Blog
During my recent vacation, there were multiple occasions where consumers expressed anger to me about prices they had paid or had refused to pay. The cases were all good illustrations of how people sometimes think about prices, and how they behave when making buying decisions. In my view, their actions were not always rational, and […]
According to the Federal Reserve Bank of St. Louis, during the past 20 years the inflation rate for medical care has been 70% higher than headline CPI. (I would have guessed the difference is even greater.) There are several reasons healthcare costs exceed the general inflation rate, and I can’t cover all of them in […]
This past week I had two buyer experiences with interesting examples of segmentation, although the sellers may not have realized they were segmenting their customers. The two situations resulted in different outcomes and provided some good lessons. The most important lesson is that segmentation should enable you to expand your customer base, sell more products […]
Last week Pfizer announced increases in the list prices of more than 40 drugs for the second time within the year. The increases average 9.4%. Although there could be some political backlash, the pricing strategy is logical. Pfizer is recognizing their pricing power, they are incorporating buyer psychology into their process, and they are taking […]
I am a lifelong fan of the San Francisco Giants. I waited a long time before they finally won a World Series in 2010, and then again in 2012 and 2014. Of course, now that they have won it a few times, I want them to do it more often; and I pay close attention […]
Customer segmentation is a simple concept – identify groups of customers who tend to have similar levels of price sensitivity and set distinct prices for each group. Unfortunately, many companies either think all their customers are the same, or they don’t have enough information to create segments. In particular, we often see this in retail […]
Taylor Swift and some other performers appear to have decided the old concert ticket-pricing model was not profitable enough and they have changed pricing strategies. Historically the most common strategy has been to price tickets low enough to ensure a rapid sellout of each venue. The sellouts provided bragging rights and strengthened demand for the […]
Last week I read an article in the Wall Street Journal, ‘How to Lie With Statistics’: Teachers Union Edition, in which Alyssia Finley pointed out a number of misleading statistics reported by teachers unions. The statistics she cited included picking the baseline most advantageous to the union’s position, using misleading comparisons with groups that are […]
I recently played golf with two doctors, following which we discussed customer satisfaction and customer ratings. One of the physicians, let’s call him Dr. Feelgood, expressed surprise that anyone would select a doctor based on ratings, and he lamented that negative ratings often reflected intangibles like staff friendliness and wait times, rather than quality of […]
Last week I read an article in the Wall Street Journal, The Secret Other Reason Basic Economy Is Everywhere. In the article, the writer seemed to imply airlines are doing something shady to force businesses to pay higher prices. In reality, the airlines are using smart segmentation techniques. They are simply finding combinations of features […]