Value-based Intelligent Pricing: Marketing and Business, #1

By Miguel Santiago Lopez Arrazola

In today's constantly evolving marketplaces, how can you ensure that your pricing and marketing strategy will not only compete but also succeed? In a world with saturated markets, intelligent pricing is not a choice; it's a necessity. "Value-based Intelligent Pricing" serves as your guide to mastering the intricate art and science of pricing amid intense competition.

This innovative book presents practical methods for establishing optimal prices and increasing profits through effective marketing techniques, enabling you to succeed and fulfill your financial goals. It also addresses key economic, financial, cost, and marketing concepts in a clear and straightforward manner, providing readers with a solid foundation for developing marketing and pricing strategies.

The Value Matrix is presented as a practical and straightforward approach for establishing prices and formulating marketing strategies.

In essence, it provides a valuable tool for:
• Assessing the current competitive landscape of a business or product.
• Benchmarking against competitors and potential substitutes.
• Planning robust marketing strategies with optimal pricing.
• Elevating customer value to increase sales, profits, and market share.
• Developing highly competitive bids.
• Comparing and ranking alternative marketing strategies.
• Period-to-period marketing benefit/cost analysis.

Overall, this method offers a quick, clear, and systematic way to set prices and guide strategic marketing decisions.

It caters to a diverse audience, including management executives, entrepreneurs, consultants, and educators, as well as students pursuing disciplines such as marketing, MBA, business, economics, finance, accounting, engineering, and law.

The author is a business consultant and marketing professor with extensive top management experience in multinational corporations. Additionally, he has a solid academic background, having obtained his degree in Economics from Dartmouth College, USA, and an MBA from the University of Los Andes, Colombia.

• Language: English
• Publisher: Miguel Santiago Lopez Arrazola
• Release date: Feb 6, 2024
• ISBN: 9798224358922

Miguel Santiago Lopez Arrazola

The author is a business consultant and marketing professor with extensive top management experience in multinational corporations. Additionally, he has a solid academic background, having obtained his degree in Economics from Dartmouth College, USA, and an MBA from the University of Los Andes, Colombia.

Book preview

1- Introduction

It is a common understanding that every marketing decision influences both price and quantity. Therefore, crafting a successful marketing strategy necessitates intelligent pricing. This involves the artful integration of essential marketing variables—namely, segmentation[1], positioning[2], price, costs, volume, and benefits—into in a quantifiable and genuinely competitive approach.  

The repercussions of pricing blunders are far-reaching, encompassing reduced sales, diminished profits[3], loss of market share[4], and even a tarnished brand reputation. In highly competitive markets, pricing emerges as a paramount marketing concern that goes beyond mere financial considerations.

This book presents the concept of the Value Matrix, which is a carefully structured approach for setting prices and developing effective marketing strategies. It expands upon the idea of Value, whereby customers make buying decisions by evaluating the benefits a product offers in relation to its price and comparing it to one or more available competing options. The Value Matrix offers a systematic and step-by-step method for quantifying Value, empowering businesses to formulate effective marketing strategies for price setting.

It is essential to highlight that a product's price is a marketing target, aimed at attaining customer loyalty while achieving sales volume and profits aligned with a company's financial goals, including metrics like Return on Investment (ROI[5]), Return on Equity (ROE[6]) and Return on Assets (ROA[7]).

Once a specific competitive price is determined, it needs to be integrated into a financial planning model to ensure the achievement of the intended financial objectives. If the proposed price does not lead to the set financial metrics, then the product needs to be redesigned, or its benefits, price, and cost relationship adjusted, and, very likely, a different marketing approach may be required.

The word Value is capitalized throughout the book as it refers to value for the customer, to distinguish it from value, which is usually referred to as quantity.

The use of the proposed pricing method will require an understanding of certain key marketing concepts, which are explained in the following sections.

2- Customers & Market Segmentation

Starting a business or launching a product in a competitive market without a thorough understanding of the potential customers is a critical, and possibly fatal, oversight. Attempting to sell to individuals or companies lacking the necessary profile can lead to futile efforts, poor sales, and setbacks down the line.

This crucial process of identifying the customer base is referred to as market segmentation, and the specific customer group chosen is commonly known as the target audience. Improper market segmentation leads to a low sales volume.

The target audience should be as homogeneous as possible, sharing demographic, psychological, and behavioral characteristics. This includes,