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Monday, May 24, 2010

May HBR: Pricing Effectively (Last Post in this May HBR Series)

“How to Stop Customers from Fixating on Price” by Marco Bertini and Luc Wathieu. As the market gets more competitive, competition forces commoditization of products and services. This causes price-fixated clients who are less receptive to innovation or marketing. Ironically, to get them off the Price Fixation (my words)—you get introduce 4 price-focused levers that call attention to how your offering is different and worthy of a premium price. Here are the four in brief:
1. Use price structure to clarify your advantage. Example: Rather than tout the complex engineering that went into new tires, Goodyear started to sell tires based on mileage consumers could expect.
2. Willfully overprice to stimulate curiosity. Example: Think Apple, which prices at a premium, thus attracting consumers to wonder—What’s going on? They stop and focus on features, often loss in commoditization.
3. Partition prices to highlight overlooked benefits. Example: Think about your cable bill…broken into components. Gets you to pay attention to often overlooked services.
4. Equalize price points to crystallize personal relevance. Example: Think Apple again, when Steve Jobs priced all I-Tunes at 99 cents.

Read all the full articles in the May 2010 issue. Well worth your time.

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