What is customer value-based pricing? Describe the two types of value-based pricing

What will be an ideal response?

Customer value-based pricing uses buyers' perceptions of value as the key to pricing. Value-based pricing means that the marketer cannot design a product and marketing program and then set the price. Price is considered along with all other marketing mix variables before the marketing program is set. The company first assesses customer needs and value perceptions. It then sets its target price based on customer perceptions of value. The targeted value and price drive decisions about what costs can be incurred and the resulting product design. As a result, pricing begins with analyzing consumer needs and value perceptions, and the price is set to match perceived value. It is important to remember that "good value" is not the same as "low price." The two types of value-based pricing are good-value pricing and value-added pricing. More and more, marketers have adopted the strategy of good-value pricing — offering the right combination of quality and good service at a fair price. In many cases, this has involved introducing less-expensive versions of established, brand name products. Many companies also adopt value-added pricing strategies. Rather than cutting prices to match competitors, they attach value-added features and services to differentiate their offers and thus support their higher prices.