A Good, Better, Best strategy is one that every company should consider (Mohammed, 2018). This strategy implicates that you can read a wider audience and generate more revenue by embracing a tiered pricing approach. When developing a tiered strategy, a common way to go about this is to develop the base product , then subtract features for the “good” tier/price and add features for the “best” tier/price. According to Mohammed (2018), we often underestimate how much the customer is willing to spend. When given the option to decide from several options, the customer will often choose the option they feel they are getting the most value for the price they’re paying (Smith, 2011). If a customer purchasing internet looks at the three levels of speed available. For example: the good version 100 mbps for $10, the better version is 200mbps for $20, and the best version is 300 mbps is $25. The consumer may usually go with the better versions at $20, but decide they get more value for the $25 speed. The implication of this strategy is that the customer will more often than not, trade up.
Price Discrimination
Indirect price discrimination fits into the implementation of this strategy. According to Froeb at al. (2018), “When a seller cannot directly identify who has a low or high value, the seller can still discriminate by designing products or services that appeal to different consumer groups.” By offering a tiered pricing strategy of a similar product, you are indirectly guiding them to one of the product offerings. Instead of offering only one product/pricing structure to a specific group, you are offering them all available options.
Challenges
Companies may face challenges developing tiered products that have enough differentiation or features that can be adjusted. Some businesses may also be fearful of cannibalization to their current business with a lower tier product (Mohammad, 2018). In my retail career, we’ve played heavily into the tiered approach of product offering. We often times tried to create tier pricing with very similar products, where the differences in value (referred to as “fences” by Mohammad) were not strong enough for the customer to trade up to the expensive product. So we found ourselves with a lot of overpriced, low margin, product that we needed to markdown aggressively to sell. There is also a danger of coming up with too many options and confusing the consumer. Mohammad also found that when a customer is presented with too many options, they forego a purchase all together.
Indirect or Direct Price Discrimination?
- Higher interest rates on car loans for borrowers with lower credit scores – Direct. You are able to identify the members of a group who have lower credit scores and charge them higher interest rates.
- Charging ethnic minorities (or red lining) higher rates on mortgages and mortgage refinance – Direct. You’re identifying a specific group of people and offering them higher rates
- Kohl’s retailer offering discounts for early morning shoppers – Direct. You are able to identify a specific group and offer them a discount. They will not be able to pass that discount on to afternoon shoppers.
- Charging higher rates on business loans – Direct. You are looking at a specific group (businesses) and charging them higher interest rates. A busines
- Volume discounts and/or benefits (example free shipping) – Indirect. You won’t be able to identify the groups of people directly who will be purchasing more. You also can’t prevent people from combining orders to hit a volume number for the free shipping.
- Charging higher rates on mortgage related financing for borrowers in a certain zip code. – Direct. They are directly identifying a group of people.
Legality
Price discrimination is generally not illegal, but it is governed by antitrust laws. The Robinson-Patman Act governs these laws. According to the FTC.gov, “Price discriminations are generally lawful, particularly if they reflect the different costs of dealing with different buyers or are the result of a seller’s attempts to meet a competitor’s offering.” However, from the examples above #2 is an illegal form of prime discriminating. Race, gender, age, ethnicity & sexual orientation are grounds for illegal price discrimination. Price discrimination can be justified if the cost of serving the different groups are different of if they are trying to be competitive with competition.
Ethical?
Price discrimination is not the most ethical practice. Mohammad (2018), describes finding features and benefits that a customer will trade up for (or not buy at all), he refers to these as fences. For example, paying for a cheaper concert ticket, but not having an assigned seat could be a fence for someone. If there are legit active differences due to costs of providing a product or service, then yes, price discrimination can be ethical.
References
Price discrimination: Robinson-Patman violations. Federal Trade Commission. https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/price-discrimination-robinson-patmanLinks to an external site.
Froeb, L. M., McCann, B.T., Ward, M. R. (2018). Managerial economics, 5th edition. https://bookshelf.vitalsource.com/books/9781337468015Links to an external site.
Mohammed, R. (2018). The Good-Better-Best Approach to Pricing. Harvard Business Review, 96(5), 106–115. http://search.ebscohost.com.ezproxy.library.berkeley.org/login.aspx?direct=true&db=bsh&AN=131356798&site=ehost-liveLinks to an external site.
Smith, T. J. (2011). Pricing strategy: Piercing the veil of value exchange. Ivey Business Journal (Online). Retrieved from http://ezproxy.library.berkeley.org/login?qurl=https%3A%2F%2Fwww.proquest.com%2Ftrade-journals%2Fpricing-strategy-piercing-veil-value-exchange%2Fdocview%2F912141527%2Fse-2%3Faccountid%3D38129Links to an external site.
Compelling correspondence is essential to the achievement all things considered but since of the changing idea of the present working environments, successful correspondence turns out to be more troublesome, and because of the numerous impediments that will permit beneficiaries to acknowledge the plan of the sender It is restricted. Misguided judgments.In spite of the fact that correspondence inside the association is rarely completely open, numerous straightforward arrangements can be executed to advance the effect of these hindrances.
Concerning specific contextual analysis, two significant correspondence standards, correspondence channel determination and commotion are self-evident. This course presents the standards of correspondence, the act of general correspondence, and different speculations to all the more likely comprehend the correspondence exchanges experienced in regular daily existence. The standards and practices that you learn in this course give the premise to additionally learning and correspondence.
This course starts with an outline of the correspondence cycle, the method of reasoning and hypothesis. In resulting modules of the course, we will look at explicit use of relational connections in close to home and expert life. These incorporate relational correspondence, bunch correspondence and dynamic, authoritative correspondence in the work environment or relational correspondence. Rule of Business Communication In request to make correspondence viable, it is important to follow a few rules and standards. Seven of them are fundamental and applicable, and these are clear, finished, brief, obliging, right, thought to be, concrete. These standards are frequently called 7C for business correspondence. The subtleties of these correspondence standards are examined underneath: Politeness Principle: When conveying, we should build up a cordial relationship with every individual who sends data to us.
To be inviting and polite is indistinguishable, and politeness requires an insightful and amicable activity against others. Axioms are notable that gracious “pay of graciousness is the main thing to win everything”. Correspondence staff ought to consistently remember this. The accompanying standards may assist with improving courtesy:Preliminary considering correspondence with family All glad families have the mystery of progress. This achievement originates from a strong establishment of closeness and closeness. Indeed, through private correspondence these cozy family connections become all the more intently. Correspondence is the foundation of different affiliations, building solid partners of obedient devotion, improving family way of life, and assisting with accomplishing satisfaction (Gosche, p. 1). In any case, so as to keep up an amicable relationship, a few families experienced tumultuous encounters. Correspondence in the family is an intricate and alluring marvel. Correspondence between families isn’t restricted to single messages between families or verbal correspondence.
It is a unique cycle that oversees force, closeness and limits, cohesiveness and flexibility of route frameworks, and makes pictures, topics, stories, ceremonies, rules, jobs, making implications, making a feeling of family life An intelligent cycle that makes a model. This model has passed ages. Notwithstanding the view as a family and family automatic framework, one of the greatest exploration establishments in between family correspondence centers around a family correspondence model. Family correspondence model (FCP) hypothesis clarifies why families impart in their own specific manner dependent on one another ‘s psychological direction. Early FCP research established in media research is keen on how families handle broad communications data. Family correspondence was perceived as an exceptional scholastic exploration field by the National Communications Association in 1989. Family correspondence researchers were at first impacted by family research, social brain science, and relational hypothesis, before long built up the hypothesis and began research in a family framework zeroed in on a significant job. Until 2001, the primary issue of the Family Communication Research Journal, Family Communication Magazine, was given. Family correspondence is more than the field of correspondence analysts in the family. Examination on family correspondence is normally done by individuals in brain science, humanism, and family research, to give some examples models. However, as the popular family correspondence researcher Leslie Baxter stated, it is the focal point of this intelligent semantic creation measure making the grant of family correspondence special. In the field of in-home correspondence, correspondence is normally not founded on autonomous messages from one sender to one beneficiary, yet dependent on the dynamic interdependency of data shared among families It is conceptualized. The focal point of this methodology is on the shared trait of semantic development inside family frameworks. As such, producing doesn’t happen in vacuum, however it happens in a wide scope of ages and social exchange.
Standards are rules end up being followed when performing work to agree to a given objective. Hierarchical achievement relies significantly upon compelling correspondence. So as to successfully impart, it is important to follow a few standards and rules. Coming up next are rules to guarantee powerful correspondence: clearness: lucidity of data is a significant guideline of correspondence. For beneficiaries to know the message plainly, the messages ought to be sorted out in a basic language. To guarantee that beneficiaries can without much of a stretch comprehend the importance of the message, the sender needs to impart unmistakably and unhesitatingly so the beneficiary can plainly and unquestionably comprehend the data.>
