Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e- Price Setting in the
Business World
Text © The McGraw−Hill
Companies, 2002532 Chapter 18
Customers are less price sensitive the greater the significance of the end benefitof
the purchase. Computer makers will pay more to get Intel processors if they believe
that having an “Intel inside” sells more machines. Positioning efforts often focus on
emotional benefits of a purchase to increase the significance of a benefit. Ads for
L’Oreal hair color, for example, show closeups of beautiful hair while popular
endorsers like Portia deRossi tell women to buy it “because you’re worth it.” A con-
sumer who cares about the price of a bottle of hair color might still have no question
that she’s worth the difference in price.
Customers are sometimes less price sensitive if they already have a sunk invest-
mentthat is related to the purchase. This is especially relevant with business
customers. For example, once managers of a firm have invested to train employees
to use Microsoft Excel, they are less likely to resist the high price of a new version
of that software.Hallmark’s ad prompts
consumers to think of the
reference price for a greeting
card in terms of the value it
creates for the person who
receives the card.
Value in use pricing considers
what a customer will save by
buying a product. Axilok’s ad
reminds its business customers
that its wheel bearing nut system
can cut labor costs by 50
percent. Similarly, Emerson
Electric invites prospective
customers to use computer
models available on the PlantWeb
Internet site to calculate project
savings for their plants.