Capturing Customer Value: Pricing and Selling
This chapter examines the task of assessing the value of the offer and looks at how to capture this value. Price setting is one of the most complicated of all the marketing activities. In practice, it is best described as art based on science. The science of pricing focuses on using research to understand the price sensitivity of individuals and the price elasticity of markets. The art of pricing focuses on setting sensible pricing objectives, understanding the interactions of price with other elements of the marketing mix, and predicting competitor reactions to price changes. Linking both art and science is the management of pricing, the management of pricing involves working with the organization's accountants to understand costs and contribution margins, developing a pricing policy, and making sure that the key performance indicators (KPIs) of people who have authority for the organization's prices are aligned with the organization's pricing objectives.
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