GROUP 1
Members:
Lê Tr n M Th - 31241026907ầ ỹ ư
Ng C m Nhi - 31241025788ụ ẩ
H Quang Minh - 31241020319ồ
Lâm Khánh Quỳnh - 31241020864
Ph m Đ Ph ng Dung - 31241024312ạ ỗ ươ
CASE STUDY 2
Question 1: What is customer value-based pricing?
Customer value-based pricing is a pricing strategy which focuses mainly
on the customer, which means a company will set its price of the product
based on the buyers’ perception of value rather than the actual cost of
production or market competition.
This concept involves 4 steps:
The first step is assessing customer needs and value perceptions
through surveys, feedback, research in the market to understand
customers’ preferences, willingness to pay.
Secondly, after understanding the customer needs and value
perceptions, we need to set a target price to match customer perceived
value.
Next, costs will be determined by the suppliers whether they can be
incurred.
Finally, companies can design products which can deliver desired
value at the target price for clients.
In the case of Gillette razor brand, they convinced their customers that the
new product always provides a big enough improvement to be worth the
higher price until they hooked on the new one, they would buy expensive
refill cartridges for years. Like when the MACH3 released, customers
happily paid nearly $2 per cartridge, which 35% over Gillete’s previous
flagship razor.
