L6: Value Proposition and Pricing Flashcards
What are the three elements/steps of the value proposition canvas?
- Customer profile
- Value map
- Fit (value proposition)
What is a customer profile?
For every segment, a customer profile should be made, it describes the characteristics of the customers.
The customer profile onsists of;
- Customer jobs (what they try to achieve in their lives and jobs)
- Gains (What would make them happy and help them reach their objectives)
- Pains (negative outcomes/risks/challenges related to customer jobs)
What is a value map?
A value map build the value proposition, it describes how your product creates value for the customer.
The value map consists of;
- Gain creators
How the offerings create customer gains
- Pain relievers
How the offerings solve the customer pains - Products and services
A list of offerings
Why testing the fit?
More fit = more value matching consumer segments
more fit = better stp process
More fit = less risk of inefficient marketing mic (mismatching value to customers)
More fit = more competitive advantage
How to test fit?
- Develop hypothesis
- Design a way to test it
- Measure the test
- Decide what measure is acceptable
- how to decide -> objectives, budget, time, resourves
What are different tools to test fit?
- Test card = a card that states all the steps of the test process
- Learning card = follows the test card and implements received feedback on the test
What is price?
The amount of money charged for a product or service, or the sum of the values that customer exchange for the benefits of having/using the product/service
Why is pricing an important element of the marketing mix?
- It is a key element in the marketing mix because it relates directly to generation of revenues and quantities sold
Why is pricing an important component of the profit equation?
- It is a key component of the profit equation, having strong effect on the firm’s profitability
Profit = (price X quantity sold) – total costs
What is customer value-based pricing?
Setting prices based on buyers’ perceptions of value rather than on the seller’s cost
What are different types of discounnting?
- Trade = business pricing
- Quantity = more quanity, more discount
- Cash discount = no financial risks
- Seasonal = summer clothes in winter
- Allowances (e.g. promotions in stores)
What are the different steps of setting a price?
- Selection of price objectives
- Assessment of target market’s evaluation of price and its ablity to pay
- Determination of demand
- Analysis of demand, cost and profit relationships
- Evaluation of competitors’ prices
- selection of a basis for pricing
- Selection of a pricing strategy
- Determination of a specific price
What is price elasticity?
A measure of sensitivity of demand to changes in price.
The % change in quantity demanded relatively to a given % change in price;
E < 1.0 - inelastic
E > 1.0 - elastic
What is linear demand?
Demand that goes opposite from the price
- Price goes up, demand goes down
- Price goes down, demand goes up
What is non-linear demand?
When price goes down, demand goes down and when price goes up, demand goes up.
With lucury items, buyers think it is bad if they charge less for the items
