Part 1 (this page): [Value Judgements] [Belief and Attitude] [Behaviour]
Part 2 (next page): [CRM] [Value Led Dynamic Pricing]
Case Studies: [Educational Retailer] [Direct Line]
In the section on Established Supplier Led Pricing we reviewed the many ways in which suppliers became more flexible in their product and pricing in response to competition. Then in section Modern Consumer Led Pricing we reviewed new business models and methods that put buyers in the driving seat, allowing them to negotiate, even dictate, their own personal terms. In this section we identify how suppliers are now seeking to better understand and then respond to individual needs and motivations. The goal is to maximise profits by identifying where suppliers can promote and deliver value added for individual customers based on what each one values. This approach recognises that whilst some values are based on deeply held beliefs that shape people's attitudes, other values are more self-satisfying and may be quite transitory.
|When we make decisions we make value judgements that are influenced by our underlying beliefs and attitudes as well as the immediate situation we are in. In many instances, especially within an organisation, the decision will be a collective one in which the varying values of the individual decision makers will come into play. A single decision will often have a different valuation according to the inputs of the different stakeholders, for example the company as a whole, management, employees, shareholders, local community, and society at large. For an identical situation, a valuation today may well be different to one a year ago or one taken in a year's time. Similarly for the same situation, the valuation will be different if we consider future generations of stakeholders (e.g. nuclear power and the decommissioning and storage costs for later generations).||
Many decisions require value
Suppliers will be in a far stronger position if they can take cognisance
of the beliefs and attitudes that underpin any decision and also the factors
that will influence actual behaviour when the decision is made. In a business
to business tender situation with a substantial order value, much time and
effort will be extended to understanding these factors. For smaller ticket
items considered individually, then such effort has historically not been
justified, and sellers have sought to sale on price or generic valuations
targeted at specific market segments.
Example: airliners like British Airways, will promote their business service in business newspapers and up-market magazines, and will promote almost identical seats in economy class in student magazines and tabloid newspapers. Time and flexibility restrictions will seek to avoid travellers switching market segments.
Our attitude to things, and thus what we value, will be formulated over time. During our childhood from our parents, our schools, our church and the general environment in which we are brought up will significantly shape our beliefs and attitudes. At work our attitude will be influenced by the organisation, professional bodies and networks, social groups, and partners. Increasingly the media is exerting considerable influence throughout our lives. Of course, in many situations we tend to self select these according to our established values. For example, our daily newspaper will often be one that re-enforces our existing values. Organisations also create their own beliefs, attitudes and values. Depending on the life-stage of the organisation, these will to a greater or less extent be influenced by the beliefs, attitudes and values of the founder(s).
Click for more information on organisational culture in the authors dissertation.
Our behaviour is the outcome of our value judgement. Behavioural Norms (or
Intents) are the way we think we ought to behave, sometimes referred to espoused
behaviour. Patterns of Behaviour are the visible actions we make and Artefacts
are the visible symbols of our action.
Example: we may highly value a green environment based on some underlying New Age belief system. We tell people that we only buy organic food but it is our actions in the supermarket that are the visible manifestations of these beliefs and values.
Our beliefs and attitudes will have a significant influence but our own
particular situation in absolute time will also influence our values and
thus how we behave (act). Urgency and stress are two powerful drivers. Marketers
have long realised that pressing needs can cloud more rational judgements.
They have named these situations as Distressed Purchases.
Example: on a very hot day we may disregard the value we put on natural food without artificial colours or flavourings, for a fizzy drink that has all these because we value being cool. If the boiler breaks down and the house is cold and likely to freeze up, we may feel obliged to pay cash in hand for a repair man because we value being warm and not having to cope with a flooded house. Organisations will too make similar valuations and in times of financial crisis have often been known to break the rules.
Maslow would say that under stress we revert to the lower levels of the hierarchy
of needs (see
Actual case study: a UK educational retailer gradually increased the price of a specialist in demand item costing £47.50 whilst monitoring how buyers reacted. There was no impact on sales until the price was £55.00 (16% higher). The company then reduced the price to 12% higher at which point sales remained constant. This initiative grossed £27,500 in additional profit over the life of the product.
Read more about the Educational Retailer
Increasingly, marketers are using values and behaviours as a way of segmenting the market place. We describe various behaviour models, including a Ethical Behaviour Segmentation, within our Strategic Interactive Marketing section, particularly with regard to interactive-TV audiences. The market may well be splitting into discrete behavioural segments, for example:
Whilst the first category above will be very price conscious those in the other groups may well expect to pay a premium to maintain their values. In some cases, charges will be directly related to behaviour (see box).
Using satellite technology they can track where and when drivers travel and set the premiums accordingly. Eventually, perhaps using and on-board sensors, the company could also monitor driver behaviour.
Read more about the Direct Line
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