PPM Presentation Group members Heikeh Courtney Chasley Josephina Gabriel Emiliana

Price Value Communication Definition: Value communication involves communicating credibly, in monetary terms, the differentiating benefits of your product. The goal, particularly for a higher-priced product, is to establish for the customer the “value” identified during the value creation stage.

How to communicate Value Value is not just a single element (price); it encompasses a range of attributes of your goods and services for which customers are willing to pay. Compile information from the self analysis and external feedback and look for a theme. The result will be the basis for your value proposition. Put it all together by identifying the following: Target market Key skills and traits Key services you provide Business benefit (not legal) you provide

REFERENCE PRICING Reference pricing-refers to how much consumers expect to pay for a good in relation to other competitors and the previously advertised price( shelp.org).

TWO TYPES OF REFERNCE PRICING INTERNAL PRICING List prices/sale prices –Other products on the shelf or convenient for comparison

EXTERNAL PRICING One that is recorded in consumer’s memory Memory of price may not be accurate If brand is frequently promoted, consumers tend to lower their internal reference point

REFERENCE PRICE EFFECT Definition of reference pricing: Reference price effect means that buyer will be more price sensitive the higher the product's price relative the to the prices of the buyers' perceived alternatives

If it is a strategic purchase there will be a fairly complex method of comparing alternatives and choosing the right solution. If it is a commodity purchase the buyer looks at two things: price and convenient.

A buyer of a commodity usually uses price to compare alternatives The buyer is not always taking into consideration the total cost of his purchase. In other words, if the buyer believes that there are many others who can deliver the same service he will focus much more on price.

Proportional price evaluation Evaluating price difference proportionally rather than in absolute terms Judgments are made based on percentage Known as the “Weber Fechner effect” Customers react to large price cuts compared to low price cuts

Perceived Value Perceived fairness is the what the people perceive fair in their minds factors driving employees’ perceived fairness of performance appraisal is psychological contract fulfillment, which describes the expectations between an employee and the employer and what each gives and expects in return from the other.

Gain-loss Framing Definition: -The framing effect is an example of cognitive bias, in which people react to a particular choice in different ways depending on how it is presented.

It is important to frame prices as opportunity costs (gains forgone) rather than out-of-pocket costs. One should unbundle gains and bundle losses. The framing effect is an example of cognitive bias, in which people react to a particular choice in different ways depending on how it is presented; e.g. as a loss or as a gain.cognitive bias

Buying Process (4 Steps) The buying involves steps that customers go through before making a purchase decision. These process involve four steps discussed below:

Need recognition in this step the customer realizes that they have a specific need for a product or service Information search in this step the customer start looking for information about the needed product or service. More complex and expensive products or services require more information search compared to less complex products. Information search can be either internal (coming from the mindset of the customer) or external (coming from other sources for example advertisements.)

SELECTION is when customers gather more detailed information to make choice based on price and value FULFILLMENT customer selects distribution channel from which to make purchase and conducts transaction