Boost brand and profit with the right price
Pricing is the second of the four “Ps” of the marketing mix, first described by E. Jerome McCarthy in his 1960 book, Basic Marketing. Since then, much innovation and energy has been focused on the other three Ps - product, place or distribution and promotion. Yet marketers have neglected the innovative potential of pricing at their peril.
Price “captures value” for the company in the most direct way possible - a profitable return. The case is long proven - in 1992 a McKinsey survey of 2,500 companies calculated that a 1 per cent increase in price improves operating profit by 11.1 per cent - greatly exceeding the impact of a1 per cent improvement in volume, variable costs or fixed costs. The art and science of pricing deserves closer attention.
Those in charge of pricing decisions have three elements to consider: internal tools and techniques such as price structures or price bundling; competitive value strategies; and customer insights. The elements should be balanced to create profits for the company and sustainable value for customers.
Pricing decision-makers first need to get to grips with the techniques for constructing and presenting prices, known as price structures. Consider a typical price structure. In the face of strong competition for travel across the English Channel, P&O Ferries charges a range of prices for different options. Its standard price for a midday return crossing is ￡244 ($409) - but it charges more for the privilege of, say, taking priority when loading and disembarking.
Alongside this tariff P&O offers promotional fares of ￡48 for a single crossing, tied to particular times. The promotional price is structured on the assumption that customers will generate additional income and benefits. For one thing, the fare acts as an advertisement for and an opportunity to sample the product, as the cost is low enough for some customers to treat it as an impulse purchase. Second, if travellers miss the specified crossing times, the price rises. And it factors in further profit opportunities on board, where travellers are likely to buy meals, beers, wines, spirits or souvenirs.
Price bundling - when customers are persuaded to buy a package of goods or services rather than a single item - is another popular technique for increasing value. Today, some companies are using bundling as a way of keeping their brand at the forefront of the customer's mind. For instance, children will hold on to the Disney toy long after they finish the McDonald's Happy Meal.
The car industry has used pricing structures and bundling for many years to raise the value of its sales. Consider the UK version of Mini One. It is advertised at ￡10,780, on top of which three option packs - branded Salt, Pepper or Chilli - tempt buyers to “spice up” their chosen vehicle. The packs include cosmetic features, as well as those known to be advantageous when reselling cars - seat height adjustment, for example. For some customers, the extras become an obligatory part of the purchase.
Managers need to develop a keen sense of the value of their products relative to those of competitors. Lower-priced competitors can severely damage customers' perceptions of value in an industry by encouraging customers to make lower prices the priority rather than any product or service benefits.
The emergence of discount airlines is a prime example of this: Southwest Airlines, the highly successful low-cost US airline, increased its share of domestic flight revenue from 3.2 per cent in 1990 to 12.9 per cent in 2002. Ryanair and EasyJet have seen similar success in Europe.
However, competitors can fight back. Jet Blue - launched in February 2000 in New York - does not offer the lowest fares on the market, yet succeeds via a benefit-led advertising message to consumers. It trades on such features as its in-flight comforts, 24 channels of DirecTV and industry-leading punctuality. In July 2004 Jet Blue delivered its 14th consecutive quarter of profit and a 14.1 per cent operating margin.
Bottled water brands have always faced low-priced competition - namely tap water - yet have seen remarkable growth in the past decade by differentiation and a focus on benefits. Own-label brands from supermarkets grew by 19 per cent in the UK market in 2003. Danone Waters launched Volvic Revive, a mineral water based sports drink, and grew by 29 per cent in 2003. Other big brands focused on different qualities. Evian's Nomad bottle, aimed at outdoor types, carries a belt loop, while Lakeland Willows' Spring Water contains salacin, a naturally occurring aspirin, which combats heart disease. If they offer genuine value to consumers, such benefits allow producers to sustain or raise prices.
Companies can try to defuse price competition by price and non-price responses. The former might include a stock-loading promotion to large customers, which tempts them to bring forward future orders and takes them out of the market until the price war is over. A non-price response might highlight the performance risks of lower-priced products in marketing promotions. Insurance companies often point to their speedy claims service as a reminder to buyers that a lower priced policy may not respond as rapidly.
If it is impossible for a company to escape a price war, it should limit its responses to the channel, region or segment where competition is most threatening. Tesco, the UK retailer, focuses price cuts on products that tend to be bought primarily by price-sensitive shoppers. Instead of discounting bananas, which are bought by all shoppers, it may cut the price of its “value” brand margarine, bought by price-conscious shoppers and few others.
The third element is the gathering and interpretation of customer knowledge. Making unfounded assumptions about customer attitudes to price can easily lead to pricing errors.
Misperceptions are particularly common in product launches, where managers often set the price of new products too low. A 2003 study by Michael Marn, Eric Roegner and Craig Zawada found that managers frequently price new products by reference to existing products, even if they provide considerably greater value to the customer.
Take a historical example. In August 1959, the British Motor Corporation lost its nerve on the eve of the original launch of the Mini, reducing the planned list price to just below the ￡500 level - the level of perceived psychological importance. The car was an instant sales success and demand outstripped supply. However, profitability was so low over the early years that it was hard for the company to invest in the car's subsequent development.
Mercedes avoided the same error 40 years later. The planned price of its A-class model was DM29,500, just below the supposedly important DM30,000 barrier. But after detailed consumer research, Mercedes found that of those asked, the 25 per cent of who would be likely to buy the A-class valued its features strongly. The research supported a launch at DM31,000. Sales soon hit their targets in Germany - and Mercedes made an extra DM300m a year.
Customer research on prices is notoriously difficult to interpret and sometimes unreliable - customers may hope to encourage price cuts or simply be unable to admit to intangible reasons for paying more than a minimum. Yet well-founded research can provide vital insights for pricing. Retailers such as Tesco, for instance, research patterns of consumer behaviour to identify the product lines where consumers respond best to price changes.
Consumers themselves may not always be logical in their pricing behaviour and some companies have tried to exploit this. For example, shoppers assume that larger packs offer better value, yet sometimes retailers charge higher relative prices for jumbo sizes. An August 2002 article in the Wall Street Journal describes how Wal-Mart shoppers could save 30 cent and gain seven ounces by purchasing four small cans of Van Camps pork and beans rather than a single large one.
Pricing strategies can also influence patterns of consumption. Consider two people who pay the same fee to join a health club. In a 2002 study, John Gourville of Harvard Business School found that someone who pays $50 per month is more likely to attend regularly (and renew their membership the following year) than a person making a single payment of $600. Patterns of consumption differ according to the timing of the purchase and the payment method used - a cash buyer of a ticket for an event purchased the day before will be statistically more likely to attend than a credit card buyer who bought ahead of time.
Because of its vital contribution, pricing needs time and attention. It integrates internal tools and techniques, competitive value and customer insight. Prices must stand the test of comparison and deliver value - particularly when companies are faced with aggressive, low-priced rivals. Ultimately, the right prices spring from a sound understanding of customer motivation, attitudes and emotions.
Tony Cram is a Programme Director at Ashridge Business School and author of Customers That Count: How to Build Living Relationships With Your Most Valuable Customers (Prentice Hall, 2001)
FT商学院2004: 定价三大要素
1960年，E?杰罗姆?麦卡锡(E.Jerome McCarthy)在他的《基础营销学》(Basic Marketing)一书中，将定价(pricing)列为“4P”营销组合的第二点。此后，人们将大量精力集中在了其它三个P上――产品(product)、地点或者说分销(place or distribution)以及促销(promotion)，并在这些方面取得了许多创新。但是，市场人员却忽视了定价的潜在创新性，他们很可能将为此尝到苦果。
价格能以最直接的方式为企业“获取价值”，即有利的回报。这一点早就得到了证明。1992年，麦肯锡(McKinsey)对2500家企业所作的一份调查显示，价格提高1%，能使运营利润增长11.1%；这要大大超过销量增加1%、可变成本或固定成本削减1%所带来的影响。定价的艺术和其中的科学性值得人们予以更密切的关注。
那些负责定价的人需要考虑三个因素：第一，内部工具和技巧，比如价格结构或价格捆绑；第二，竞争价值战略；第三，对消费者的洞察力。这些因素必须相互平衡，才能为企业创造利润，为客户创造可持续的价值。
定价者首先需要掌握构造和标示价格的技巧，也就是所谓的价格结构。让我们来看一个典型的价格结构案例。横渡英吉利海峡的客运业务竞争十分激烈，针对这种情况，P&O Ferries公司为有不同选择的客户开出了不同的价格。一张标准的日间往返票定价在244英镑；但如果乘客要优先登轮或优先上岸，则需支付更多的费用。
除了这一类票价，P&O Ferries还提供一个单程票的促销价，只售48英镑，但这种票只能在特定时间段使用。公司认为，客户会带来额外的收入和利益，因此制订了这样一个促销价。首先，这种票价格非常低，能刺激一些消费者的购买欲望，因而起到了广告的作用，并为消费者提供了试用产品的机会。其次，如果旅行者错过了特定的开船时间，票价就会上涨。而且，考虑到旅行者很可能会在船上用餐、买啤酒、葡萄酒或其它酒精饮料及纪念品，该票价也涵盖了更多船上的盈利机会。
价格捆绑，即让顾客购买一整套产品或服务，而不是只买一个单一的项目。这是另一种常用的增值技巧。目前，一些企业正利用捆绑方式，让客户把它们的品牌牢牢记住。例如，孩子们在吃完麦当劳(McDonald’s)的欢乐套餐后，还会一直保留着迪斯尼(Disney)玩具。
多年来，汽车业一直采用价格结构和捆绑的方式提高销售价值。让我们来看一看英国的迷你一号(Mini One)。它的宣传定价为1.078万英镑，除此之外，还有三种分别被称为盐、胡椒和辣椒的套餐选项，以吸引购车者把他们选购的汽车变得“热辣起来”。这些套餐包括了汽车配饰，以及那些车子转手时能体现出来的优点，如可调高度的座椅。对有些顾客来说，这些额外的东西成了买车过程中必不可少的一部分。
管理者需要同时对自身和竞争对手产品的价值具有敏锐的感觉。低价竞争者会鼓励消费者优先考虑价格，而不是任何产品或服务的特点，这会严重损害消费者对行业价值的认识。
廉价航空公司的出现便是这样的一个例子：低价航空公司西南航空 (Southwest Airlines)在美国极为成功，其国内航线收益占总收益的份额从1990年的3.2%上升到了2002年的12.9%。瑞安(Ryanair)和易捷(EasyJet)航空公司也在欧洲获得了类似的成功。
然而，竞争对手也可以反击。2000年2月，蓝色喷气机(Jet Blue)在纽约成立。它所提供的票价并不是市场上最低的，但它向消费者传达的广告信息以利益为导向，照样借此获得了成功。它的卖点在于舒适的舱内环境、24个DirecTV频道以及全行业领先的航班准点率。2004年7月，蓝色喷气机宣布它连续第14个季度盈利，运营利润率达到14.1%。
瓶装水品牌也一直面临着低价竞争，也即来自非蒸馏水的竞争；但在过去十年里，该行业通过产品细分和注重产品特点而得到了巨大发展。2003年，在英国市场上，超市的自有品牌瓶装水增长了19%。达能水公司(Danone Waters)新推出了一种矿泉水式的运动饮品Volvic Revive，结果在2003年增长了29%。其它大品牌则将注意力集中在不同的品质上。依云(Evian)的Nomad瓶装水针对户外人群的活动设计了一个扣环；Lakeland Willows的清泉水(Spring Water)含有一种天然生成的阿司匹林salacin，能够治疗心脏疾病。如果这些产品真的向消费者提供了价值，并给他们带来了好处，那么生产商保持或提高价格也就合情合理。
企业可以通过价格或非价格手段来消除价格竞争。价格行为包括向大客户提供stock-loading促销，促使它们将未来的订单提前，从而使公司预先占有这部分市场份额，直到价格战结束为止。非价格行动可以在市场推广这个环节中，着重强调低价产品的性能风险。保险公司经常提醒消费者，他们的索赔服务速度很快，这对消费者也是个提醒，即低价保单的服务可能没那么迅速。
如果企业真的无法避免价格战，那它应当将自己的行动限制在最具竞争威胁的渠道、地区或部门。英国零售商特易购(Tesco)会把减价策略集中用在那些主要由价格敏感型消费者购买的商品上。它不会对人人都买的香蕉打折，而是降低人造黄油的价格，因为这才是其“价值”的品牌形象，是只有那些价格敏感型顾客及其他少数人才会买的商品。
第三个要素是收集并解读客户信息。如果对客户的价格态度作没有依据的假设，很容易导致定价错误。
这种错误的观念在产品新上市时尤为普遍，因为管理者往往将新产品的价格定得过低。迈克尔?马尔纳(Michael Marn)、埃里克?罗格纳(Eric Roegner)和克雷格?扎瓦达(Craig Zawada)在2003年的一项研究中发现，管理者通常参照已有产品来给新产品定价，即使新产品能向消费者提供高得多的价值。
让我们来看一个历史教训。1959年8月，英国汽车公司(British Motor Corporation)在推出迷你(Mini)车的前一夜，慌慌张张地将原定价格降到了500英镑之下，而500英镑的价格水平被认为是重要的心理线。这一车型的销售即刻获得了成功，产品陷入供不应求。然而在最初的几年里，该车的利润率实在太低，以至于公司很难对这款车型的后续开发进行投资。
40年后，奔驰(Mercedes)汽车避免了同样的错误。其A级车的原定推出价格为2.95万德国马克，刚好低于看来很重要的所谓3万马克价格线。但经过详细的客户调研后，奔驰发现，在那些接受调查的消费者中，25%有可能购买A级车的人非常注重它的特点。这一研究认为，上市价格可定为3.1万德国马克。结果，这款车的销售不久就找准了它在德国的目标消费群体，奔驰也每年多赚了3亿德国马克。
众所周知，有关价格的客户调研很难解释，有时也不可靠；客户可能希望削减价格，或者自己也说不出为什么愿意多付钱的理由。然而，以事实为依据的调研能为定价提供至关重要的信息。例如，像特易购这样的零售商会研究消费者行为的模式，以找出消费者最能对哪些产品线的价格变化作出反应。
消费者自己的定价行为并不总是清晰合理的，有些企业正试图利用这一点获利。例如，顾客总是以为，买大包的商品更合算，但有时零售商对大包装商品的价格定得相对更高。《华尔街日报》(Wall Street Journal)2002年8月的一篇文章提醒消费者，他们可以在沃尔玛(Wal-Mart)买四小罐Van Camps的猪肉黄豆罐头，而不要买一个单独的大罐，这样能节省30美分，并多得7盎司的东西。
定价策略也能影响消费模式。假设有两个人去参加健身俱乐部，付的钱也相等。哈佛商学院的约翰?古瓦尔(John Gourville)在2002年的一项研究中发现，与一次性支付600美元的人相比，每个月支付50美元的消费者经常去健身房(并在下一年续延其会员资格)的可能性更大。购买次数和付款方式的不同导致了消费模式的差异。研究显示，一个在活动前用现金买票的消费者比一个预先用信用卡付帐的人，更有可能参加该活动。
由于定价有着举足轻重的作用，因此我们需要给它时间，并予以关注。它能把内部工具和技巧、竞争价值以及对客户的洞察力统一起来。价格必须经得起比较，并体现出产品的价值，特别是在企业面临凶狠的低价竞争时。从根本上说，正确的价格来自对客户动机、态度和情感的深刻理解。
托尼?克拉姆是阿什里奇商学院(Ashridge Business School)的项目主任，并著有《重要的客户：如何与你最有价值的客户建立往来关系》(Customers That Count: How to Build Living Relationships With Your Most Valuable Customers)一书(Prentice Hall于2001年出版)。
