Tag Archives: pricing

How Much is it Worth? $1.9 million!

Determining the right price for a product or service is complicated. Marketers need to first determine the strategy that is best for meeting the objectives. Does the organization want to establish a beach-head and gain market share (at a low price), or does it want to reach the elite purchasers (at a higher price)?

Pricing strategies include demand-oriented, cost-oriented, profit-oriented, and competition-oriented approaches. Within these various approaches are price models that include skimming, penetration, luxury, bundling, price-lining, return-on-investment, and more. But finally, and perhaps most importantly, do not discount the strong appeal used with psychological pricing.

All these strategies are interesting, but how does one apply them to a unique product such as a champion racing pigeon? In many instances, the correct price is the price that someone will pay for the item. This is different than what the item might be worth in general – it is what the item is worth to that one particular buyer.

Take pets as an example. How much are people willing to pay for a pet? Or consider an animal that brings prestige, and perhaps even monetary gains, to a buyer – animals such as thoroughbred horses, or racing pigeons – that bring prestige and monetary gains to owners. What are they worth?

Recently, ‘New Kim’, a champion racing pigeon, recently fetched the amount of $1.9 million, breaking sales records for such a bird! Two bidders (operating under the names of ‘Super Duper’ and ‘Hitman’) drove up the purchase price to the record amount, surpassing the $1.6 million spent last year on another champion racing pigeon named ‘Armando’. The same Chinese owner is thought to have bought both pigeons.

How much are you willing to pay?

Group Activities and Discussion Questions:

  1. As class begins, poll students about pets and pricing. Ask who has a pet and how much they paid. Ask other students if they were going to buy an animal, how much would they consider spending?
  2. Show a video about the Belgian pigeon: https://youtu.be/kNmk5Jw5rbY
  3. Discuss pricing strategies (e.g., demand-oriented, cost-oriented, profit-oriented, competition-oriented, etc.).
  4. Divide students into teams. Have each team select a different price approach and determine a SMART objective for the approach.
  5. Next, have students use their selected price model to determine prices for the ordinary products (e.g., milk, gas, eggs, etc.), shopping products (such as clothing.), and luxury items (such as Louis Vuitton handbags), and rare (such as racing pigeons).

Source:  Associated Press; other news sources

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LG’s New Rollable TV costs $87,000

It’s finally here and it is incredible! Last year at the Consumer Electronics Show in Las Vegas, LG Electronics showcased an innovative, rollable screen TV. Now, the TV is in production and will be available next year in South Korea for the price of…. (Insert drum roll)… $87,000!

Did that price surprise you? Yeah, we thought so.

The screen is 65-inches and is built around a flexible OLED panel that uses self-lighting pixel technology and dimming control to delivery an amazing picture. Since the screen is flexible, it can retract partially or fully into its base, adapting to different aspect ratios. When fully retracted, no screen shows.

The base does come in four different colors, plus the aluminum base can be inscribed with words of wisdom (such as “you paid what for this?!”). The base also includes a sound bar for premium listening.

Regardless of price, the rollable TV is truly revolutionary. Instead of owners setting up a large black screen that always is in place, even when off, LG’s unit liberates the TV from the wall.

Ready for a new TV?

Group Activities and Discussion Questions:

  1. Pricing is a complex topic. Discuss the six steps for pricing (determining objectives, estimating demand, determining cost/profit relationships, select price level, set list price, and make adjustments).
  2. Discuss the various pricing models in class: demand-oriented, cost-oriented, profit-oriented, and competition-oriented.
  3. Show a video of LG’s rollable $87,000 TV: https://www.impomag.com/home/video/21199409/lg-reveals-jawdropping-price-on-rollable-tv?lt.lid=5f90574cfed1277042925d3d&lt.ack=ryRUDA6PD&lt.usr=71617211&utm_source=IMPO_10212020&utm_medium=email&utm_campaign=124311&utm_term=643230
  4. For specifications, view the news release from LG: http://www.lgnewsroom.com/2020/10/commercial-launch-of-lgs-long-awaited-rollable-oled-tv-marks-turning-point-in-tv-history/
  5. For LG’s rollable TV, divide students into groups and have each group work on any/all of the six steps.
  6. When setting the price level, assign each team a different model to use (demand-oriented, cost- oriented, etc.).
  7. Debrief the exercise. Compare the various pricing models and discuss advantages/disadvantages of each.

Source: CNET, Engadget, IMPO Insider, The Verge, other news sources

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Google’s new Pixel 5

Ready for a new phone? Just the thought of researching new phones and then paying hundreds of dollars more can give consumers a headache. Google seems to be paying attention this fatigue and is making its phones a little simpler and a little less expensive.

It seems like Google is responding to pandemic economic concerns and is pricing its phones in a comfortable middle ground. These products seem made for watching TV or listening to music at home, all without needing to shell out a thousand dollars for a new device. [A Google executive stated that “The world doesn’t need another $1,000 phone right now.”]

The new Pixel phones are priced a bit differently than the past. For example, last year’s Pixel 4 pricing started at $800, but the new Pixel 5 starts at $700. There is even a lower-priced model called the Pixel 4a5G that is priced from $500 – $600.

The Pixel 5 eliminated facial recognition to unlock the phone (good for mask-wearing users!), as well as radar technology that recognized a user waving a hand over the phone, and telephoto and zoom lenses. But on the other hand, it added a larger battery and ultralow-power mode that lets the phone run 48 hour on a charge. The screen is larger and users can wirelessly charge other devices by laying them on the back of the phone.

Group Activities and Discussion Questions:

  1. Poll students: What phone do they have? How long have they had it? Are they going to buy a new phone in the next few months? Why or why not?
  2. Video of Pixel 5 phone: https://youtu.be/twNDke-cfv4
  3. Show Google’s new phones: https://store.google.com/product/pixel_5
  4. Discuss competition: Who are the direct competitors for this product?
  5. Divide students into teams. Have each team do a chart of a different brand of phone, including features and pricing.
  6. What are the points of difference between the various phones?
  7. How much does pricing matter?
  8. How much do features matter?

Sources: Associated Press; New York Times; Washington Post; The Verge; other news sources

 

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