The Good-Better-Best
Approach To Pricing
MM2 GROUP 4
PRESENTATI
ON COVER
TITLE
Pranay Kumar Dhruw-20PGP153
Pranitkumar Dash-20PGP154
Prashant Singh-20PGP155
Paresh Khairnar-20PGP156
Prerna Sharma-20PGP157
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.
Earlier Assumption was that the
customers are highly price sensitive and
will find the least expensive product they
could find
The Problem
Companies try to follow
Discount model most of the
time to attract the price
sensitive customers
But the “Your Choice Auto” of Allstate
was a success which included three
different plans (Value, Gold and
Platinum) for customers of different
economic background
The Solution
GBB approach helps to attract
both price sensitive customers
and those who are willing to
pay a little extra for more
features
The G-B-B strategy has been used by many
companies in past also which has proved that
customers are willing to pay more for better
quality and additional features
The
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
Revenue From Good Version:
Low priced offering of core product makes it
accessible to price sensitive or dormant
customers who previously couldn’t afford it
G-B-B
Strategy
Brand Boosting:
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
Going On The
Offence
Objective is to Increase revenue,
capture market and build a
sustainable customer base.
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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Playing Defense
How not
to Defend
Protecting brand's exposed flank
Reduce
price
The
Better
Way
Launch
"Fighter
Brand"
Create new
GOOD
Product
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
different benefits
•
Shift From Binary to consideration
Sense of
being
Empowered
Quick
decision
To Exploit
Goldilocks'
Effect
Good
Version as
'Sunk Cost'
Drawing On
Consumer Psychology
Clear the confusion of consumers
and make them more focused
about what they want
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Grouping
If a company is set on
many offerings, it can be
useful to group them in a
way making consumer
decision making two step
process
The paradox of choices
When consumers have too
many options, they
become confused or
paralyzed with indecision
Brainstorming
About tiers
and features
The first step is deciding
how many products to
offer
Value Barometer
Author used a list of 13
common product
attributes that can be
added, dropped or varied
to create different
perceptions of value.
Fence Attributes
Fence attributes prevent
canalization and
migration of existing
customers to lower priced
offering.
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Value
Barometer
A crucial step in devising GooBetter-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
Companies mostly could
implement some form of G-B-B
if not entirely.
It will help them to gain new
customers, additional revenue
and be competitive in the
market.
Challenges in designing a full
G-B-B model is for Companies
whose products have few
distinct features, which also
can’t be modified making it
difficult to identify effective
fence attributes and produce
the good bundle.
In other cases, executives may
be too fearful of cannibalization
(or skeptical about the
effectiveness of fences to limit
it) to sign off on a Good offering.
Even if a Good option is not
viable in any form, exploring a
G-B-B strategy may prompt
companies to introduce a Best
offering, which can deliver new
revenue.
Shifting to a G-B-B pricing
model is more powerful than it
appears initially.
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THANK
YOU
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