PRICE AND VALUE

COMMUNICATION
Strategies to Influence Willingness-to-Pay

GROUP 2
 CONTENT
01 VALUE COMMUNICATION
CHALLENGES IN VALUE
02 COMMUNICATION
ADAPTING THE MESSAGE FOR
03 PRODUCT CHARACTERISTICS

04 THE DEGREE OF BUYER

INVOLVEMENT
05 STRATEGIES FOR CONVEYING
VALUES
06 MOST COMMON EFFECTS

07
MULTIPLE PARTICIPANTS IN THE
BUYING PROCESS
 OBJECTIVES
Objective n° 1 Objective n° 2 Objective n° 3

To explore the To visualize the degree of Understanding

ideas regarding buyer involvement the different
price and value effects on a
communication buyer's
perception
 VALUE COMMUNICATION
"An informative interaction that exposing the potential customers
to the benefits of a specific product."

Value communication can have a great effect on sales and price

realization when a product or service creates value that is not
otherwise obvious.

Perception of value are based on conveyed information.

 01 02 03 04

Value The buyer is not The marketers In order to sell

communication incentivized to often assume on value, a seller
is often figure out the that market needs to sell to
substituted by relative value demand is fixed. the consumers
propositions. that recognizes
"Featured-
the value.
Communication."

"V.C CHALLENGES"
 ADAPTING THE MESSAGE FOR
PROJECT TIMELINE
PRODUCT CHARACTERISTICS
The first step in developing a value message is
determining which customer perception
to
influence.
The goal is to help the customer to

recognize the linkage between a product
and salient value drivers.

Two dimensions that frame a communication

strategy:
(1) The type of value delivered-economic or
psychological.
(2) The degree of buyer involvement.
UNDERSTANDING THE TYPE OF
VALUE SOUGHT
It includes the monetary and
psychological benefits which
can be both quantified , yet,
the data should be used in In monetary value, value
market communications quantification should be the
differs. central part of the message,
while in psychological value,
the message will focus on
how a product will make the
customer feel.
 THE DEGREE OF BUYER
INVOLVEMENT
Varies dramatically from one
product category to the next
as well as across purchase
occasions.
The degree of involvement
depends on different aspects
such as price involvement,
level of information, high-
visibility environment, and/or
social system.
 STRATEGIES FOR CONVEYING
PROJECT TIMELINE
VALUE
When the benefits are When the benefits are
mostly economic, mostly psychological, it is
value communication best to avoid incorporating
needs to be a central quantified value estimates
part of the message .
into market communication.

Leveraging
"Economic Value
Estimation" is one of
the best way to
describe the
economic value.
 STRATEGIES FOR CONVEYING
PROJECT TIMELINE
VALUE
EVE is just one facet of the Buying decisions and the
role of price in customer corresponding evaluations of
decision-making price points are replete with
market and business process

inefficiencies.
The role of non-economic
factors becomes more
important when the
expenditure is small.
MOST COMMON
EFFECTS AND THEIR
INFLUENCE ON A
BUYER'S PERCEPTION
OF VALUE
COMPETITIVE-REFERENCE EFFECT

True value is what is perceived by consumers who

are fully informed of alternatives, understand the
benefits of differentiation, and act in rational
ways

By managing a customer's understanding of

the relevant competitive alternatives, a
seller can significantly influence the
customer's willingness-to-pay
SWITCHING-COST EFFECT

The greater the product-specific

investment that a buyer must make to
switch suppliers, the less price sensitive
that buyer is when choosing an
alternatives.
DIFFICULT-COMPARISON EFFECT

Buyers are less sensitive to the price of a known or

reputable supplier when they have difficulty comparing
alternatives.

Rather than attempting to find the best value in the

market and risk a poor value in the process, people
simply settle for what they are confident will be a
satisfactory purchase.
END-BENEFIT EFFECT

The greater the risk and the higher the cost

failure, the more salient this effect becomes,
which is why the end-result are critical driver
of the end-benefit.
PRICE-QUALITY EFFECT

Price represents nothing more than the money a

buyer must give to the seller as part of the
purchase agreement. For a few products, however,
the price means
much more and the old adage,
"you get what you pay for" has special resonance.
These products fall into three categories: Image
products, exclusive products, and the products
without any other cues to their relative quality.
EXPENDITURE EFFECT

states that the buyers are more price

sensitive when the expenditure is larger,
either in dollar terms or as a percentage of
available budget. As the expenditure
increases, the potential return to shopping
around for a better deal increases.
SHARED-COST EFFECT

A fundamental design principle built into the

federal tax code. Although the portion of the
benefit accounted for by the product's price
is an important determinant of the price
sensitivity, so is the portion of that price that
is actually paid by the buyer.
TRANSACTION-VALUE EFFECT

Suggest that buyers are motivated by more

than just the "acquisition utility" associated
with obtaining and using a product.

They are also motivated by the "transaction utility"

associated with the difference between the price paid
and what the buyer considers a reasonable offer for the
product.
FAIRNESS EFFECT

Fairness is often framed by the "shadow of

the future". For one-time transactions,
consumers tend to be more willing to accept
market rate pricing. However when they
anticipate future interactions with the seller,
the norms of fairness are applied more
rigorously.
 MULTIPLE PARTICIPANTS IN THE
BUYING PROCESS

The buying process frequently involves more people than just the
customer since others participate by providing information, facilitating

search, and influencing the purchase decision. Multiple participants are,

in fact, the norm for purchases of high involvement goods characterized
by complex offerings and, often, higher prices. Multiple participants are
also common in most business markets where purchasing is managed by
professional procurement managers using sophisticated information
systems and aggressive negotiation tactics
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