Pricing: Nature and Role
“Price only becomes an issue in the absence of value”
(Create value to lessen the importance of Price)
Today’s Learning Objective:
• Looking at and learning about price and pricing from every reasonable possible angle.
Opening Pricing Discussion.
1. Never use the word “cheap” to describe your pricing or products
2. Prices are far easier to drop than to raise firm should price accordingly
3. In the absence of other info or knowledge about a product, consumers tends to view higher priced products as higher quality which is far from necessarily true
4. About 2/3 of prices end with a 9, based on the assumption that consumers round nine, making the product same less expensive. Most round down
5. Most pricing decision by marketers are arbitrary, based on gut
6. Few consumers know the right rice for anything
a. Instead consumers mainly respond to increases or decreases and the comparative prices of one product brand versus another product brand, unless of course the one brand has carved out more equity than the other
7. Marketers habitually try to trick consumers into thinking they are getting more for less
-skippy pb selling less for more price, smaller jar, higher price. They indented its jar such that the same priced container now delivers 9% less.
8. Anchors are another pricing trick that marketers sometimes use. Specifically few consumers at the nyc restaurant normas’ buy the $1000 caviar and lobster omelet, but the fact that this product costs 1000 makes the other menu items, which surely are extremely expensive, seem less pricy.
9. Consumer tend to over value and thus tend to be willing to pay more, for certainty. This is why many buy warranties that cost more than the expected value of the loss. When offered the choice between a certain 3000 and an 80% chance of $4000. Consumers usually choose the lower amount even when the alternatives expected value ie 3200... [continues]
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