Aviation Leadership and Management Skills Development - Optimisation of Pricing
Sofema Online (SOL) www.sofemaonline.com considers the importance of setting the correct pricing
Introduction
Developing both a credible price structure together with an efficient pricing strategy is an important aspect of business success.
» How are the products arranged to show their value
» How to direct customers to a profitable choice
» How to Upsell
» The Effect of using Price Anchors
Marketing Insight
By creating a High-Value Price Anchor as the first item in a particular list - it is possible to raise the product profile (This is known as cognitive bias). Priming potential customers with large numbers is proven to increase the perceived value of your offers.
Price Optimization Techniques
» When positioned alongside an extravagant option, a moderately priced item looks like great value.
o This technique is used to encourage higher-value purchases.
» Using cognitive biases such as ‘anchoring’ and the ‘serial position effect’
» Consider the following key points
o The Anchoring Effect Describes our tendency to focus on the first piece of information we receive when evaluating subsequent information.
o By suggesting an RRP (regular retail price), and then offering a reduced rate, we present customers with seemingly special offers.
o Decoy Pricing
» Appeals to our tendency to use comparison to judge value.
» Enhances the perceived value of an offer by presenting it alongside a disproportionately expensive item.
» By carefully arranging the names and features assigned to packages (“Pro” and “Plus” establishes an immediate comparison, whilst “Standard” and “Basic” are easily ignored) We can guide the consumer in making their decision.
o Position: Serial Positioning
» The Serial Position Effect describes the way in which information presented in a series is recalled.
» People are most likely to remember items given at the start of a list (this is called Primacy) and those at the end (this is labeled Recency).
» However, subjects struggled to remember items given in the middle of a list.
Important Marketing Notes
» It is known that items at the top and bottom of a webpage receive many times more clicks than those on the rest of the page.
» When presented with a limited range of choices, most people are drawn towards items positioned in the center. (Holds True for vertical and horizontal choices) - This is known as Centre Stage Effect
o The Paradox of Choice
» When presented with an overwhelming range of products to choose from, most customers will end up deferring their purchase. (Unfortunately for us as marketers, it is understood that brain activity during a difficult decision mirrored that of a subject experiencing physical pain.
» In order to avoid the problem of the Paradox of Choice, it is usually best to avoid offering an excessive number of options.
Next Steps
Please email team@sassofia.com with any comments, questions or suggestions
Sofema Online introduces a new series of courses focused on the development of Soft Skills Aviation Leadership and Management Skills Development - see here for details of our Aviation Leadership Diploma:
