Should Companies Seek Consumer Feedback On How To Price Their Products Or Services?
Companies should invariably seek customer feedback collected through market research to understand how to price based on the value that products and services create for the customer. This technique of pricing is described as value-based pricing strategy in which prices of products and services are arrived at based on the value they create (Pekka et al. 55). Therefore, based on the information collected from market research, a company can set a price that the customer is willing to pay. Ernst et al. acknowledge that the goal of a consumer market research is to understand and learn more about a customer’s attitude, needs, motivation and behavior as they relate to products or services (83). In conducting a consumer market research, a company collects relevant, reliable, valid and up to date information about consumers taste and preferences.
The companies that factor in feedback collected from a consumer when setting prices for different products and services enhance their competitiveness. Pekka et al. aver that one way that a company can enhance its competitiveness is by being more customer-focused with regard to pricing decisions (59). Business entities should offer products at prices that align to a consumer’s ability to buy as well as personal preferences. Therefore, when used accurately, value-based pricing tend to boost a customer’s sentiment and loyalty towards a company. In addition, a company can offer prices that align to a consumer’s budget and taste perspectives thereby enhancing the ability of the company to attract and retain customers. Moreover, a company can easily adapt a product to better suit the market by determining how a particular price matches consumer value in relation to other competitors. However, a company utilizing a value-based pricing strategy should map prices to customer profiles so that the prices can vary according to customer variations in the market.
Ernst, Holger, Hoyer, Wayne, and Rübsaamen, Carsten. “Sales, Marketing, and Research-And-Development Cooperation across New Product Development Stages: Implications for Success”. Journal of Marketing, Vol. 74, No. 5(2010): 80-92.
Pekka, Toytari, Risto, Rajala and Alejandro, Thomas. “Organizational and Institutional Barriers to Value-Based Pricing in Industrial Relationships”. Industrial Marketing Management, Vol. 47(2015): 53-64.