Pricing an der ESCP Europe Berlin | Karteikarten & Zusammenfassungen

# Lernmaterialien für Pricing an der ESCP Europe Berlin

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TESTE DEIN WISSEN

Top 5 methods for having the willingness-to-pay conversation

(2/2)

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3. Most-least questions

Start with a set of features and create a subset of these features and let them be ranked from 1 to 10 on how much the customer values it.

--> Quickest way to determine the relative priorities of features and to identify the most and least valued of them.

4. Build-your-own questions

Give customers a list of features and let them build their “ideal product.”

--> To identify the ideal packages for each customer regarding feature and price combination.

--> Applicable only if you have a rough idea on the WTP and how much they value each feature.

5. Purchase simulations

Most advanced method. You provide customers with a product that has specific features and a price and ask them if they would buy it. Then change the features and price and ask again.

--> Useful for precise estimates of the WTP for a product and its features.

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What does it indicate if the coefficient of elasticity is greater than 1.0?

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Elastic = quantity demand of the product changes drastically when its price increases or decreases

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Cost-plus logic to pricing

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Product --> Costs --> Price --> Benefit --> Customers

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TESTE DEIN WISSEN

Top 5 methods for having the willingness-to-pay conversation

(1/2)

Lösung anzeigen
TESTE DEIN WISSEN

1. Direct WTP questions

What do you think is an acceptable price?

--> Easiest way to see if there is a WTP for the new product in early stage innovations.

--> Large scale will form a range of what the market is generally willing to pay plus you will see if you´re off track – especially if the WTP is much lower than expected.

2. Purchase probability questions

Show the product concept with its values and benefits and a price and ask about the purchase probability from 1 to 5.

--> Easiest way to see if somebody would actually buy it

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Anchoring effect

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- Magic in the middle

- compromise

- attraction

“Buyers look for reference points” (when they do not want to engage

in time-consuming activities, such as “looking online, reading test

reports, or asking friends”) that are immediately available

Example: “The Magic of the Middle”

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The three profit drivers

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Sales, price, costs

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CVM price recommendation

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Set the price so that the benefit ratio (the product’s overall

benefit, compared to that of its competitor) is equal to the price ratio

Recommended price: benefit ratio * competitors price

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TESTE DEIN WISSEN

Price vs. quality [= benefit]: What matters more?

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Communication of value example with Olympic Games

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Smart pricing ideas (3 examples)

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Gillette: Indian market must have features

LinkedIn: Money back when receiving a response for paid InMail

BahnCard: Discount with BahnCard leads people to perceive it as cheaper (50% - instead it's only 30%)

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Differentiation value

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monetary + psychological

Monetary: “total cost savings or income enhancements that a

customer accrues as a result of purchasing a product”

Psychological: “refers to the many ways that a product creates

innate satisfaction for the customer”

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TESTE DEIN WISSEN

Prestige / snob effect

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higher price = higher quality

Examples: Apple, Starbucks

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Avoidable (not sunk) costs

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- “recognize that the cost of making a sales is always the current cost resulting from the sale, not costs that occurred in the past (= replacement costs)

- Particularly critical when costs easily rise or drop (and not that relevant at stable prices)

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Q:

Top 5 methods for having the willingness-to-pay conversation

(2/2)

A:

3. Most-least questions

Start with a set of features and create a subset of these features and let them be ranked from 1 to 10 on how much the customer values it.

--> Quickest way to determine the relative priorities of features and to identify the most and least valued of them.

4. Build-your-own questions

Give customers a list of features and let them build their “ideal product.”

--> To identify the ideal packages for each customer regarding feature and price combination.

--> Applicable only if you have a rough idea on the WTP and how much they value each feature.

5. Purchase simulations

Most advanced method. You provide customers with a product that has specific features and a price and ask them if they would buy it. Then change the features and price and ask again.

--> Useful for precise estimates of the WTP for a product and its features.

Q:

What does it indicate if the coefficient of elasticity is greater than 1.0?

A:

Elastic = quantity demand of the product changes drastically when its price increases or decreases

Q:

Cost-plus logic to pricing

A:

Product --> Costs --> Price --> Benefit --> Customers

Q:

Top 5 methods for having the willingness-to-pay conversation

(1/2)

A:

1. Direct WTP questions

What do you think is an acceptable price?

--> Easiest way to see if there is a WTP for the new product in early stage innovations.

--> Large scale will form a range of what the market is generally willing to pay plus you will see if you´re off track – especially if the WTP is much lower than expected.

2. Purchase probability questions

Show the product concept with its values and benefits and a price and ask about the purchase probability from 1 to 5.

--> Easiest way to see if somebody would actually buy it

Q:

Anchoring effect

A:

- Magic in the middle

- compromise

- attraction

“Buyers look for reference points” (when they do not want to engage

in time-consuming activities, such as “looking online, reading test

reports, or asking friends”) that are immediately available

Example: “The Magic of the Middle”

Q:

The three profit drivers

A:

Sales, price, costs

Q:

CVM price recommendation

A:

Set the price so that the benefit ratio (the product’s overall

benefit, compared to that of its competitor) is equal to the price ratio

Recommended price: benefit ratio * competitors price

Q:

Price vs. quality [= benefit]: What matters more?

A:

Communication of value example with Olympic Games

Q:

Smart pricing ideas (3 examples)

A:

Gillette: Indian market must have features

LinkedIn: Money back when receiving a response for paid InMail

BahnCard: Discount with BahnCard leads people to perceive it as cheaper (50% - instead it's only 30%)

Q:

Differentiation value

A:

monetary + psychological

Monetary: “total cost savings or income enhancements that a

customer accrues as a result of purchasing a product”

Psychological: “refers to the many ways that a product creates

innate satisfaction for the customer”

Q:

Prestige / snob effect

A:

higher price = higher quality

Examples: Apple, Starbucks

Q:

Avoidable (not sunk) costs

A:

- “recognize that the cost of making a sales is always the current cost resulting from the sale, not costs that occurred in the past (= replacement costs)

- Particularly critical when costs easily rise or drop (and not that relevant at stable prices)

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