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Smarter Pricing: How to capture more value in your market by Tony Cram

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2. When they say price, they really mean value

Smarter pricing begins by understanding that the customer is trading money for more than simply a product or service. Customers are buying a combination of product (or service) performance, plus an emotional association. For instance, DHL’s express airfreight service competes with low-cost no-name shippers, but combined with the DHL service there is an emotional factor – its reputation for on-time delivery. In the wholesale meat market during the Asian bird flu epidemic in Spring 2004, chicken with a proven European source commanded a price premium based on health security – the product came with an emotional association of reassurance.

Often customers claim that the most important criterion is ...

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