When It’s Time to Expand Beyond the Base

Harvard Business Review

The new CMO of an extreme-race company is on the hook to come up with a way to further monetize the underexploited brand while also fixing customer pain points related to the registration process. She and the COO propose a premium membership that allows die-hard fans to buy early access to race registration, but tests on social media reveal strong animosity toward the program among some racers. Should the company pull the plug or move forward, potentially upsetting the company’s most loyal customers? This fictional case study features expert commentary by Michael Bolingbroke and Huib van Bockel.

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Put the Customers’ Money Where Your Mouth Is

Dear CEO: 50 Personal Letters from the World’s Leading Business Thinkers

Most enterprises strive to understand their customers and organise to deliver meaningful solutions. Market orientation as a management philosophy is excellent, yet even the most customer-loving ventures fail to take the logic full circle. When it comes to making money from the value they work hard to create, businesses often revert to old habits and, rather than taking a hard look at customers, they take a hard look at what they sell. This is clearly inefficient and, given today’s technology, likely a dangerous omission.

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A Novel Architecture to Monetize Digital Offerings

Journal of Revenue and Pricing Management

As commerce continues to shift to the digital domain, organizations respond by improving and evolving their approach to creating value for customers. When the time comes to convert digital anything into cash they can bank, however, the same organizations seem stuck in time. The purpose of the article is to highlight this inconsistency and, importantly, propose a solution. First, we leverage the literature on freemium and participative pricing mechanisms to lay the foundations for a revenue architecture fit for the digital economy. We argue in favour of three building blocks: empowerment, dialog, and reputation. Second, we describe FairPay as a promising configuration of these factors.

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Can one business unit have two revenue models?

Harvard Business Review

Peter Noll, a pharmaceutical company division chief, ponders the varying business models of two units that have just merged. Both have for years employed flexible, inventive strategies to good effect, but Noll is inclined to impose a single model on the combined entity. The two unit heads, however, make compelling arguments for being left to do their business as usual. What choice should Noll make? Expert commentary comes from Bodo Eickhoff, of Roche Diagnostics Deutschland, and Eric Achtmann, a tech investor and corporate adviser to Costa Coffee.

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Price Wars and the Managers Who Start Them

Business Strategy Review

Price wars are a fact of business life. While customers relish the opportunity to save some money for most companies they are an unwelcome, often unwarranted hazard that is best avoided. Yet, despite the apparent downside for business, intensive price competition is surprisingly common. So what is going on? Who exactly is to blame? Research by Marco Bertini sheds new light on their instigators.

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When Customers Help Set Prices

MIT Sloan Management Review

To many managers, the idea of involving customers in pricing decisions seems counterproductive. For most companies, pricing is a sensitive, private affair. But it may be time to re-examine those ideas. Letting customers have input on prices provides opportunities for customization and can promote greater customer engagement. Opening up customer participation also offers a way for companies to create a new sense of excitement.

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The Right Price, at the Right Moment, to the Right Customer

Business Strategy Review

Every company has to put a price on what it sells, but Tim Ham and Marco Bertini have found that most companies often fail at this important task in a manner that jeopardises long‐term value. And, there are surprisingly large rewards for those companies that invest in even the simplest of price optimisation techniques.

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The Price of Olympic Success

Business Strategy Review

Pricing almost eight million tickets for the 2012 London Olympic Games was a hugely complex challenge. How could those in charge of the Olympics, billed as ‘Everybody’s Games’, juggle the clashing objectives of the event’s many stakeholders? Marco Bertini spoke with Stuart Crainer about the challenge of Olympic ticketing and what it reveals about setting the price of all goods in the future, especially given today’s savvy consumers and the new technologies that are changing the way business is done.

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Pricing to Create Shared Value

Harvard Business Review

Many companies are in competition with their customers to extract as much value as possible from every transaction. Pricing is their weapon of choice, and consumers fight back by rooting out and disseminating pricing policies that seem unfair. The problem is that companies generally think of value as a pie that is rightfully theirs. But value is not fixed, and it neither originates with nor belongs solely to the firm. Without a willing customer, there is no value. Instead of using pricing in a way that turns customers into adversaries, companies can use it to enlarge the pie. That means viewing customers as partners in value creation–a collaboration that increases customers’ engagement and taps their insights about the value they seek and how firms could deliver it. The result can be new revenue, increased customer satisfaction and loyalty, positive word of mouth, and cost savings. The multiyear process to price the 8 million tickets to the upcoming London 2012 Olympic Games suggests five principles for using pricing to create shared value: Focus on relationships, not on transactions, by using pricing to communicate that you value customers as people; set prices proactively to discourage detrimental behavior and to encourage behavior that is beneficial to both your firm and your customers; allow prices to change in response to shifting customer needs; promote transparency by providing the rationale for your pricing; and make sure that prices and the processes by which they are set meet consumers’ expectations about what is fair.

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The Perils of Popularity

Business Strategy Review

The iPhone’s worldwide success would seem to be an unqualified win-win for Apple and the mobile operators that sell it. Not so, as Marco Bertini and Ricardo Cabornero explain, mobile operators must maintain a delicate balance between winning new customers and retaining existing ones. This task is made more difficult when their own brands can actually be diminished by selling the iPhone.

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