Within any given customer segment, however specifically defined it is, are individuals who ultimately are different from everyone else in the same segment. Demographics, psychographics, buying behavior etc all go only so far. Every individual ultimately has unique preferences, interests and willingness to pay – all of which are non-static and highly malleable. The challenge is in finding the exact willingness to pay of each customer at any given point in time but the opportunity for the marketer is to create product versions, promotions and messaging that nudges the customers with higher willingness to pay to step forward or those with lower willingness to pay to step backward. In either case the front row of customers will be those that are the least price sensitive.
Here are three case studies of marketers nudging the higher willingness to pay customers to identify themselves:
- For their new animated movie Frog and the Princess, Disney is holding two and half weeks’ worth of premium-priced screenings at single theaters in New York City and Los Angeles. Ticket prices? $20 to $50. Disney says it brought in $2.8 million in ticket sales from these premium priced tickets.
- Panera bread, a gourmet casual restaurant, introduced a premium priced sandwich for $16.99 while most of the menu items are priced at $10 or less.
- A coffee shop owner used to charge $1.60 for his regular cup of Joe. He introduced premium coffee illy and serves it in white ceramic cup with illy logo (premium product and premium packaging) at a premium price of $3.00. Sales tripled after this move.
The net is, the marketer can either take the prices as exogenous, set by competitors , dictated by costs etc. or take control of their pricing to maximize profit.