定价策略 课件 Chpt 03 - Customer Perception-Driven Pricing、Chpt 04 - Price to Value

TimJ.SmithPricingStrategy:SettingPriceLevels,ManagingPriceDiscounts,&EstablishingPriceStructuresPowerPointbyTimJ.Smith,PhDManagingPrincipal,WiglafPricingAdjunctProfessorofMarketing&Economics,DePaulUniversity©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Chapter3CustomerPerceptionDrivenPricingUsingConjointAnalysistoIdentifyValueTrade-OffsandDefinePrices©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.AgendaHowcantheperceptionsofcustomersbeusedtosetprices?Howcanintangiblevaluebequantifiedandusedforpricing?Whatisconjointanalysisandhowdoesitusecustomerperceptionstoinformpricing?Howdoesconjointanalysiscomparetotheothermethodsofpricesetting?Whichmethodofpricesettingisfoundtobethemostusefulforwhichkindsofpricingchallenges?StretchQuestion:Whatisthevalueofabrandinmonopolisticcompetition?©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.CustomerPerceptionDrivenPricingWithevolutionaryproducts,Customers…haveexperiencewiththeproductcategorycanconceptualizepotentialvariationsonthoseproductsunderstandthevalueofthebenefitsdeliveredholdpriceexpectationscanmakeinformedtradeoffsbetweencompetingalternatives.ExampleBreyer’sIcecreamwithHershey’sChocolateChipsCaseForkliftswithautomaticvs.manualtransmissionsSecuritysoftwarebundledwithonlinedatabackupofferingsTidewithcolorsafebleach©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.WhyConjointConjointanalysisprovidesmuchgreaterrelevanceanddepthinpricesettingthanothermethodsDiscriminatesbetweenthebenefitsofspecificbrands,productattributes,servicelevels,marketsegmentsNarrowerpricebandsthanfromExchangeValueModelsMoreinsightandrelevancethanfrompureEconomicPriceOptimizationConjointispricingaccordingtocustomerperceivedvalue©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ConjointcreatesPart-WorthUtilityFunctionsConjointtreatsaproductasabundleofattributes,features,andbenefitsTheresultingattributetovaluerelationshipiscalledapart-worthutilityfunction.Thesumofthepartworthutilitiesofaproductistheconsumerutility.Canidentifythewillingness-to-paybyconsumersforproductsthatdon’texistyetResearcherscanexplorealternativevariationsofaproduct,evenproductsthatdonotyetexist,andidentifythevaluecustomerswouldplaceonaproductwiththeassociatedfeaturesCanbeusefulinuncoveringnewproductcompositionsandpotentialpricepointsthatcustomerswouldaccept©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ConjointisaMarketResearchBasedToolAsamarketresearchtechnique,thequantificationofvaluecomesfromtheperspectiveofthecustomer,notthecompanyHassimilarchallengestoothermarketresearchtechniquesShowsasnapshotofcustomerwillingnesstopaywithlimitedabilitytodemonstratehowproductvaluationswillevolveRequiresmarketswithmanycustomers,notjustafew(InB2Bmarkets,thiswouldincludeSeagull,notHawkmarkets)©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.CustomerValuationsVaryConjointanalysiscanrevealthedispersionofvaluethatdifferentcustomersplaceonaproductoritsfeaturesThisdispersioncanleadtoarangeofpricesthatappeartobeacceptabletothemarketforaproductTheacceptablepricesrangetocomeoutofaconjointanalysisismuchnarrowerthanthatfromarawexchangevaluemodel,butbroaderthanthatfromeconomicpriceoptimizationDispersionofvaluationbetweenconsumerscanbemeaningfullyusedtoenhanceprofitabilitythroughSegmentationCustomerswillplacedifferentvalueonaproductthantheproducingfirm,bothgreaterandlowervaluationGreatervaluationscanderivefromcustomershavingalternativeusesforaproductthanwasoriginallyintendedbytheproducer,orfromsatisfyinganeedgreaterthanwasanticipated.Lowervaluationscanderivefromcustomersperceivingawidervarietyofalternativesthanoriginallyanticipated,ornolongerneedingasetofbenefitsdelivered.Ifconsumerdispersionbetweenvaluationsofspecificfeaturescanbeaggregatedintomeaningfullydifferentgroups,conjointanalysiscanformthebasisofhighlyvaluablemarketsegmentation©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Example:MangoJuiceWhilefreshmangojuiceiscommonwithintropicalareas,itishardertofindinmorenorthernlatitudesPotentially,anewhotconsumerproductMangojuiceisrelativelyexpensivetoproduceinrelationtootherjuices,suchasgrapeororangeProducersvarybetweenofferingpureMangoJuiceandMangoFruitBlends©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.AttributesunderConsideration32ouncecontainerofMangoJuicehasbeendeterminedFormulation:PureFruitBlendBrandingNationalBrandBoutiqueBrandPricelevels$4or$7Eachofthreeattributeisposedattwodifferentlevelsforthisexample,butmoreattributescanbeincludedandmorelevelscanbeconsidered©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.AttributeAlternativesPriceIngredientIngredientBrandPureMangoJuicePremiumNicheBrand$7MangoFruitBlendPremiumNicheBrand$7PureMangoJuicePremiumNicheBrand$4MangoFruitBlendPremiumNicheBrand$4PureMangoJuiceNationalBrand$7MangoFruitBlendNationalBrand$7PureMangoJuiceNationalBrand$4MangoFruitBlendNationalBrand$4©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.RankOrderingPriceIngredientIngredientBrandPureMangoJuicePremiumNicheBrand$7Rank=6MangoFruitBlendPremiumNicheBrand$7Rank=8PureMangoJuicePremiumNicheBrand$4Rank=2MangoFruitBlendPremiumNicheBrand$4Rank=4PureMangoJuiceNationalBrand$7Rank=5MangoFruitBlendNationalBrand$7Rank=7PureMangoJuiceNationalBrand$4Rank=1MangoFruitBlendNationalBrand$4Rank=3Researchsubjectsareaskedtorankordertheirpreferences©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ScoringTheresearcherthenproceedstopreparethedataforevaluationbyscoringitfrom0to7,wherethelowestscoreisthatwhichyieldsthelowestutilityandthehighestscoreyieldsthehighestutility.PriceIngredientIngredientBrandPureMangoJuicePremiumNicheBrand$7Score=2MangoFruitBlendPremiumNicheBrand$7Score=0PureMangoJuicePremiumNicheBrand$4Score=6MangoFruitBlendPremiumNicheBrand$4Score=4PureMangoJuiceNationalBrand$7Score=3MangoFruitBlendNationalBrand$7Score=1PureMangoJuiceNationalBrand$4Score=7MangoFruitBlendNationalBrand$4Score=5©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.PartWorthUtilityFeaturePartWorthUtilityIngredientPureMango(2+3+6+7)/44.5FruitBlend(0+1+4+5)/42.5BrandPremiumNiche(2+0+6+4)/43.0National(3+1+7+5)/44.0Price$7(2+0+3+1)/41.5$4(6+4+7+5)/45.5Part-worthUtilityisfoundbyaveragingproductscoresamongattributePartWorthUtilitymeasuredinUtils,aneconomistmetricofutility.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ProductUtilityTofindtheutilityofaproduct,wesimplyaddthepartworthutilitiesWecanseethatthepart-worthutilityvaluationcreatesthesameutilityrankingaswasreportedinthesurveyrankingProductUtility(Utils)UtilityRankingPureMango,PremiumNicheBrand,$74.5+3.0+1.5=9.06MangoFruitBlend,PremiumNicheBrand,$72.5+3.0+1.5=7.08PureMango,PremiumNicheBrand,$44.5+3.0+5.5=13.02MangoFruitBlend,PremiumNicheBrand,$42.5+3.0+5.5=11.04PureMango,NationalBrand,$74.5+4.0+1.5=10.05MangoFruitBlend,NationalBrand,$72.5+4.0+1.5=8.07PureMango,NationalBrand,$44.5+4.0+5.5=14.01MangoFruitBlend,NationalBrand,$42.5+4.0+5.5=12.03©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.UsingUtilstodeterminePriceDifferentialsBecausepricewasoneoftheattributesbeingmeasuredintheconjointanalysis,wecanplaceamonetaryvalueonUtils.Overthepricerangefrom$7to$4,thepart-worthutilityrangesfrom5.5to1.5.Thus,adifferentialUtilisvaluedat$.75/util©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.PotentialCompellingOffersThepreferencevaluethisparticipantplacesonanationalbrandsversusboutiquebrandsis1util,or$0.75.Thepremiumnichebranddetractsvaluefromtheproductforthisparticipantwithrespecttonationalbrands.ThepreferencevaluethisparticipantplacesonaPureMangoJuiceversusaMangoFruitBlendis2utils,or$1.50.Purityinmangojuiceaddsvalueforthisparticipant.Potentialproducts.Marketaboutiquebrandofpuremangojuicecompetingagainstanestablishednationalbrandofmangofruitblendpricedat$4wouldhavetomarkettheirproductatapricelessthan$4.75toattractthisresearchparticipant.$4.75isfoundbyaddingtheutildifferencebetweenpremiumnicheversusnational(-1.0utils)andtheutildifferencebetweenpuremangojuiceandmangofruitblend(2.0utils),whichyields1util,where1utilisvalued,bythecustomer,at$.75©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.TheLargerMarketDifferentcustomerswillhavedifferentutilityrankings,andthereforedifferentpart-worthutilitiesforthevariousattributesTheaggregatemarket’spart-worthutilityforspecificattributesistheaverageoftheindividualparticipantspartworthutility.Iftherearemeaningfuldifferencesbetweengroupsofmarketresearchparticipantsintheirutilityrankings,researcherscansegmentthemarketanduncovertheutilitydifferentsegmentswouldplaceondifferentproductcompositions.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.5StepstoConjointAnalysisAttributesDefinitionStimulusPresentationResponseMeasurementEvaluationCriterionDataAnalysis©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.1.AttributeDefinitionTheattributesandattributelevellistsneedtobefull,relevant,andexecutable.Conjointcanonlyvalueanattributethisisincludedintheresearch,andonlywithintherangeoflevelsexaminedAddingmoreattributesquicklyaddscomplexity,andcosts,butalsodeliversmoreinsightandflexibilityAttributeTypesPhysicalattributesPerformancebenefitsPsychologicalpositioning.AttributeLevelsTheeattributesareexaminedatspecificdiscretelevels,notonacontinuousscaleNeedtoensurethatthelevelsspanthedimensionunderinvestigation,butisfineenoughtoindicateintermediatepoints.Forexample:Commuterbicyclethetiresatthreelevelsofnarrow,medium,orwidewidth,ortheselectioncouldbeexpandedtoincludefivelevelswithextrawideandextranarrow.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.2.StimulusPresentationVerbal“Brand:National”TheattributeislistedalongwithitslevelAdvantages:simplicityinexecutionefficiencyincollectionofdatavarietyinnumberofattributesandlevelswhichcanbeconsideredinasinglestudy©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.2.StimulusPresentationParagraph“Thebrandwouldbeanationallywellknownbrand.”AttributeisdescribedusingnaturallanguageincompletesentencesAdvantage:providesamorerealisticandcompletedescriptionoftheproductwhichwouldleadtomorereliablemeasurementsofresults.Disadvantage:Descriptionswillbelongitlimitsthetotalnumberofdescriptionstoasmallnumber©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.2.StimulusPresentationPictorialVisualpropsusedinaninterviewsetting.Advantage:RealisticPictorialrepresentationsaremorelikelytoaccuratelycommunicatethemeaningofdifferentattributelevelsParticipantsarelesslikelytosufferfrominformationoverloadinreviewingmultiplelistsoffeatures,thetaskitselfismoreinterestingandlessfatiguingDisadvantage:thecosttoprepareandpresentthestimuluscanbehigh.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.3.ResponseMeasurementRankorderingNonmetricmeasurementParticipantsareprovidedwithastackofcardswhereeachcardholdsaproductdescriptionorstimuluspresentation.Participantsarethenaskedtodividethecardsintotwohalvesofpreferredandnotpreferredproducts,andthenrepeattheprocedureofstartingwiththepreferredhalf,movingthroughoutthepile,untiltherankinghasbeencomplete.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.3.ResponseMeasurementPairedcomparisonsNonmetricmeasurementTwoproductsarepresentedatatimeandtheparticipantisaskedtostatetheirpreference.Whichcommutercycledoyouprefer?GreyDiscBrakes700x38CStreettiresMadeinChinaWellknownbrandPriceisseveraldollarsmorethanaverageBlackPivotBrakes26”X1.95”RuggedtiresMadeintheUSAUnknownbrandPriceisaverageOR©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.3.ResponseMeasurementRatingscalesParticipantsareaskedtoratetheirlevelofinterestinaproduct.Thescalecanbecontinuousasshownintheexhibitordiscrete,suchasgivingaproductaratingbetween1and100inwholenumbersFunctionally,researchershaveshownthatratingscalesandrankorderingcanyieldsimilarresultsundermanycircumstancesCommuterCycleThecycleisGreyThecyclehasdiscbrakesThecycleisbetterthanaverageThecycleisseveraldollarsmorethanaverageThecycleismadeinChinaThelabelonthecycleisawellknownbrandBasedontheinformationabove,howlikelyisitthatyouwouldpurchasethiscommutercycleNotatAllLikelyVeryLikely©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.4.EvaluationCriterionCriteriausedtorankpreferencesOverallPreferenceorIntentiontoBuyOverallPreferenceWhenstudyingmoreestablishedmarkets,preferenceevaluationhavebeenidentifiedtobemoreusefulinestimatingmarketshares.IntentiontoBuySuitablefornewproductclassesandservicethatconsumerstonotpurchasecurrently.Thesestudieshelpresearchersestimatethepotentialmarketsize.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.5.DataAnalysisThetypeofdataanalysisthatisconductedwilldependuponthepriordecisionsregardingresponsetype.RankorderingRecognizethatwedon’treallyknowbyhowmuchonealternativeispreferredoveranother.Wecanonlyanalyzetheorderingofpreferencesthroughtechniquessuchasmonotoneanalysisofvariance(MONANOVA),PREFMAP,orLINMAP.PairedComparisonsParticipantshavebeenaskedtostatetheirprobabilityofchoice,LOGITandPROBITmethodscanbeusedtoaccommodatethefactthatprobabilitiesliebetweenzeroandone.RatingscoresRegressionanalysissuchasordinaryleastsquares(OLS)orminimizingsumofabsoluteerrors(MSAE).©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.AroseisarosebyanyothernameConjointAnalysisismarketedunderavarietyofnamesDiscretechoiceandtradeoffanalysisaretwoofthemorepopularnamesRegardlessofname,eachvariantsharesthesamebasicprinciples©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.SummaryConjointanalysistendstodominatepricingchallengeswithevolutionary,differentiatedproductsConjointanalysistreatsaproductasasumofitsparts,includingfeatures,attributesandbenefitsConjointanalysisrevealsthepart-worthutilitythatcustomersplaceonspecificattributes.Dispersionbetweenthepart-worthutilityfunctionsofcustomerscanbeusedtoidentifymarketsegmentsandestimatemarketsharesofproductsservingthosemarketsegments.ProjectPlan:attributedefinition,productdescriptionselection,responsetypeselection,evaluationcriterion,anddataanalysis©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.TimJ.SmithPricingStrategy:SettingPriceLevels,ManagingPriceDiscounts,&EstablishingPriceStructuresPowerPointbyTimJ.Smith,PhDManagingPrincipal,WiglafPricingAdjunctProfessorofMarketing&Economics,DePaulUniversity©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Chapter4PricetoValueExploringtheStrategicFrameworkRelatingtheThreeDominantApproachestoPriceSetting©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.AgendaWhatshouldweexpecttofindwhenweidentifyproductsonthepriceversusvalueplane?Whatdoesitmeantobepricedtovalue?Valueadvantaged?Valuedisadvantaged?Arepenetrationpricingandskimpricingtheonlypricingstrategiesforlaunchinganewproduct?Whenlaunchinganewproduct,whichcompetitorsaremostlikelytobethreatened?StretchQuestion:Whenconsideringtheuseofpriceversusvaluetocapturemarketshare,whichapproachismoredefensible?©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.PriceVariabilityinAutosLargevariationofpricesforasimilargoodwithinthesamecategoryTataNano$2500ChevroletMalibu$28,000BentleyFlyingSpur$170,000afactorof68betweenthelowestpriceproductioncarandthehighestpriceproductautoWhatjustifiesthepricedifference:BenefitsBenefitsbasedpricingisadirectextensionoftheeconomicsofpricing©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.PricetoBenefitsMapPriceBoundaryTheoryIdentifyrelevantcompetingalternativesDefinethevaluedifferentialPricingaccordinglyThepricetobenefitsmapplotsthepositionofproductsintermsofperceivedproductsandperceivedbenefits….Visualrepresentationofhowcustomersperceivethevaluetradeoff.PerceivedPricePerceivedBenefitsTataNanoLexusLSChevroletMalibuBMW7SeriesBentleyFlyingSpur©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.EVMModelDeliversPricetoValue©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ConjointDeliversPricetoValue©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.TheMarketExpectsPricetoValue©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.PricingAreasValueEquivalenceLineWherepriceincreasesproportionaltobenefitsincreasesValueAdvantagedExcessbenefitsbeyondwhatiscapturedinpriceValueDisadvantagedPricedhigherthanwhatwouldbejustifiedbasedonthemeasureofbenefitsalonePerceivedPricePerceivedBenefitsValueAdvantagedValueDisadvantagedZoneofIndifferenceValueEquivalenceLine©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ZoneofIndifferenceAroundthevalueequivalencelineisazoneofindifferenceSmallvariationsinpriceorbenefitsaroundthevalueequivalencelinehavenonmeasureableeffectonsalesvolumeNotallproductswillfallalongthevalueequivalencelineOutsideofthiszoneofindifference,liesthevalueadvantagedzoneandthevaluedisadvantagedzone.Productslyinginthevalueadvantagedordisadvantagedzonesareeitherpricedsignificantlylowerorhigherthanthecorrespondinglevelsofbenefits,asperceivedbycustomersElasticityisakeyingredientfordeterminingthewidthofthiszone.ThereisarangeofpricingmovesthatwillnotimpactpurchasingbehavioratallRangeofdemandinelasticity,asthenextnearestcompetitorisoutofthecomparisonmetricCanbeasourceofapainlesspriceincrease,thusimprovingprofitability©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.VarianceinPriceElasticityBigNumbersyndromelargechangesinpricehavenon-lineareffectonelasticityofdemandZoneofcredibilityBelowexpectationpricetheofferinghasnocrediblevalue.AboveexpectationpriceandcustomersdonotbelieveitispossibletodeliverthatmanybenefitsBenefitBracketedBenefitFloor:RequiredminimallevelofbenefitsBenefitCeiling:Exceedingamaximumlevel,maximumWTPforbenefits…morehorsepowerinacarbecomesunnecessaryPriceCappedBudgetconstraintsPricecategoryspendingconstraintsVariancebysegmentdifferentcustomersegmentshavedifferentpricesensitivitiesVariancewithtimecustomerneedschangeovertime,productlifecycleandexpectationofgrowingbenefitsforsamedollarVariancebypricecommunicationmethoddaily,monthly,orannualpaymentschemescanaffectpricesensitivityVariancebydiscountingmethodoffinvoicediscountsvs.onreceiptdiscountshavedifferenteffectsonperceivedpriceCreatingdemandvs.shiftingsharesmarketgrowthbyloweringpriceofitemorisitjuststeelingafixedshareCross-productelasticity.Switchingbetweencategories:carsvs.bicyclesAsaluminumbecamecheaper,itdisplacedsteelinbeveragecans,laterdisplaceditselfbyplasticPaperorplasticbags©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ValueAdvantagedAttimes,companieswillchoosetopriceaggressively,thusprovidingmorebenefitsthanexpectedatagivenpriceUnharvestedValueSomeauthorsrefertoproductspricedinthevalueadvantagedzoneassufferingfrom“unharvestedvalue”becausethecompanyhastheopportunitywithproductsthatare“valueadvantaged”toraisetheprices.ConsideritapricingerrorEx:sellingfrontrowseatsatthesamepriceaslawnseatsinalargeamphitheatreMarketShareTakingCustomersperceivethatmorebenefitsaredeliveredatagivenpricethroughthevalueadvantagedproduct,andrationallychoosetoselectthatproduct.Warning:deliberatelypricingproductsinthevalueadvantagedzoneislikelytoinstigateacompetitivereaction,suchasapotentialpricewar,harmingoverallindustryhealthHypercompetitionCertainproductcategories,technologydrivensectorsinparticular,enjoysequentialimprovementsinproductqualityovertimeAutosandgasmileageDRAMdecreasesincostsperkbeachtimeanewphotolithographystandardbecomesavailableLCDTV’s,computerprocessors,etclikewiseenjoysuchcostsreductionsovertimeAggressivelypricingnewtechnologythatofferssignificantcostsadvantagesoverlegacytechnologyisacommontraitincertainmarkets.FormsthebasisfortheconceptofHypercompetion,SeeD’Aveni©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ValueDisadvantagedAttheotherendofthespectrum,companieswillattimespriceaproducthighincomparisontotheperceivedbenefitsofthatoffering.MissedOpportunitiesSomeauthorsrefertothisasmissedopportunities,asthefirmcouldhavesoldahighervolumeiftheirpricesweremoreinlinewithexpectationlevelsConsiderittooa