Value, not volume

Many business managers get trapped by their belief that raising prices in order to increase margin will lead to a loss of volume. The good news is that there is an alternative that makes it possible to build both volume and profit margins at the same time. Differentiated pricing allows managers to t...

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Bibliographic Details
Published in:Marketing management (Chicago, Ill.) Ill.), 2003-05, Vol.12 (3), p.45
Main Authors: Klompmaker, Jay E, Rodgers, William H, Nygren, Anthony E
Format: Magazinearticle
Language:English
Subjects:
Market strategy
Pricing policies
Online Access:Get full text
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Summary:Many business managers get trapped by their belief that raising prices in order to increase margin will lead to a loss of volume. The good news is that there is an alternative that makes it possible to build both volume and profit margins at the same time. Differentiated pricing allows managers to target prices for particular segments of the market by identifying each segment's price sensitivity based on its perception of value. As a result, differentiated pricing often allows the business to reach customer groups it has not before, while capturing the full value of a product offering across the whole spectrum of customers. There are three basic strategies for applying differentiated pricing successfully: 1. product line, 2. service convenience, and 3. value added.
ISSN:1061-3846