Silver Pricing: Satisfying Needs Is Not Enough – Balancing Value Delivery and Value Extraction Is Key

Abstract

At first glance, the silver market provides a highly lucrative opportunity for businesses willing and able to meet the needs of Japan’s senior generation. International and domestic players have been pursuing these new opportunities in the last few years. Thoroughly understanding the needs of the silver generation is a key to capitalizing on it. However, this is just one side of the value coin. A need is not the same as demand, and demand is not the same as profitable business. To turn a profit, you have to balance value delivery and value extraction. Value delivery is relatively easy: it requires market research, appropriate products and services, and an effective distribution system. Value extraction is difficult: you need to set and implement the right prices across products, regions, and channels. A marketing strategy based solely on demographic and socioeconomic data, customer needs, and buying power is simplistic, misleading, and in some cases dangerous. Capitalizing on the silver market requires a systematic approach to developing and profitably selling products and services tailored to the older generation. It takes a solid understanding of customer requirements, value-to-customer, ability and willingness to pay, price elasticities, and revenue and profit functions. The best way to achieve this is by means of a professional pricing process covering and connecting pricing strategy, price setting, and price implementation.