CHAPTER 3Seven Games in the Strategic Pricing Hexagon

An illustration of a design.

The previous two chapters introduced the three information sources – cost, competition, and value – and showed how their combinations naturally yield four basic economic frameworks for pricing. These frameworks complement the conventional price‐setting approaches that rely solely on one of the information sources.

In Chapter 2 we highlighted some of the strengths and limitations of those economic frameworks, without providing specific and systematic guidance on which framework a business should select to help make faster, more confident, and more effective pricing decisions. The central question to developing that guidance is: Under what market conditions or characteristics are these frameworks most helpful?

There are natural links – but not strict deterministic ones – between the economic frameworks and market characteristics that lead directly to the seven strategic pricing games, which form the uppermost layer of the Strategy Hex (Figure 3.1).

Market characteristics are the strongest indicators that a particular pricing approach or economic framework fits a particular game. These characteristics include the concentration of buyers and sellers, the diversity of customer needs, and the variety and differentiation of offers. The cost structure of the offers can also play a role. The matrix in Figure 3.2 summarizes these ...

Get Game Changer now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.