O'Reilly logo

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Smarter Pricing: How to capture more value in your market

Book Description

The most neglected element of the marketing mix can have an unrivalled impact on the bottom line. Smarter Pricing helps managers make more intelligent pricing decisions, implement pricing strategies and structures more effectively in the market and capture more value for their business. 

  • At no time has effective pricing been more significant. Buyers are getting stronger, markets more transparent, and manufacturers in new powerhouses such as China, are becoming more and more competitive.

  • Recent McKinsey survey of 2500 companies calculated that a 1% increase in price improves operating profit by 11.1%.

  • Smarter Pricingis a good, hands-on book on pricing for practising managers, providing a developed mix of techniques through international examples from a range of sectors that bring pricing theory into a real-world context.

  • Smarter Pricingjoins the developing suite of FTPH books offering executives focused and practical advice on decisive business challenges.

  • Smarter Pricing is a fast and focused companion to practical price management, for executives and marketers in every sector.

Table of Contents

  1. Copyright
    1. Dedication
  2. Acknowledgements
    1. Publisher’s acknowledgements
  3. Upwards, not downwards
  4. Pricing by voodoo or bingo? – there’s a better way
    1. It’s important, so how well are we doing it?
    2. Smarter pricing
    3. Chapter takeaways
    4. Management questions for your business
    5. Going further – references and additional reading
  5. Customers: smarter ways to understand them
    1. When they say price, they really mean value
      1. The tipping point of value
      2. The value proposition
      3. The target group: what does it need? What can it afford?
      4. Dynamic propositions and value innovation
      5. Chapter summary
      6. Management questions for your business
      7. Going further – references and additional reading
    2. What would you pay for this? Perils and pitfalls of pricing research
      1. Serious price research – done by the few
        1. Intention-based research
      2. Perils of price questions
        1. Purchase-based data
      3. Pricing research – the bottom line
      4. Chapter summary
      5. Management questions for your business
      6. Going further – references and additional reading
    3. Price discrimination – segmenting by price sensitivity
      1. Price–volume relationship
      2. Buying more as the price rises!
      3. Driving miles to buy cheap petrol
      4. Nine effects to reduce price sensitivity
      5. Different customers, different sensitivity
      6. The answer is price discrimination
        1. First-degree discrimination
        2. Second-degree discrimination
        3. Third-degree discrimination
      7. Different segments, different brands
      8. Chapter summary
      9. Management questions for your business
      10. Going further – references and additional reading
    4. Customers behaving badly – how pricing can help
      1. Pricing that brings unsatisfactory behaviour
      2. Pricing to help customers behave profitably
      3. Charge them for what they don’t eat!
      4. The ultimate price promise
      5. Mini-bar barrier lifted
      6. Pricing that impacts consumption
      7. Ten dollar bills feel more than $100 on the card
      8. Early payment, less commitment
      9. Men don’t read price tags
      10. Price stimulates behaviours – manage that knowledge well
      11. Chapter takeaways
      12. Management questions for your business
      13. Going further – references and additional reading
  6. Competitors: smarter ways to outwit them
    1. Standing out from the crowd – pricing’s role in positioning and differentiation
      1. Up-market or down-market?
      2. What is positioning?
      3. Price – a quality indicator . . . and more
        1. How price can communicate the position on the quality spectrum?
        2. How price can convey accessibility
        3. How price can convey that it is easy to do business
        4. How price can reassure
        5. How price conveys security
        6. How price can convey differentiation
        7. How price conveys exclusivity
        8. How price conveys indulgence
        9. How price can convey aspiration
      4. Dynamic market . . . relativities change
      5. You’ve got to be different: ban commodity thinking
        1. Is water a commodity?
        2. Is concrete a commodity?
        3. Is plastic a commodity?
      6. Differentiation is the lifeblood – there are three types
        1. Get the basics right, that’ll support higher prices
        2. Make it easier, achieve higher prices
        3. Build a relationship, earn higher prices
      7. Looking for new points of difference
      8. Chapter takeaways
      9. Management questions for your business
      10. Going further – references and additional reading
    2. Competing with value players – hit back with benefits
      1. New threat – deep discount
      2. No room for haughty brand supremacy
      3. Look at the Wal-Mart way and look out!
      4. Fight back with benefits
      5. Ten strategies to beat the value players
        1. 1. Innovation, novelty and new products
        2. 2. Leverage tradition
        3. 3. Customer responsiveness
        4. 4. Trust and reassurance
        5. 5. Certainty
        6. 6. Expertise
        7. 7. Range, choice and selection
        8. 8. Personalization, customer insight
        9. 9. Time-based understanding
        10. 10. Add services
      6. You cannot hold all the business
      7. Chapter takeaways
      8. Management questions for your business
      9. Going further – references and additional reading
    3. Fighting price wars – planning to escape pain
      1. What is a price war, where do they happen?
      2. Does a price war make sense?
      3. Volume increases rarely match the original profit foregone
      4. Any advantage is short-lived
      5. And customers get the wrong message
      6. Strategic shakeouts don’t happen
      7. How price wars really start
      8. Avoid, avoid, avoid
      9. Kick ’em with non-price responses
      10. Fear and emotion to fight price cuts
      11. Be creative and selective in your responses
      12. If you have to fight, punch hard, once
      13. Retreating may be the most profitable strategy
      14. Prepare now
      15. Chapter takeaways
      16. Management questions for your business
      17. Going further – references and additional reading
  7. Company success: smarter ways to capture value
    1. Fixing the right price – structures, segments and stairways
      1. How could we set the price?
        1. Stage 1. Customer factors
        2. Stage 2. Competitive factors
        3. Stage 3. Company factors
      2. Pricing objectives
      3. Life-cycle pricing
      4. Next step: develop a price structure
      5. Reward high users with multi-dimensional prices
      6. It’ll cost you more later
      7. Different segment, different price
      8. Leading customers up price stairways
      9. Block out competitors – pair up product and system
      10. Hot sauce calls for a refreshing bundle
      11. When they bundle, I’ll be different
      12. Confused by prices? That’s the intention
      13. End confusion, risk a price war
      14. Price structure gets golfers out on the links
      15. It’s new, what should I charge?
      16. Chapter takeaways
      17. Management questions for your business
      18. Going further – references and additional reading
    2. Communicating prices – creating positive perceptions
      1. Pricing cues – the magic of 99p
      2. Err . . . I don’t know how much it is normally
      3. Seeing something else pricey loosens the wallet
      4. Threshold price points
      5. Price presentation
      6. The Machiavellian way to communicate
      7. Divide and conquer
      8. Here is the price . . . plus one last benefit
      9. Love discounts, hate surcharges
      10. Why should I clear my own table?
      11. What a rising price says about you
      12. Chapter takeaways
      13. Management questions for your business
      14. Going further – references and additional reading
    3. Why pay more? How to get higher prices
      1. Iffy invoicing – throwing advantages away
      2. Take a bravery pill – announce a price increase
      3. How to increase prices paid, without imposing a price increase
      4. Price-cut perils
      5. Chapter takeaways
      6. Management questions for your business
      7. Going further – references and additional reading
  8. Pricing success and executive summary
    1. Pricing success – keeping discipline, measuring results
      1. Higher prices (but higher discounts)
      2. Co-ordinating pricing decisions – how does it happen?
      3. Sales force giving it away?
      4. Managing pricing discipline
      5. Prevent profit leakage
      6. When ‘strategic’ really means loss-making
      7. How do you measure success?
        1. 1. The ‘look to book’ ratio
        2. 2. The sound of silence
        3. 3. The switching rate
        4. 4. Market share movement
        5. 5. Fixed costs per unit sold
      8. Difficult but important
      9. Chapter takeaways
      10. Management questions for your business
      11. Going further – references and additional reading
    2. Smarter pricing – the five-minute version
    3. The last word on price
      1. Going further – references and additional reading