LESZINSKI, MARN - SETTING VALUE NOT PRICE

Question 1

CUSTOMER VALUE

Answer 1

Perceived benefits - perceived price
-> the higher the perceived benefits & the lower the perceived price
= higher customer value = likelihood of buying

Question 2

VALUE MAP

Answer 2

Y-axis = perceived price
X-axis = perceived benefits
VEL = Value equivalence line = constant market shares of competitors
Value disadvantage = share loser = above the VEL
Value advantage = share gainer = below the VEL

Question 3

VALUE MANAGEMENT

Answer 3

• gaining a clear understanding of important attributes important to customers -> driving buying decision
• „soft“ nontechnical attributes often matter most
• focus on customer data, don’t trust on internal perceptions about attributes

Question 4

CONSUMER DISTRIBUTION ON THE VEL

Answer 4

• clustered distribution of customers along the VEL
• „order of entry“ =advantage for „older“ companies (same benefits)
• BENEFIT-BRACKETED = minimum and maximum benefit level
• PRICE-CAPPED = unwilling to spend more than a fixed amount

= position your product in relevant clusters = customer volume, demand
= avoid too high or too low positioning on the VEL -> excluding large portion of price-capped/benefit-bracketed customers

Question 5

MOVING OFF THE VEL

Answer 5

= threatens all competitors -> can refine and lower the VEL (price wars)
= knowledge about volume elasticities needed -> reducing price, same benefits vs keeping price, increasing benefits
= how far to move off the VEL

= very risky strategy

Question 6

REPOSITIONING ALONG THE VEL

Answer 6

• understand where clusters are on the VEL and how competitors are positioned along the VEL
• loosing some customers (who preferred old positioning) but idea is to gain more new customers who prefer new position
  = change product features that attract new customers without loosing old ones
• conjoint analysis to understand value of attributes = needed price change
• avoid provoking undesirable competitor reactions