Competitive Advantage through Pricing

Abstract

These are some outstanding examples of companies who have put Pricing into a long-term context, who have taken a view about the pricing that will underpin a product's positioning in the marketplace for all its life. For these companies, pricing is not just a short-term marketing tool, it's an integral part of their long-term strategy. In some instances it will even be their main strategic focus (Figure 11.1).

‗We’re going to democratise the automobile and build a car for the great multitude that everybody will be able to afford. We will price it so that no man making a good salary will be unable to own one.‘¹

(Henry Ford, 1907)

‗We exist to provide value to our customers - to make their lives better via lower prices and greater selection - all else is secondary.‘²

(Sam Walton, WalMart, 1977)

‗The purpose of Motorola is to provide products of superior quality at a fair price. We're aiming to sell 100000 TVs next year at the price of S179.95.‘³

(Paul Galvin, Motorola, 1949)

‗We take a long-term view about our growth and our core skill is the ability to produce massively at very low cost so we can get to the best price for our customers . . . we have a calculatedly aggressive view about price that fits our long-term vision.‘⁴

(Woo-Chong Kim, Chairman Daewoo, 1996)

‗Our strategy is to price to reflect the product’s perceived value to the customers. When we came to price Zantac in 1983, SmithKline Beecham Tagamet was market leader. But Zantac performed better, it had to be at a premium position. We set the price at a 50% premium and it was market leader within 4 years.‘⁵

(Glaxo VP, 1996)