MKTG 409 Week 9 Pricing Seg 1 So when we think about pricing incidentally this is the wheel that we talked about and this is something that I put up the first day We re looking at these marketing mix decision variables We have finished the product area and now we re gonna be looking at the pricing area So when we think about pricing obviously an organization is interested in pricing the product in the right way to be able to generate revenue And as we ve talked about a little bit already we know that the right price is not necessarily the lowest price So when we think about pricing from the standpoint of what it means to customers we have to recognize that we use price as consumers as an indicator of quality to some degree Now I mentioned earlier we talked about branding that we also use a brand as a representational of quality Which is the case from many products especially when we can t judge the quality of product for ourselves Well we also use price when we can t judge the quality of the product for ourselves Price is used to represent quality for many different kinds of products And so when we think about on the part of consumers the meaning of a high price it can certainly translate into meaning that it s high quality Sometimes it can also mean and the high price can go with what we view as a premium product And we also know that at times the price that s high can stand for just a situation where we re getting ripped off I mean certainly that occurs So a high price certainly has a certain meaning to a customer doesn t it and it can be a representationof higher quality Likewise when we think about what the meaning of a low price is a low price can certainly mean that it s low quality or it may mean that it s a good value I wanna show you a video that deals with pricing It s a video about a company that is aggressive at pricing and it s called the Dollar Shave Club Hi I m Mike founder of dollarshaveclub com What is dollarshaveclub com Well for a dollar a month we send high quality razors right to your door Yeah a dollar Are the blades any good No Our blades are great Each razor has stainless steel blades an aloe vera lubricating strip and a pivot head It s so gentle a toddler can use it And do you like spending 20 a month on brand name razors 19 go to Roger Federer I m good at tennis And do you think that your razor needs a vibrating handle a flashlight a backscratcher and ten blades Your handsome ass your grandfather had one blade and polio Looking good papa Stop paying for shave tech you don t need And stop forgetting to buy your blades every month Alejandro and I are gonna ship them right to you We re not just selling razors We re also making new jobs Alejandro what were you doing last month Not working What are you doing now Working I m no Vanderbilt but this train makes So stop forgetting to buy your blades every month And start deciding saving you We are So when we look company that is an right where you re gonna stack all of those dollar bills I m dollarshaveclub com and the party is on at the Dollar Shave Club certainly they represent a aggressive pricer They re coming in with a low price And it could mean that it s a good value or it may mean that it is low quality I decided to try it and I found out for this in terms of just my own view point that unfortunately the quality of the blades are low As it turns out this is just my perception of it and my experience I found out that in this case that the low price meant low quality I frankly found that the blades where at a quality level quality level that were the quality of the blades that I after I d used a razor That s kind of where the starting Now some of you may have tried it and you been perfectly and that s good the blades whether was throwing away point was for me comfortable with it They do have a higher range of blade that they sell And it s about I believe about 8 a month I didn t try that And what s interesting is that when I decided to no longer continue in the Shave Club they didn t attempt to move me up to the higher quality blade Which I found kinda surprising Because I thought that perhaps if a person was withdrawing from the club because they didn t like the quality That they might say to you make you a special offer for example That for x amount of time you could try this for an introductory price At for the higher quality blades I know people that have used the higher quality or have paid the higher price and they tell me that the blades are fine But I didn t move on up to the 8 a month blades But the point is to say that in my particular experience that the low price actually resulted in low quality Now certainly we know of situations where we ve seen organizations adjust the price downward and they ve kept the quality the same and it s helped their business a great deal It s made them much more competitive in the market place We have seen that for example in the fast food industry with what we called value pricing In the fast food industry who started value pricing Well it was Taco Bell They started value pricing meaning that they kept the quality level the same but they brought the price down And we certainly have seen other fast food organizations follow suit over a considerable period of time I could remember taking my family to Taco Bell from time to time when my kids were at home and they were like maybe eight and 12 or something like that And at that time I always felt like that it was not a good value We went because they wanted to go but I have to say that as I looked at what we got I didn t feel that the value was very good Now I will tell you one thing I found interesting about Taco Bell And their menu offering is Taco Bell has maybe about six ingredients And they ve got about 60 menu items And I figured out eventually that with maybe six ingredients Like cheese and lettuce and tomatoes and onions and a meat like product and so forth that they had different kinds of menu items because of how it was stacked or rolled or a hard shell or a soft shell and that s how they got up to about …