Conversation Agent - Valeria Maltoni - Pricing Strategy

« My Take on "Join The Conversation" | Main | Marketing's Killer App: Active Participation »


Some really interesting points here. The research seems to validate something that is called the "price-quality" effect. As its name implies, it says that in the absence of any other information, consumers will use price as a gauge of the quality of a product or service.

Much of my work is in the b2b space. When formulating a pricing strategy there, it is important to look at a few key elements. The first is the value of the offering (in hard dollars) relative to competitive alternatives. If you have superior value you can choose any one of the three basic pricing strategies - skim, penetration, or neutral. You should also look at the stage of the product category lifecycle. Godin's observations are very effective for markets in the high-growth stage where low prices encourage trial and adoption. But a low-price strategy is destructive when markets mature and demand growth slows. When considering a low-price strategy, you also should consider your cost position (can you sustain the strategy?) and the likely response of competitors (will you start a destructive price war?)

The perceived value as in expressing one's personality is probably the easiest to wrap our arms around.

I'm with you on design -- aesthetics has its place. this reminds me of Virgina Postrel's book "The Substance of Style".

Valeria, you know my point about luxury market and the capabilities of its players to retain high image and high margin even on the smallest stuff.
Perception of quality, added value, design these are all components to make "the" price.
Perception: wine is the easier example and you and other commenters have already exploited perfectly.
Added value: if you wear a IWC watch or a Dior bag, etc., you get the image of the product. Is it bad? Yes and no. Yes because you should not be judged by what you wear, no because it is a sign of taste and what you wear is undeniably part of your personality.
Design: this is the only one not always directly linked to price and the 2CV is the example. A cool car no matter the speed and the gadget (nothing, in fact) at a low cost. Ikea is another example.
But as a matter of fact a piece of design is
always perceived as costly.

The comments to this entry are closed.

Conversation Agent

  • Since 2006, Conversation Agent focuses on the impact of technology on business, culture, and human behavior.


As seen on

Advisory Boards

Marketing that makes business sense


Book Reviews

  • Conversation Agent participates in the Amazon Services LLC Associates Program. It provides a means for Conversation Agent to earn commissions by linking to Amazon.

Comment Policy and Social Guidelines

  • This is my blog and not a public space. Critical discourse is welcomed. However, inappropriate comments will be deleted. See my social guidelines for reference.


  • The opinions blogged herein represent only those of Valeria Maltoni and do not reflect those of her employer, persons or companies mentioned herein, or anyone else.