Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic

Marketing: A

Global−Managerial

Approach, 14/e

17. Pricing Objectives and
    Policies

Text © The McGraw−Hill

Companies, 2002

504 Chapter 17

Value pricing leads
to superior
customer value

Look at Price from the
customer’s viewpoint

Pricing Policies Combine to Impact Customer Value

Autobytel’s car prices include free
delivery, which may help it to
compete with dealers who are
located close to the customer.

We’ve discussed the details of pricing policies separately so far to emphasize that

a manager should make intentionaldecisions in each of the areas of pricing policy.

Overlooking any of them can be serious because ultimately they all combine to

impact customer value and whether or not the firm has a competitive advantage.

Ever since Chapter 2, we’ve emphasized that customer value is based on the ben-

efits that a customer sees in a firm’s marketing mix and all of the costs. This value

is relative to competitors’ ways of meeting a need. Ideally, a target customer will be

impressed that the specific strategy decisions that a marketing manager makes with

respect to Product, Place, and Promotion offer a benefit. Perhaps if the decisions

are not on target a customer will view them as a cost. For example, a consumer

might view a producer’s decision to use exclusive distribution as a negative if a prod-

uct is harder to find, or if its “exclusive” image is a turn-off to friends. Even so, from

the customer’s view, Price is usually the main contributor to the cost part of the

value equation.

That means that when we talk about Price we are really talking about the whole

set of price policies that define the real price level. Second, it’s important to keep

firmly in mind that superior value isn’t just based on having a lower price than some

competitor but rather on the whole marketing mix.

Smart marketers look for the combination of Price decisions that result in value

pricing. Value pricingmeans setting a fair price level for a marketing mix that really

gives the target market superior customer value.

Value pricing doesn’t necessarily mean cheap if cheap means bare-bones or

low-grade. It doesn’t mean high prestige either if the prestige is not accompanied