Smarter Pricing: How to capture more value in your market

Kick ’em with non-price responses

Rao, Bergen and Davis (2000) have suggested four types of non-price action that might be taken

1. Focus on quality not price. Their example is the Ritz-Carlton hotel in Kuala Lumpur. In 1997 the Malaysian business economy was in disarray and Indonesian forest fires were jeopardizing tourism, leading to a collapse in hotel demand. Rival hotels responded by dropping room rates and economized on flowers and other luxury touches. The Ritz-Carlton chose to emphasize quality over price, meeting flight arrivals with flowers and music, providing new services such as a ‘laptop doctor’ to deal with guests’ IT difficulties. Ritz-Carlton was the long-run victor.

2. Alerting customers to risk. Insurance companies often point to ...