Question

Which is more important -- focusing your pricing strategy on profitability or setting a pricing strategy that addresses the customer’s perceived value? Please elaborate.

Answer 1

In my opinion Setting a Pricing Strategy which addresses and aligns with the perceived value of customers is more viable and relevant in the current business scenario than to focus on profitability. This is because the customers have do many options to choose from that if they do not consider the price of product worth the value preposition perceived after consuming or using the product, they will land on the product of other companies easily resulting in decreased profitability. Bit if the company will focus more on matching the customers' perception of value of product with the product price then it will inturn also bring profits to business irrespective of the existing competition in the industry.

Moreover the another important fact to support the pricing strategy addressing to customers' perception will also increase the profitability through attracting new customes as it will cause satisfaction among customers in their after purchase behavior and will help avoiding cognitive dissonance. Matching and aligning customer perception with pricing strategy will enable the business to attract new customers as it will increase brand value leading to a sustainable business practice.

In comparison to this pricing strategy focusing on profitability will not produce purchase satisfaction to customers thus resulting in loosing customer loyalty and satisfaction.

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Thanks dear student...

Hope I explained well .... Good luck and God bless

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