Behavioral Pricing
Posted by Joseph Mignano on Monday, February 20, 2012
Under: Marketing Strategy
Behavioral pricing is the idea of charging different customers different prices for the same product based on certain behavior. I've read many articles predicting that 2012 will be the year of behavioral pricing. Shockingly, much of the talk is on the opportunity to charge more for products or services based on certain behaviors (for example, if a person "likes" a particular brand on Facebook or follows that brand on Twitter, there is a reasonable expectation that person would be willing to pay more for that brand's product than someone who doesn't do either of those things).
The average consumer understands that different people pay different amounts for the same product, whether it is a $2 item at the grocery store or a $20,000 car. Have you ever heard of a coupon? Customers standing in the check-out line at the grocery store understand that a customer with a coupon will get to pay less for a product than they will if they don't have that coupon. Consumers generally only get upset at different price points for the same product if they feel they weren't given the same opportunity for purchasing the product at the lowest price point.
Businesses who use behavioral pricing as a way to reward customers for purchasing their products and services will not only earn repeat business from existing customers, but earn the business of additional customers. Instead of using social media to identify customers to punish, social media should be used to provide incentives (either lower prices or value add to products and services). These incentives can be exclusive discounts, tips for using products, help with technical issues, or even some casual conversation. Businesses who understand the opportunity social media presents in terms of behavioral pricing (and really relationship building) also will likely benefit from word-of-mouth marketing.
Charging consumers more for showing brand loyalty would be the same as printing a coupon advertising a higher price for a product; it may be a good short term strategy, but once consumers figure out what is going on, it will be impossible for them to trust that brand again.
Do you know of any companies that charge more than the standard price for a product based on certain behavior?
The average consumer understands that different people pay different amounts for the same product, whether it is a $2 item at the grocery store or a $20,000 car. Have you ever heard of a coupon? Customers standing in the check-out line at the grocery store understand that a customer with a coupon will get to pay less for a product than they will if they don't have that coupon. Consumers generally only get upset at different price points for the same product if they feel they weren't given the same opportunity for purchasing the product at the lowest price point.
Businesses who use behavioral pricing as a way to reward customers for purchasing their products and services will not only earn repeat business from existing customers, but earn the business of additional customers. Instead of using social media to identify customers to punish, social media should be used to provide incentives (either lower prices or value add to products and services). These incentives can be exclusive discounts, tips for using products, help with technical issues, or even some casual conversation. Businesses who understand the opportunity social media presents in terms of behavioral pricing (and really relationship building) also will likely benefit from word-of-mouth marketing.
Charging consumers more for showing brand loyalty would be the same as printing a coupon advertising a higher price for a product; it may be a good short term strategy, but once consumers figure out what is going on, it will be impossible for them to trust that brand again.
Do you know of any companies that charge more than the standard price for a product based on certain behavior?
In : Marketing Strategy