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Name of author Rick Baker, P.Eng.

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Thought Tweet #468

by Rick Baker
On May 2, 2012

Thought Tweet #468 There's no question: unfinished business gnaws away at brain-energy.

 

The Thinking Behind The Tweet

There's only so much energy in your brain. If you leave unfinished business - paper clutter - around your office then it serves as an ongoing reminder of your...unfinished business. Even if that unfinished business does not register consciously in your thoughts it does gnaw at your subconscious. And that gnawing consumes energy...energy your brain can put to far better use.

As the saying goes, "Out of sight, out of mind".

Tags:

Brain: about the Human Brain | Thought Tweets

Competing - using a Value-Based Price strategy

by Rick Baker
On May 2, 2012

A year ago, I wrote about Competing - Using a Low-Price strategy….the introduction was: 

At our Leaders’ workshops we tie two marketing concepts together. The two marketing concepts are ‘the PQS Triangle’ and ‘Differential Advantage’. Both of these concepts are ‘vintage’ marketing thoughts…..things we learned a few decades ago. 

PQS Triangle is a picture, designed to make it clear businesses can set its marketing strategy based on a combination of Price, Quality, and Service. Rarely, if ever, can a business succeed if its marketing strategy is designed to win at all of P, Q, & S. Put another way – it is virtually impossible to deliver the lowest Price, the highest Quality, and the best Service all at once. Something has to give. For most of our Clients the thing that has to give is Price: most of our Clients are not in a position to offer the lowest Price. 

Differential Advantage answers the question: Why do our Clients buy from us rather than do nothing or buy from one of our competitors? 

When the PQS Triangle and Differential Advantage are combined we have the essence of the marketing strategy. 

For certain businesses the marketing strategy does contain Price – i.e., the business can compete by offering better prices than their competition. 

Now, about Competing – using a Value-based Price strategy: 

Hanan & Karp expressed the concept concisely in ‘Competing on Value’.

"A value-based price has five characteristics:      

  1. Price is premium price.
  2. Price is compared with the improved profits it contributes to a customer’s business, not to competitive prices.
  3. Price is recoverable by the customer’s improved profits and is therefore an investment rather than a cost.
  4. Price is not discountable.
  5. Price is applications-specific. It varies in direct proportion to each customer’s improved profits."

This, of course, is the exact opposite to competing – using a low-price strategy.

So, the spectrum of pricing strategies goes from low-price at one end to value-based on the other end. 

Where do you position your pricing in that Price-Strategy Spectrum?

Tags:

Leaders' Thoughts | Marketing | Sales

Copyright © 2012. W.F.C (Rick) Baker. All Rights Reserved.