1
www.pricinginnovations.com
VALUE-BASED PRICING
PART 3:
HOW TO PRICE DIFFERENTIATION?
2
www.pricinginnovations.com
PART 3:
HOW TO CREATE
DIFFERENTIATION? Keys to differentiation
Negative differentiation
Posit...
3
www.pricinginnovations.com
THE FEATURES OR
ATTRIBUTES OF A
SOLUTION THAT OFFER
GREATER OR LESSER
VALUE THAN THE NEXT
BES...
4
DIFFERENTIATION COMES IN MANY FORMS
5
TAXI CAB
DIFFERENTIATION COMES IN MANY FORMS
6
TAXI CAB HOURLY CAR
FLAT FEE RIDES
DIFFERENTIATION COMES IN MANY FORMS
7
TAXI CAB HOURlyCAR
FLAT FEE RIDES
RIDE-SHARE
DIFFERENTIATION COMES IN MANY FORMS
8
TAXI CAB HOURlyCAR
FLAT FEE RIDES
RIDE-SHARE UBER/LYFT
DIFFERENTIATION COMES IN MANY FORMS
9
DIFFERENTIATION COMES IN MANY FORMS
TAXI CAB HOURlyCAR
FLAT FEE RIDES
RIDE-SHARE UBER RIDE-AS-A-
SERVICE
UBER WITH
PREDI...
10
www.pricinginnovations.com
Basis of
Competition
REFERENCE VALUE
Positive or
Negative
Differentiation
Total Financial
Be...
11
www.pricinginnovations.com
N B C A
THE ONLY KIND OF
DIFFERENTIATION THAT
COUNTS IS THE ONE OVER
THE NEXT BEST
COMPETITI...
12
www.pricinginnovations.com
IF A SOLUTION IS SUFFICIENTLY
DIFFERENTIATED, IT WILL HAVE
CHANGED THE “SIZE” AND/OR THE
“SH...
13
A DIFFERENTIATED SOLUTION
CAN BE PRICED ACCORDINGLY,
IF THE VALUE OF ITS BENEFITS
CAN BE QUANTIFIED AND
JUSTIFIED RIGHT.
www.pricinginnovations.com
POSITIVE DIFFERENTIATION
14
The value delivered by the features and functionality that make up ...
www.pricinginnovations.com
POSITIVE DIFFERENTIATION
15
The value delivered by the features and functionality that make up ...
16
www.pricinginnovations.com
GOAL OF PRODUCT
MARKETING:
RAISE THE PERCEIVED VALUE OF
A SOLUTION TO ABOVE THE
PRICE POINT ...
www.pricinginnovations.com
THE GOAL OF PRODUCT MARKETING
17
The value delivered by the features and functionality that mak...
18
www.pricinginnovations.com
NEGATIVELY DIFFERENTIATED
SOLUTIONS PROVIDE GREAT
OPPORTUNITIES FOR FIRST-TIME
BUYERS, PRICE...
www.pricinginnovations.com
The value delivered by a competitive or alternative solutionReference Value
Leaner solutions pr...
www.pricinginnovations.com
The value delivered by a competitive or alternative solutionReference Value
Leaner solutions pr...
21
www.pricinginnovations.com
BUILDING NEGATIVE
DIFFERENTIATION?
DO NOT OVER-ENGINEER!
MAKE SURE THE TOTAL ECONOMIC
VALUE ...
22
www.pricinginnovations.com
4 KEYS TO SUCCESSFUL
DIFFERENTIATION
1. SEGMENT
2. QUANTIFY
3. MAKE IT RELATIVE
4. MAKE IT K...
23
www.pricinginnovations.com
KEY TAKEAWAYS
DIFFERENTIATION
Keys to differentiation: segment,
quantify, make it relative &...
24
www.pricinginnovations.com
SEE ALSO PART 4:
HOW TO CALCULATE A
PRICING WINDOW?
PRICING INNOVATIONS
of 24

Pricing Innovations: How to Create Differentiation?

Part 3 of our pricing series aims to dive deeper into the concept of differentiation. We aim to different types of differentiation and begin getting into how to create differentiated offers. Finally, we discuss the 4 keys to successful differentiation.
Published on: Mar 4, 2016
Published in: Business      
Source: www.slideshare.net


Transcripts - Pricing Innovations: How to Create Differentiation?

  • 1. 1 www.pricinginnovations.com VALUE-BASED PRICING PART 3: HOW TO PRICE DIFFERENTIATION?
  • 2. 2 www.pricinginnovations.com PART 3: HOW TO CREATE DIFFERENTIATION? Keys to differentiation Negative differentiation Positive differentiation Definition of Differentiation
  • 3. 3 www.pricinginnovations.com THE FEATURES OR ATTRIBUTES OF A SOLUTION THAT OFFER GREATER OR LESSER VALUE THAN THE NEXT BEST COMPETITIVE ALTERNATIVE
  • 4. 4 DIFFERENTIATION COMES IN MANY FORMS
  • 5. 5 TAXI CAB DIFFERENTIATION COMES IN MANY FORMS
  • 6. 6 TAXI CAB HOURLY CAR FLAT FEE RIDES DIFFERENTIATION COMES IN MANY FORMS
  • 7. 7 TAXI CAB HOURlyCAR FLAT FEE RIDES RIDE-SHARE DIFFERENTIATION COMES IN MANY FORMS
  • 8. 8 TAXI CAB HOURlyCAR FLAT FEE RIDES RIDE-SHARE UBER/LYFT DIFFERENTIATION COMES IN MANY FORMS
  • 9. 9 DIFFERENTIATION COMES IN MANY FORMS TAXI CAB HOURlyCAR FLAT FEE RIDES RIDE-SHARE UBER RIDE-AS-A- SERVICE UBER WITH PREDICTIVE PICK-UPS
  • 10. 10 www.pricinginnovations.com Basis of Competition REFERENCE VALUE Positive or Negative Differentiation Total Financial Benefits of a Solution DIFFERENTIATION VALUE ECONOMIC VALUE + = VALUE IS RELATIVE
  • 11. 11 www.pricinginnovations.com N B C A THE ONLY KIND OF DIFFERENTIATION THAT COUNTS IS THE ONE OVER THE NEXT BEST COMPETITIVE ALTERNATIVE
  • 12. 12 www.pricinginnovations.com IF A SOLUTION IS SUFFICIENTLY DIFFERENTIATED, IT WILL HAVE CHANGED THE “SIZE” AND/OR THE “SHAPE” OF THE “LIGHTBULB.”
  • 13. 13 A DIFFERENTIATED SOLUTION CAN BE PRICED ACCORDINGLY, IF THE VALUE OF ITS BENEFITS CAN BE QUANTIFIED AND JUSTIFIED RIGHT.
  • 14. www.pricinginnovations.com POSITIVE DIFFERENTIATION 14 The value delivered by the features and functionality that make up the “basis of competition” or by a substitute solutionReference Value The value of the differentiated features or attributes of a solution stack that surpasses the reference valueDifferentiation Value The total financial value of the benefits provided by an individual feature or combinations of features of a solutionEconomic Value
  • 15. www.pricinginnovations.com POSITIVE DIFFERENTIATION 15 The value delivered by the features and functionality that make up the “basis of competition” or by a substitute solutionReference Value The value of the differentiated features or attributes of a solution stack that surpasses the reference valueDifferentiation Value The total financial value of the benefits provided by an individual feature or combinations of features of a solutionEconomic Value A buyer’s opinion of a product's value to him or her. It could be highly contextual and it influences his/her willingness to payPerceived Value Buyers acquire solutions when their perceived value of the benefit is greater than its pricePrice Point
  • 16. 16 www.pricinginnovations.com GOAL OF PRODUCT MARKETING: RAISE THE PERCEIVED VALUE OF A SOLUTION TO ABOVE THE PRICE POINT AND AS CLOSE TO THE ECONOMIC VALUE AS POSSIBLE
  • 17. www.pricinginnovations.com THE GOAL OF PRODUCT MARKETING 17 The value delivered by the features and functionality that make up the “basis of competition” or by a substitute solution Reference Value The value of the differentiated features or attributes of a solution stack that surpasses the reference value Differentiation Value The total financial value of the benefits provided by an individual feature or combinations of features of a solution Economic Value Buyers acquire solutions when their perceived value of the benefit is greater than its price Price Point A buyer’s opinion of a product's value to him or her. It could be highly contextual and it influences his/her willingness to pay Perceived Value
  • 18. 18 www.pricinginnovations.com NEGATIVELY DIFFERENTIATED SOLUTIONS PROVIDE GREAT OPPORTUNITIES FOR FIRST-TIME BUYERS, PRICE-SENSITIVE SEGMENTS AND NICHE TARGETS.
  • 19. www.pricinginnovations.com The value delivered by a competitive or alternative solutionReference Value Leaner solutions provide great opportunities for first-time buyers, price- sensitive segments and niche targets Perceived Value Value communications must be formulated carefully to position the value of the leaner offering Price Point Negatively differentiated solutions are great for providing simplified or “good enough” solutions Differentiation Value Negatively differentiated solutions deliver less economic value than the reference solutions Economical Value NEGATIVE DIFFERENTIATION
  • 20. www.pricinginnovations.com The value delivered by a competitive or alternative solutionReference Value Leaner solutions provide great opportunities for first-time buyers, price- sensitive segments and niche targets Perceived Value Value communications must be formulated carefully to position the value of the leaner offering Price Point Negatively differentiated solutions are great for providing simplified or “good enough” solutions Differentiation Value Negatively differentiated solutions deliver less economic value than the reference solutions Economical Value NEGATIVE DIFFERENTIATION
  • 21. 21 www.pricinginnovations.com BUILDING NEGATIVE DIFFERENTIATION? DO NOT OVER-ENGINEER! MAKE SURE THE TOTAL ECONOMIC VALUE DOESN’T EXCEED THE REFERENCE VALUE.
  • 22. 22 www.pricinginnovations.com 4 KEYS TO SUCCESSFUL DIFFERENTIATION 1. SEGMENT 2. QUANTIFY 3. MAKE IT RELATIVE 4. MAKE IT KNOWN
  • 23. 23 www.pricinginnovations.com KEY TAKEAWAYS DIFFERENTIATION Keys to differentiation: segment, quantify, make it relative & make it known Negative differentiation: must be segmented & relatively-positioned Positive differentiation: you can price for it if you can elevate the perceived value Definition: the only kind matters is the one over the NBCA
  • 24. 24 www.pricinginnovations.com SEE ALSO PART 4: HOW TO CALCULATE A PRICING WINDOW? PRICING INNOVATIONS

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