How to Differentiate Between Customer-Driven & Competition-Driven Pricing
- 1). Recognize price matching as a form of competitive pricing. Businesses set their own prices to match those of their top competitors to neutralize the effect of price wars, and promote evaluation of alternate factors such as value, quality and relationship management.
- 2). Understand that volume pricing is another form of competitive strategy. Pricing decisions based on market share result in generally lower prices to achieve a desired penetration target in the population.
- 3). Use everyday low pricing (discount pricing) as an incentive for stabilizing customer-driven sales. These marketing techniques focus on continual discounts, rebates and special sales to establish the perpetual expectation of value within the customer base in the quest to become the first choice among competitors.
- 4). Establish a price-quality relationship as another technique to influence customer perception. According to Boone, most marketers believe that this perceived price-quality relationship remains steady over a relatively wide range of prices.
- 5). Implement odd pricing to appeal to consumers cognitive need to save. Advertisements that promote prices featuring $.99 believe that consumers favor uneven amounts or slightly lower prices over any other types.