1 the failure of a company to set its prices appropriately
2 a context that makes it difficult to increase prices
3 the consequences of companies trying to conceal their approach to pricing
4 the means by which a company ensured precision in the prices it offered
5 the fact that companies can learn about the effects of a price reduction
6 the first sector to price products according to how much customers were prepared to spend
7 the widespread use of rough guidelines to determine prices
Getting the price right
A、
Chief executives need to pay more attention to pricing, according to Roberto Lippi of the Apex Group, a consultancy that offers advice on pricing strategy. He accepts that low inflation figures in many industrialised countries makes raising prices tough, but argues that this should not necessarily deter companies. He gives the example of the airlines, which, with their minimum stay requirements and massive premiums for flexibility, led the way in sorting customers into categories, based on their willingness to pay.
B、
The key to pricing is to avoid alienating customers. As Lippi points out, once a bad price has been established, it can be very difficult to turn the situation around. He gives the example of a consumer goods company that went bankrupt largely because it did not price its digital cameras properly. In contrast, he cites the case of a Swiss drug company that introduced software for every sales representative's laptop, enabling them to provide consistent and accurate price quotes. To help staff with this innovation, the company also created a new post of director of pricing strategy.
C、
Many of today's managers have the benefit of modern technology to help them with pricing. Supermarket chains, for example, can easily track customers' 'elasticity' - how their buying habits change in response to a price rise or a discount. But although a company can now measure this sort of thing in a more sophisticated way, following basic rules is still the most common way of setting prices. Most bosses still worry more about their costs than the prices they charge; one recent survey found that they spend as little as 2% of their time on pricing.
D、
One popular approach to pricing is illustrated by the car companies that charge extra for product add-ons such as electric windows, instead of offering them as part of the standard price. Although many customers are prepared to pay extra, Lippi recommends that companies make sure that price differences reflect real differences in the product, either in quality or in the extra service on offer. The worst approach is to try to keep the pricing structure secret from customers. Nowadays, that is more likely to lead to lost contracts than large profits.
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