Pricing: Understanding and Capturing Customer Value Zou Deqiang, Ph. D School of Management, Fudan University May14,2008
1 Pricing: Pricing: Understanding and Understanding and Capturing Customer Capturing Customer Value Zou Deqiang, Ph.D. School of Management, Fudan University May 14, 2008
What is a price? Narrowly, price is the amount of money charged for a product or service Broadly, price is the sum of all the values that consumers exchange for the benefits of having or using the product or service O Copy rights reserved, Zou Deqiang
2 2 © Copy rights reserved, Zou Deqiang What Is a Price? • Narrowly, price is the amount of money charged for a product or service. • Broadly, price is the sum of all the values that consumers exchange for the benefits of having or using the product or service
Weighing Benefits vS. Total Price Total price Purchase price Total Benefits Shipping and installation Features Training, repair, upkeep Quality Fina ng Service Time and effort to find, buy, use Availability Price of accessories Performance Disposal or recycling fees Personal satisfaction O Copy rights reserved, Zou Deqiang
3 3 © Copy rights reserved, Zou Deqiang Weighing Benefits vs. Total Price
Ask The Right Questions The customer question in pricing is not What price is the customer willing to pay? The customer questions in pricing are What prices can we convince buyers are supported by the value to them of our products and services? How can we better segment the market to reflect the differences in value to different types of customers? O Copy rights reserved, Zou Deqiang
4 4 © Copy rights reserved, Zou Deqiang Ask The Right Questions The customer question in pricing is not: ¾What price is the customer willing to pay? The customer questions in pricing are: ¾What prices can we convince buyers are supported by the value to them of our products and services? ¾How can we better segment the market to reflect the differences in value to different types of customers?
Customer-Driven Pricing The demands of the market require pricing every product to reflect the customer's willingness-to-pay. PRICE WILLINGNESS TO PAY O Copy rights reserved, Zou Deqiang
5 5 © Copy rights reserved, Zou Deqiang The demands of the market require pricing every product to reflect the customer’s willingness-to-pay. The demands of the market require pricing every product to reflect the customer reflect the customer’s willingness willingness-to-pay. Customer Customer-Driven Pricing Customer-Driven Pricing Driven Pricing PRICE WILLINGNESS TO PAY