The most important message delivered by Malcolm Gladwell in his “Choice, happiness, and spaghetti sauce” speech that can be linked to marketing (and pricing policy in general) is the innovation that should be brought to the pricing strategy. This innovation regards examples in which companies revolutionize their pricing policies, strategies, or organization, or where companies use an understanding of customer psychology to change client perceptions of value and price (Hinterhuber & Liozu 2012). This means that somewhere deep inside the customers know what they want, but they would never tell.
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In most cases, the customer would not tell the company what his or her preferences are just because the company does not ask the right question and the resonance, they get is confusing. It is important that even research-intensive, advanced companies should approve a variety of substitute pricing strategies across their merchandise and service portfolio. When approving the strategies, the businesses should remember that there is no perfect price for all the customers, but there is a perfect price for a distinct cluster of clients.
One of the best strategies that correlate with the customers’ needs is the value-based strategy. The customers’ value is well-defined as the customers’ alleged preference for and appraisal of those product characteristics and consequences that simplify (or complicate) reaching the customer’s goals and purposes in use conditions.
Price-adjustment strategies are often based on competitive conditions. Competitive pricing strategy is the most popular among other types of pricing strategies (Jensen 2013). Another key to understanding the customer needs is dynamic pricing. But the most important lesson that you learn is that sometimes the best position is simply the one that is open. This means that if you are planning to launch a new tomato sauce and the opponents are all priced about the same, that tells you the best niche for your new product might be top priced.
Additionally, when you launch, your unique selling proposition will be informal and persuasive, offering your customers to treat themselves to the best. Any pricing strategy, no matter how good it seems to be, should be first tested among the potential customers (Kotler et al. 2013). After you received the results, you would divide the clients into groups by a unique characteristic that would define each cluster.
Another great lesson that we learn is that sometimes we should forget everything we have known before and try to start over in order to come up with new ideas that would change the game. The main idea is also that we should not always follow the patterns, but create our own if we want to represent the dominance and originality in the business world. The pricing strategy might seem aggressive, but if it is one of a kind – it is destined to be successful. Creating a pricing strategy is like creating a spaghetti sauce – you will have to create 45 varieties of it before you make it in a proper way as there is no chance the same price, just as the same sauce, would be ideal for everyone.
Hinterhuber, A & Liozu, S 2012, Innovation in Pricing: Contemporary Theories and Best Practices, Routledge, London.
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Jensen, M 2013, Setting Profitable Prices: A Step-by-Step Guide to Pricing Strategy -Without Hiring a Consultant, John Wiley & Sons, Hoboken.
Kotler, P, Armstrong, G, Trifts V & Cunningham P, 2013, Principles of Marketing, Ninth Canadian Edition, Pearson Education, Upper Saddle River.