Question presented to flowresulting: how do we ensure growth in market share and margin in the price-sensitive car maintenance market? Flowresulting advised to investigate the potential of value-based pricing as a lever for growth. Onno Struif Bontkes, service & after sales manager, chose flowresulting because “flowresulting not only produces a report with insights, but also concrete advice that we can apply immediately. Their way of working has direct business value for us.”
A key concept in value-based pricing is “willingness to pay”: how much value does a customer assign to different parts of a proposition, and what is he willing to pay for them?
Struif Bontkes: “The project showed us which elements are most important in a customer’s choice. Based on the advice, we refocused our marketing communication entirely on warranty, in addition to price . One of the insights from the study was that a large part of SEAT drivers thought they received ‘only’ 12 months warranty (or less) on maintenance, while SEAT provides a 24-month warranty.”
Pricing research often uncovers the gap between perceived value and ‘real’ value. This insight helps to focus marketing communication. SEAT used the results of the study to focus communication on proposition elements that really matter to customers, instead of functional – less valued – elements, such as free window repair.
For each project a market simulator is tailor made, based on the study results. The market simulator enables various strategic scenarios to be calculated which serve as input for a business case. The business case for this project uncovered increasing warranty to 48 months to be an significant lever for growth.
Onno Struif Bontkes: “The research showed us the optimal price for each customer segment. We adjusted prices accordingly. In one segment we decided to increase price, while in another segment we decided to lower the price and increase profits through a significant increase in sales. Thanks to intelligent pricing, our market share has grown and returns have improved.”
Want to know more about pricing strategy, pricing research or the methodologies we use? Don’t hesitate to contact us.
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