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M-Price
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Background
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Price is not just a number on a tag
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Price is made up of many parts
When you buy a new car, the sticker price may be adjusted
for
• Rebates
• Dealer discounts
• Add on accessories
• Insurance
• Finance fees
• Taxes
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Price Matters
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Price Matters
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Pricing is a Headache!
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M-
Price
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Pricing is it is practiced
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Pricing : What we do different
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The key approaches and proven techniques
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The key approaches and proven techniques
Purchase decisions are often based on what consumers
consider the current actual price to be – not the
marketer’s stated price.
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The key approaches and proven techniques
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The key is in synthesis
The data collected from primary and secondary sources and
collated through
conjoint analysis,
Van Westendorp curves and
Relative Value Maps
is then integrated in econometric models based on
Hedonic pricing models and
Almost Ideal Demand System (AIDS)
to arrive at dynamic demand curves.
The demand curves are mathematically analyzed to arrive at
profit maximizing price, sales value maximizing price, sales
quantity maximizing price for each market segment
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Feature Price Upper & Lower Competitive
Combination price thresholds Positioning
Conjoint Analysis Van Westendorp Relative Value Map
Econometric Models
Glamorous Models
Just Ideal Price Models
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Typical attributes of a value proposition for
Industrial Product • The reputation of the supplier
• Reasonable credit control
• Professional knowledge of the sale person
• Initiative of the sale person
• Creditability of the sale person
• Professional manner of the sale person
• The consistent quality of the product
• The economy of the product
• Operational Training
• Quality/price ratio of the product
• Warranty period
Prioritize these •
•
The quality of the parts &service products
The unification of the parts
attributes to identify • The price of the parts &service products
the key Value •
•
The service fee
The ability to solve problem
Drivers • The response time of the service
• The service attitude of the engineers
• The network/area coverage of service
• The delivery time of the product
• The delivery time of the parts
• Logistical flexibility of the product
• Logistical guarantee for parts
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Thinking about next time you buy this brand, select the
option that describes the option you would most likely to
buy
Spare part Spare part Spare part
availability availability availability
Modest within 36 hours within 8 hours
Application Reasonable Excellent
support not Application Application
available support support
available available
Warranty Warranty Warranty I would
Period 36 Period 24 Period 12 not buy
months months months any of
these
Product Product Product
Delivery Ex Delivery 15 Delivery one
stock days month
Price Eu Price Eu Price Eu
5400 6,000 6,400
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Relative Value Map (RVM)
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Theoretical basis
A Delight Attribute
Higher performance of
these attributes generates
delight for the stakeholder
For example
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Threshold Analysis
based on Moster System
Performance
Delight
Loyal
Delight Volunteers positive word
Threshold
Critical
zones Satisfaction
Dissatisfaction
Threshold
Dissatisfaction
Will never BUY again
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Relative Value
Map
Price Satisfaction
B
Equal Value
D
Line
C
A
Quality Satisfaction
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Econometric Models
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Hedonic pricing model
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Hedonic pricing model
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Consider an entry level personal computer bought today
compared with one bought ten years ago: the price is not
greatly different, but it is much cheaper than the price of a
similar computer bought ten years ago.
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Hedonistic Price Models
(HPM)
Uh is Utility
x is Expenditure
zi is Product Features
cn are Market segment Characteristics
g, a, b are system characters
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An Almost Ideal Demand
System Model (AIDS)
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where wi is the share associated with the ith
good, is the constant coefficient in the ith share
equation, is the slope coefficient associated with
the jth good in the ith share equation, pj is the
price on the jth good.
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X is the total expenditure on the system of
goods given by
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P is the price index defined by
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Thank you for your time
METRIC
METRIC Consultancy (UK) Limited
211, Tollgate Road, Beckton, New Ham , London, E6 5XW
M- Price®