necessary actions.

While this model is straightforward to understand, it does involve comprehensive and often complex tasks at each stage. Their implementation allows for a thorough development of the pricing strategy, without missing any important moments.


How to do a SOSTAC analysis?

To effectively conduct a SOSTAC analysis, one must start with a Situation analysis to gain a clear understanding of the current market, competitive landscape, and internal capabilities. Next, Objectives should be defined, focusing on specific, measurable goals. Strategy formulation involves deciding on a core approach to achieve these objectives, considering market segmentation and positioning. Tactics then detail the specific marketing tools and channels to be used. Actions involve the operational planning of resources and timelines for tactical implementation. Finally, Control establishes metrics and processes for monitoring performance and making adjustments to stay on track toward objectives. Each step is critical for ensuring that the strategy is comprehensive, focused, and adaptable to changes.

What is the SOSTAC model theory?

The SOSTAC model, developed by PR Smith, is underpinned by the foundational principle of creating structured and comprehensive strategic plans. It emphasizes a logical sequence of analysis, goal setting, strategic development, tactical execution, action planning, and continuous monitoring. This ensures that marketing strategies are well-founded, targeted, and adaptable to feedback and changing market conditions. Its effectiveness lies in its universality and simplicity, making it applicable across a wide range of marketing contexts and capable of guiding teams through the strategic planning process with clarity and purpose.

What are the 5s in SOSTAC?

It's important to clarify that the 5Ss are not part of the SOSTAC framework but are related to another concept by PR Smith focused on digital marketing effectiveness: Sell (online sales), Serve (customer service), Speak (online communication), Save (cost efficiency), and Sizzle (site stickiness and social media engagement). While not a component of SOSTAC, the 5Ss complement the framework by providing goals that a digital marketing strategy, developed using SOSTAC, might aim to achieve.

Is SOSTAC only for digital marketing?

The SOSTAC planning framework, while highly effective in digital marketing contexts, is by no means confined to them. Its structured approach to strategic planning offers broad utility, making it applicable to a wide variety of strategic planning endeavors beyond marketing. Whether for business development, operational planning, or non-digital marketing strategies, SOSTAC provides a comprehensive, flexible framework that guides the planning process from conceptual analysis to tactical implementation and control, across industries and departments.

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