Pricing and Value strategies in a highly dynamic, competitive and changing environment Go to http://www.slideshare.net/LoicAtPSL/value-and-pricing-strategies-for-mobile-operators/
Enhancing pricing strategies within the context of price fairness! This is the topic of a recently published book entitled “The Price is Wrong”, Dr. Sara Maxwell — Associate Professor at Fordham University and Co-Director of the Fordham Pricing Center.Here Is Greg Thomas' review of the book
Dr. Maxwell calls attention to the resulting costs and foregone profits that go along with consumers’ perception of unfair prices. Perceived unfair prices irritate consumers who externalize their feelings by stopping their purchases of your products or services.
Dr. Maxwell proposes a model aimed at identifying consumers’ perception of the unfairness of particular pricing strategies and applies the model to various real world situations.
“The evidence shows that if sellers do not play fair, consumers will quit. But what is a fair price?” (p. 6)
In her analysis, Dr. Maxwell emphasizes that consumers judge those prices fair which comply with two types of fairness norms: personal and social. A personally fair price is recognized when it matches the product’s expected value in the exchange.
Recognition of a socially fair price occurs when the process of setting prices complies with the social norms of a society, which are the rules of expected and appropriate actions based on custom and tradition (p.11). For instance, Dr. Maxwell delineates how it is social acceptable to raise prices when there is an increment in costs, but not when there is an increment in demand (p. 8). Furthermore, she provides empirical evidence by describing how the majority of participants (82%) in a price experiment found it unfair that a hardware store increases snow shovel prices after a large snowstorm (p. 43).
Throughout the book, Dr. Maxwell pursues questions such as: what is priced?; who establishes the price?; how is the price charged?; when can the price change? Her answers to these questions constitute reliable guidelines for the understanding of the conflicts between pricing strategies and social norms.
One of the most revealing findings of the book is that consumers’ reaction to a personally unfair price is mild relative to their reaction to a socially unfair price!
Written in an accessible style, “The Price is Wrong” combines theoretical expositions with clear exemplifications and leads to a better understanding of the elusive definition of price fairness helping the readers to make more informed pricing decisions.
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http://www.youtube.com/watch?v=aeXAcwriid0
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