Although it is a strategy which is not widespread, it gains ground since it is in line with the marketing objectives that promote a company’s products / services by defining and highlighting the value proposition to the end users and through disclosure of how differentiated from competing products / services are. Furthermore, many consumers are willing to pay more for a product if they think that derive from this important value, where that value presented in a clear and correct way. Today’s consumers have access to a huge amount of information and are increasingly informed and demanding. Therefore how can a pricing strategy be determined based on product value and what are the essential advantages?
First of all, a company which price its products and services in this way must first:
– Conduct thorough market research which should include the following:
Identification and recognition of the wishes, needs and expectations of potential buyers. The company should listen its customers and understand their opinion for the products / services in comparison with the other competing products / services on the market. At this point it is particularly useful, for sales representatives and customer service representatives to communicate directly with potential buyers to know their real needs, worries, concerns and interests. In this way the company shows that it cares to satisfy consumers and their feedback, thus contributing to the formation of emotional bonds with them.
–  Competitors analysis:
Should a company know who the competitors and the prices of products / services will be, it could determine how to differentiate, what is the added value and its own competitive advantages  (better quality products, innovative technologies, comfort and ease of service, better guarantees and sales conditions) and consequently to formulate their price, based on objective criteria.
–  Market segmentation & targeting :
In order to apply a smart pricing that will generate continuous sales and earnings for companies, it is necessary to identify markets and customers who are willing to pay for the value proposition that represent the products / services that they provide. These parts of bidders is what will ultimately become a reliable and loyal customer base in the long term, yielding continuous and stable revenues in business.
– It should carry out price fluctuation test so as to receive valid conclusions about the acceptance or rejection of certain price levels from potential consumers. This would determine the optimal combination of volume and value of a company’s products and thus calculate more precisely revenue, margins and discounts that wishes and is able to implement.
In conclusion, the price set by a company for its products based on the value that buyers give to them is the most effective pricing strategy, and focuses to the customer. This pricing strategy, even if accompanied by a thorough market research can lead to the creation of dedicated consumers and the development of more qualitative and competitive products and hence stable and continuous sales, resulting eventually in the optimization of business revenues.
References : Vivian Guo (2012), Tim Donnelly (2011), Ronald J. Baker (2009), www.mckinseyonmarketingandsales.com, www.entrepreneur.com, www.yourbusiness.azcentral.com, www.marketingmo.com, www.marketingdonut.co.uk, www.dkconsultants.gr.