Price: Marketing Mix for the Common Good

The consumer weighs the price against the perceived value of using the product.  If the price exceeds the sum of the value, consumers will not buy the product.  Consumers differ in the values they assign to different product features and marketers often vary their pricing strategies for different price segments. The defining factor for evaluating a product’s price for the consumer is the quality. A consumer will pay more for a better-quality product.

In recent years another factor has been emerging for which a consumer is willing to pay more for a product. Consumers would pay more for sustainable products designed to be reused or recycled. In 2015 “Nielsen reveals that almost two-thirds (66%) of consumers are willing to pay extra for products and services that come from companies who are committed to positive social and environmental impact. That represents a sizable jump from 55% last year and 50% the year before.”

In results from a survey from 2019 “83% believe it’s important or extremely important for companies to design products that are meant to be reused or recycled. Nearly three-quarters (72%) of respondents said they’re currently buying more environmentally friendly products than they were five years ago, and 81% said they expect to buy more over the next five years.” (Accenture)

There is an obvious growing global trend showing the willingness for consumers to pay extra if the product or the company making the products is environmentally or socially devoted. For this reason, an environmental and/or social pricing method can be added to the traditional pricing methods.

There is an obvious growing global trend showing the willingness for consumers to pay extra if the product or the company making the products is environmentally or socially devoted. For this reason, an environmental and/or social pricing method can be added to the traditional pricing methods.

Traditional pricing methods are:

  • Cost-based
    • Cost-plus pricing
    • Mark-up pricing
  • Competition-based
    • Market skimming
    • Market penetration
  • Customer-based pricing
    • Internal reference pricing
    • Price-quality inferences

The common good value pricing method will be added to the consumer-based pricing method. The Novice Marketeer’s common good values are based on the values set in the Economy for the Common Good concept:

  • Human Dignity
  • Solidarity and Social Justice
  • Environmental Sustainability
  • Transparency and Co-determination

Pricing and human dignity

This method will rest on the economic factors and will concern essential products. For this to happen legislations will have to be applied to lead the way. The most recent example comes from the UK and the scrapping of the “Tampon Tax” by the government.

Essential products prices should be kept at a minimum profit to guarantee every human has access to them and will be able to afford them and governance is the only way. Governments are regulating prices for excise products like tobacco and alcohol guaranteeing a minimum price. Essential products could also be regulated in a similar way. Instead of guaranteeing a minimum price, they should guarantee a maximum price. The problem here would be what products to be deemed as essentials?

Pricing for Solidarity and Social Justice

In this method, the price of a product or a service will be related to a social cause. This could be a global or a local communal cause. All other price defining factors considered plus adding the amount that will be going to or compliant with a social cause.

Price for Environmental Sustainability

In this method like the in the previous, the price of a product or a service will be related to an environmental cause. This could be a global or a local communal cause. All other price defining factors considered plus adding the amount that will be going to or compliant with an environmental cause.

Transparency and Co-Determination in Pricing

This is a vital process if pricing for the common good method is to work. The first three methods will not be possible to gain traction if there isn’t complete transparency. Consumers should be able to clearly understand the reason or cause of the higher price they are paying for a product or a service. The distribution of that money should be evident and transparent.

Conscious consumerism is on the uprise and as figures have shown people are ready to pay extra if the product or service is supporting a common good value.

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