Pricing Strategy: Economic Value to Customer
The question describes a pricing method that goes beyond the basic product features. It considers the complete value perceived by the customer.
Economic-value-to-customer pricing directly addresses this by assessing:
- Buyer's perception of product performance.
- Channel deliverables (e.g., ease of purchase, delivery).
- Warranty quality.
- Customer support services.
- Softer attributes like supplier reputation, trustworthiness, and esteem.
This approach quantifies the total economic benefit the customer receives, justifying the price based on that perceived value.
Why Other Options Are Incorrect
- Target rate-of-return pricing focuses on achieving a specific profit percentage based on costs.
- Auction-type pricing relies on bidding processes or dynamic market demand.
- Competitive pricing sets prices primarily based on what competitors charge.
These methods do not inherently encompass the broad range of buyer perceptions and associated services mentioned in the question.
Important Questions from Pricing Strategies
Indicate the correct code for the points taken into consideration for product line pricing from the following:
(i) Demand relationships of different products
(ii) Competitive situation in the product market
(iii) Advertising endeavours for different products
(iv) Cost estimates for various products
Choose the correct answer from the code given below:
In pricing one new emerging model is Outcome Based Pricing Model. When pricing is done for the IT industry., which of these will represent Outcome Based Pricing?
In principle, all goods and services are valued at _______, that is, inclusive of all taxes.
- Which one of the following statements does not support the concept of third degree price discrimination?
- When does a firm fix skim the creams price for a product?
