question
What are some recommended strategies to estimate the economic value?
answer
two strategies that can help estimate the economic value of your product is monetary value and psychological value
question
What are the characteristics of monetary value?
answer
Monetary value is connected to a customers profit and loss, it can be difficult to capture but the use of data collection tools and in depth interviews/algorithms can give the seller an idea of how the product is valued monetarily
question
What are the characteristics of psychological value?
answer
Psychological value is the overall satisfaction and security a consumer has about the value of a product. It uses different collection tools and cojoint analysis with different psychological variables
question
What is CVM pricing?
answer
A data driven representation of the worth, in monetary terms, of what a company is doing or could do for its customers (customer value=Benefits-Price). CVM calculates the average relationship between perceived quality and price by looking at fair value and equivalence lines
question
Why is CVM pricing not the best method for optimal value capture?
answer
It is not the best method for optimal value capture because it underestimates the value of more differentiated products and overestimates the value of less differentiated products
question
What types of segmentation are most widely used?
answer
The most widely used types of segmentation are personal demographics and firmographics
question
Which type of segmentation is the most effective for pricing decisions and why?
answer
The most effective segmentation method is value based segmentation because it looks at the value perceived and the value received which has the greatest effect on seller's cost. To accurately segment the market based on value you first have to decide basic segment criteria, then identify the value drivers, determine operational constraints, the create primary and secondary segments, then have descriptions for those segments, then develop segment metrics.
question
Why are price structures implemented?
answer
Price structures are implemented because they allow firms to align benefits with their economic value and cost. Without price structures firms undersell to those who value the product more than the price, and they shut out those who would buy the product at a lower cost but still above variable cost.
question
What are the objectives of Pricing Policies?
answer
To manage expectations and improve expectations, they are rules or habits that determine how a company
question
What are firms trying to reinforce/discourage with Pricing Policies?
answer
The goal is to treat each price exception as an opportunity to redefine the pricing strategy so that these types of requests will be dealt with systematically in the future. They REINFORCE positive pattern of behavior on the consumers part and consistency. they DISCOURAGE making exceptions to buyers negative purchasing behaviors.
question
What are 4 different buyer types?
answer
Value-driven buyer, price-driven buyer, brand-driven buyer, convenience driven buyer
question
What is a value-driven buyer?
answer
a value driven buyer has a high importance for differentiation and a low cost of search (they will look for a long time)
question
What is a price-driven buyer?
answer
A price driven buyer has a low importance differentiation and a low cost of search
question
What is a brand-driven buyer?
answer
A brand driven buyer has a high importance of differentiation and a high cost of search
question
What is a convenience-driven buyer
answer
a convenience driven buyer has a low importance of differentiation and a high cost of search
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