m Customers should recognize the value

organizations create , otherwise value based

pricing will fail
m Most differentiated & highest quality supplier
vulnerable to competitors who offer a lower price
alternative possessing only these features which
customers identify
m @ize of expenditure. Ex:
m @hared cost .Ex : Business Traveler
m @witching cost. Ex : @oftware
m Perceived Risk : Ex: Hospitals
m Price Quality perception
m retermine which customer perception to influence
m Identify value drivers
m Factors influencing buyer¶s perception of your
value & Price are Target customer's Relative cost
of search & Type of benefits sought ± Economic or
Psychological
m Financial or Non Financial cost to determine
alternative product¶s features
m repends on search characteristics , size and
expenditure
m @earch Goods ± What customer can evaluate
before purchase
m Experience Goods ± Requires commitment to
purchase . Eg: Management Consulting
m Relative cost of search declines for expert
customers
m Economic Benefits : Measurable Economic
benefits like ROI , Reduced cost or productivity
m Psychological : Comfort, @ecurity , @afety,
Appearance , Health , Comfort.
m Chart rescription
m @trategy 1 : Economic Value Communication
m @trategy 2 : Economic Value Assurance
m @trategy 3 : Psychological Benefit Associations
m @trategy 4 : Psychological Benefit Assurance
m Communicate Objective Information that
differential economic value justifies pricing
m Low relative cost of search , Economic Value
sought
m Communicate assurances that differential
economic value justifies pricing .
m Expert opinion , Credibility , Narration .
m Ex: ruracell , Microsoft , Webinars
m Appearance , Pleasure , @afety et al are the
drivers
m Customer recognizes the differentiation but
psychological value they associate is subjective
m Reframing the way the customer views the
product or service differentiation
m Performance benefit communication
m Ex: Michelin , Razor
m Benefits are psychological and difference among
brands are difficult for customers to ascertain : Eg
: Exotic vacation
m Comparison is difficult
m Induce trial .Eg : Health Clubs
m Companies with brand image makes the killing
m Endorsements from people like ³me´
m Proportional price evaluation. Weber ± Fechner Effect
.Eg: Car Pricing ,Hotels
m Reference Prices .Order of presentation. Buyers are
motivated to buy more than just the utility associated
with obtaining and using a product
m Perceived fairness : Maintenance or improvement.
Maintenance are considered as necessities. Ex: Oil
companies
m Gain-Loss Framing :Ex: Gasoline .To make price less
objectionable , make it opportunity cost