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Discussion: Dose excessive price variation in your product trigger loss of customer trust..?? | Deepak Sood

Abhishek Rai, Regional Manager @ Daimler l Ex Tata Motors l NIT Surat

Dose excessive price variation in your product trigger loss of customer trust..??

Price of a product is the perceived value in customers mind before buying any product( which may change in a +ve or -ve way after usage)

As a seller if you are able to establish that perceived value and then keep on changing between customers , it creates confusion in customers mind and he feels cheated. At this point of time you loose a potential loyal customer forever..

In recent times one brand which has followed fixed price strategy really well is ONEPLUS , even on one of the biggest discount days they took a call of not discounting their product.

Fixed price strategy even establish better Residual Value of a product which enhances the life cycle value as well

Top Comments

Lorenzo Buongarzone, Pricing & Value Management Manager

Hi! Nice question! Price elasticity is key here. Looking at an average elastic demand curve, price discrimination allows to go from profit “rectangle” to profit “triangle”. Using fixed pricing will not allow you to fully exploit the demand curve. Example: For product ABC you will have 50sales at Price 6, however you will also have 5sales as Price 10, and probably 78sales at price 4.

As reference see the price and quantity sold of a Coca Cola can, varying from supermarket to a hotel minibar. In cases of average elastic demand, sticking to a price will make you miss out on profit. The underlying problem in your example is not the theory of price discrimination, but the sales person not being able to capture your true willingness to pay – which I also find as the biggest issue to tackle. Have a great day!…

Marcelo Ambrosio de Góes, Strategic Planning Executive Manager LatAm at FIS | Bridging Sales, Finance and Operations

This is a very clever point. I don’t think you have a single answer for that.

There are things that customers know will vary according to supply and demand – plane tickets, hotel rooms. We already expect price variance. Some other markets are not as volatile, so if you keep swinging prices, customers will eventually either feel cheated or learn to play the game. Perhaps trucks are this way?

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Dose excessive price variation in your product trigger loss of customer trust..?? | Deepak Sood.

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