Impact Pricing: Your Blueprint for Driving Profits by Mark Stiving

Author:Mark Stiving [Stiving, Mark]
Language: eng
Format: mobi
ISBN: 9781613081211
Publisher: Entrepreneur Press
Published: 2011-09-01T14:00:00+00:00

Summary

Each of these segmentation methods is an example of identifying some characteristic about customers that is correlated with their willingness to pay and then using that information to determine the price they receive. In some markets, especially B2B, you can identify the customer characteristic and negotiate a unique price with each customer. In markets where you rely on customers to identify their segment, this only works when your normal price is for customers with the higher willingness to pay, and you provide incentive to the other group to “prove” they deserve a discount.

Here is another example that doesn’t fit in the above categories. Put yourself in the shoes of a car salesman at a GM dealer. A customer walks in and wants to purchase a new Malibu. How would you determine how big of a discount you will need to give him? You may look to see what kind of car he currently drives, how nice the clothes are that he’s wearing, or the brand of watch he has on. What kinds of questions did he ask? Were they more about the car or the price? These are all characteristics about the customer that provide hints about his willingness to pay. Although this chapter identified five characteristics that are frequently used in price segmentation, this car example shows there can be many more. Can you think of more?

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