The Good-Better-Best

Approach To Pricing

MM2 GROUP 4
PRESENTATI
Pranay Kumar Dhruw-20PGP153
Pranitkumar Dash-20PGP154
Prashant Singh-20PGP155
ON COVER
Paresh Khairnar-20PGP156
Prerna Sharma-20PGP157

TITLE
Manoj Kumar-20PGP158
Mandve Shivtej Deepak-20PGP159
 Introduction
 Good-Better-Best Strategy refers to pricing a product or service differently for different segments of
market based on their economic background or willingness to pay for it by providing different quality and
features in the product or service
 Many companies have adopted this strategy such as Chevrolet, American Express, Netflix, Samsung,
etc.

But the “Your Choice Auto” of Allstate

Earlier Assumption was that the The G-B-B strategy has been used by many
was a success which included three
customers are highly price sensitive and companies in past also which has proved that
different plans (Value, Gold and customers are willing to pay more for better
will find the least expensive product they
Platinum) for customers of different quality and additional features
could find
economic background

The Problem The Solution The

Companies try to follow
Discount model most of the
time to attract the price
sensitive customers
GBB approach helps to attract
both price sensitive customers
and those who are willing to
pay a little extra for more
features
Implementation
Identifying the attributes to
attract both the existing and
new customers and carefully
communicating those values
to them

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 Revenue From Best Version:
By having a best version some existing customers
will spend more for the best features resulting in
additional revenue. Also this brings in new high
spending customers who are attracted to the
product or service with added features
Going On The
Revenue From Good Version:
Low priced offering of core product makes it
accessible to price sensitive or dormant
Offence
customers who previously couldn’t afford it
Objective is to Increase revenue,
G-B-B capture market and build a
Strategy
Brand Boosting: sustainable customer base.
The Best version of the product or service gets
marketed and shown to customers and helps
build the brand image for all the product lines.
This boosts the sales of all product lines
irrespective of GBB

Ancillary Revenue:
Complementary goods and services for the core
service or product will be sold more as more
people will access the good products due to
affordability.

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 How not
to Defend
Playing Defense
Protecting brand's exposed flank

Launch
Reduce
"Fighter
price
Brand"

The Create new

Better GOOD
Product
Way

Defensive maneuver
can have mixed results!

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• Respone/anticipation according to consumer psychology

• Unbundle the features of offerings and put it on G-B-B

strategy

• Creates fence between price sensitive consumers and

those who would pay more

• Nice differentiation among packages,each level has some

Drawing On
different benefits
Consumer Psychology
• Shift From Binary to consideration
Clear the confusion of consumers
Sense of To Exploit and make them more focused
being Goldilocks' about what they want
Empowered Effect

Good
Quick
Version as
decision
'Sunk Cost'
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 Grouping
Brainstorming
About tiers
The paradox of choices
If a company is set on When consumers have too
many offerings, it can be many options, they
useful to group them in a

and features
way making consumer become confused or
decision making two step paralyzed with indecision
process

The first step is deciding

how many products to
offer

Value Barometer Fence Attributes

Author used a list of 13 Fence attributes prevent
common product canalization and
attributes that can be
added, dropped or varied migration of existing
customers to lower priced
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to create different
perceptions of value. offering.
 Value
Barometer
A crucial step in devising Goo-
Better-Best bundles is
choosing attributes to add,
drop, or vary to create
different perceptions of value

Some examples:
Volume: Netflix prices its streaming services as per the number of
devices
Speed: Federal Express offers a variety of next day delivery options in
major cities
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Defining and Pricing Bundles
Choose the fence attributes that Separate's Good, Better and Best Attributes so that an
organization can target customers effectively. E.g. New York Times

In Southwest Airlines, they identified high appeal/low-cost items. Bundling Inexpensive

items in a premium package helped generate 73$ million incremental revenue.

High appeal/low cost are often less about the actual product and more about the
customer experience

When devising Best Bundles, Companies need to be realistic about the attributes they
can include to avoid complexity and unrealistically high prices.

Two rules of thumb for design and pricing ensures sharp distinctions between offerings

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 Once a company
has created a
multitiered
offering, it needs
to help customers
understand the
various options

 This comparison
grid, from a
website helps us
to understand it
more effectively

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 Bringing in Research
Expert Judgement
• Experienced executives,
salespeople, and other
frontline employees have a
good understanding of
customers and their needs
• When setting G-B-B prices,
companies should collect and
factor in the views of these
in-house experts.
General Market Research
• Insights can be gained by
asking customers to respond
to potential features and
prices via qualitative and
quantitative surveys.
• Modifying the questions to
test customers’ interest in a
discounted Good product
instead can yield insights into
fence attributes and the risk
of cannibalization.
Conjoint Analysis
• It helps to determine how
people value different attributes
(feature, function, benefits) that
make up an individual product
or service.
• Researchers can gain a clear
sense of which attributes or
features customers want, how
much they will pay for each,
and which are fence attributes
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 Conclusion
It will help them to gain new
Companies mostly could
customers, additional revenue
implement some form of G-B-B
and be competitive in the
if not entirely.
market.

Challenges in designing a full

G-B-B model is for Companies
In other cases, executives may
whose products have few
be too fearful of cannibalization
distinct features, which also
(or skeptical about the
can’t be modified making it
effectiveness of fences to limit
difficult to identify effective
it) to sign off on a Good offering.
fence attributes and produce
the good bundle.

Even if a Good option is not

viable in any form, exploring a
Shifting to a G-B-B pricing
G-B-B strategy may prompt
model is more powerful than it
companies to introduce a Best
appears initially.
offering, which can deliver new
revenue.
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THANK
YOU

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