Price – It’s not the first, it’s the last decision point for the customer

Summary : It is a common error to think that price is the first decision point for a buyer. Now in a B2C ‘want’ based decision, a price range may be needed up front for the buyer to decide if they can afford it or to decide if it’s high enough to lend them exclusivity (for example in the case of $900 blue jeans). But this is a range and not a single price. After that, price will be set aside and the B2C buyer will decide in a pattern. For example, the buyer looking for exclusive jeans won’t be found at W ... See More

 Price – It’s not the first, it’s the last decision point for the customer

 It is a common error to think that price is the first decision point for a buyer. Now in a B2C ‘want’ based decision, a price range may be needed up front for the buyer to decide if they can afford it or to decide if it’s high enough to lend them exclusivity (for example in the case of $900 blue jeans).  But this is a range and not a single price. After that, price will be set aside and the B2C buyer will decide in a pattern. For example, the buyer looking for exclusive jeans won’t be found at Wal-Mart.

 Price is always the last decision in a B2B ‘need’ based decision because the solution to need must be found first. Price only becomes truly relevant when multiple products are found that offer similar solutions (remember: problems are markets … solutions are products. A need is differentiated from a want because it has a specific benefit. For example jeans fill a need while exclusivity is a want).

 Now it could be said that price is relevant when the cost of solving the problem is greater than the end-market value. But here the issue is cost not price. It is really important to understand this difference. No supplier can be viable over the long-term by pricing a product below its cost. Doing so not only kills the supplier, it hurts the customer as well. This very problem has been the most significant barrier to the widespread adoption of 3D packaging technology. While it has been fertile ground for some partnering, it will only breakout when the technology is bundled with a cost solution. Moore’s Law is a great example of this, because it is the technology of scaling that enables the cost solution while the resulting greater functionality via more transistors grows market size.

 

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