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    Price To Value

    Uploaded by

    Shan Kumar
    Strategy consumer perception VEL marketing strategy pricing and competitive analysis

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Price To Value

    Uploaded by

    Shan Kumar
    27 views13 pages
    Strategy consumer perception VEL marketing strategy pricing and competitive analysis

    Original Title

    Price to Value

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    © © All Rights Reserved

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    Strategy consumer perception VEL marketing strategy pricing and competitive analysis

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    27 views13 pages

    Price To Value

    Uploaded by

    Shan Kumar
    Strategy consumer perception VEL marketing strategy pricing and competitive analysis

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    You are on page 1of 13

    Price to Value

    Chapter 4-6

    Agenda
    What should we expect to find when we
    identify products on the price versus value
    plane?
    What does it mean to be priced to value?
    Value advantaged? Value disadvantaged?
    What are the common pricing practices while
    launching a new product?
    When launching a new product, which
    competitors are most likely to be threatened?

    Price Variability in Autos


    Large variation of prices for a similar
    good within the same category
    Tata Nano $2500
    Bentley Flying Spur $170,000

    What justifies the price difference:


    Benefits
    Benefits based pricing is a direct
    extension of the economics of
    pricing

    Price to Benefits Map

    Conjoint Delivers Price to Value

    Value Equivalence line

    Zone of Indifference
    Around the value equivalence line is a zone of indifference
    Small variations in price or benefits around the value equivalence line
    have non measureable effect on sales volume

    Not all products will fall along the value equivalence line
    Outside of this zone of indifference, lies the value advantaged zone
    and the value disadvantaged zone.
    Products lying in the value advantaged or disadvantaged zones are
    either priced significantly lower or higher than the corresponding
    levels of benefits, as perceived by customers

    Elasticity is a key ingredient for determining the width of this


    zone.

    Value Advantaged

    Value Disadvantaged

    At the other end of the spectrum, companies


    will at times price a product high in
    comparison to the perceived benefits of that
    offering.

    Missed Opportunities
    Some authors refer to this as missed
    opportunities, as the firm could have sold
    a higher volume if their prices were more
    inline with expectation levels
    Consider it too a pricing error
    Ex: Unsold advertising space within a
    poplar magazine

    Usually results in a loss of market share

    Customer perceptions
    Executive Approach
    Identify competing products and their features , benefits, and prices. Position
    them on the price to value map according to management impressions of the
    valuation of competing benefits

    Delphi Approach
    Use a defined or identified market transaction prices and independent expert
    evaluations of benefits

    Consumer Research Approach


    Measure the level of perceived benefits and perceived price for a
    number of products, as well as the variation in prices in which
    customers are indifferent to changes.
    Plot the products according to the mean perceived price and mean
    perceive benefits. Use the variation in prices to define ellipses of
    uncertainty about the mean price and benefits for the products.

    Dispersion in Perceived Price

    Dispersion in Perceived Benefits


    When different customers hold different
    beliefs regarding the benefits of a
    product.
    Most common error, to include to multiple
    and disparate market segments as one in
    making a Price to Benefits map

    Poor marketing communication


    techniques
    Arises naturally when different segments
    pay attention to promotional activity
    differently.
    the benefits of the product can only be
    poorly perceived prior to purchase, if they
    are ever observed (credence goods)
    customers with direct and recent exposure
    to the product are likely to have a more
    accurate reading of the benefits than those
    with less exposure to the product

    Market Confusion

    Perceived Price

    Simultaneous Dispersion in Perceived Price and Benefits

    Large Dispersion in Perceived


    Benefits and Price
    Leading to poor purchases, and
    ultimately brand betrayal or lost
    opportunities
    Perceived Benefits

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