ditch the discounts
TRANSCRIPT
The Great Pizza War
$5.99 for two topping pizzas
$10 for a large pizza with unlimited toppings
During recession
Companies competed with one another by chalking out heavy discounts to improve sales and attract recession
weary consumers.
• Across-the-board price cuts reduces profits
•Deep discounts devalue a product or service
• It limits the company’s abilities to raise prices as economy improves
• The hassle to introduce higher quality, higher priced versions of regular products to attract customers after offering heavy discounts
Adaptive pricing
Different customers have different needs and place different values on a product or service.
Key to adaptive pricing
• Price like colour or style is one of a product’s attributes.• Adjust the attributes to appeal to customers without dropping
the price.• Sell through different channels.
Versioning
• Offering “good", "better” and “best” varieties of the same products.• Worked best for companies with weak demand.• Powerful magnet for price-sensitive customers.
Aimed at health conscious customers who want low fat ,sugar free and probiotic ice-cream.
Aimed at price conscious consumers with basic flavours.
Amul’s expensive and superior quality ice-cream.
Nano launched by Tata aims at price sensitive customers who wanted an affordable car by reducing manufacturing costs.It is the most basic car launched by the company.
Introduce lower-priced versions
Aimed at budget shoppers who wanted quality but didn’t want to pay for premium prices.
Unbundle services and add extra fees
Fees charged for reservation, meals and luggage.Attract price sensitive consumers with low pricesEarn high profits from premium travellers.
Withdraw recession-pricing tactics
Introduce new premium products
Increase the price of regular products
Increase the price of regular products
Pricing is not just about “increasing” or “decreasing”
Learning to implement adaptive pricing will lead to new customers and improved sales.