Friday 5 April 2013
Wednesday 3 April 2013
Goldilocks Pricing
The concept of Goldilocks Pricing is nothing new and originates from the story of Goldilocks and the three bears. The first bowl of porridge was too cold, the second bowl of porridge was too hot, but the third bowl of porridge was just right and this is the bowl that Goldilocks decided to eat.
Two examples show how Goldilocks pricing has been and has not been observed from the perspective of the consumer.
This model can
be applied to the way products and information relating to these products is
presented to consumers. Choice is a good thing, but consumers require enough
information to be able to make their own decision as to which offering
represents the best value for money to suit their requirements. Providing more
than three options begins to cloud judgment and stifle the decision making
process. If you go into a supermarket to buy some baked beans and 100 varieties
are offered at multiple price points, it is likely that you will end up leaving
confused and without purchasing any beans at all!
The cycling industry shows
evidence of things that work well, yet I believe that some ranges can be
synthesized further. Reducing the number of product lines benefits the
consumer, retailer and supplier and it should be in that order of importance
too. There is a cycle to the benefit of simplifying the number of choices but
broadly speaking;
- Consumers benefit by having clearer and more simplified thought into which product suits them best.
- Retailers benefit from reduced shop floor uptake that should hopefully be used to support a simplified decision making process – not to add more stuff!
- Other benefits to the retailer include restocking and inventory requirements revolve around a smaller number of products over a higher volume that should in turn lead to supplier discounts.
- Suppliers can focus their demand planning around fewer products and negotiate smaller manufacturing costs across higher volumes of the same product and this can hopefully be passed onto retailers through increased margins or by investing into higher quality product for the same cost.
Two examples show how Goldilocks pricing has been and has not been observed from the perspective of the consumer.
The Allez
range of Specialized bicycles offered in the UK observes the Goldilocks
principle to a tee. Three bicycles are offered at price points of £550, £725
and £900. Model names also support this idea, with the entry model simply
called Allez, the mid price point being the Allez Sport and the top tier model
the Allez Elite. In my belief, there should be an incentive to jump a
price tier and offering colour options in the base tier removes one less incentive
to make the leap to the mid level model.
Goldilocks
operates to make the middle option a more attractive proposition, determined by
the consumer. The addition of colour options below this mid price point only
removes an incentive to make the leap to the mid tier, especially given that
lower price point consumer may be perhaps more influenced or drawn in by colour
options. However to make this a fair argument, it would be wise to consider how
each model fits within the market compared with other brands, perhaps only
offering one colour option would make this lower tier model the lowest tier of
three equivalently priced alternatively branded models.
Considering an
example where this time the number of options exceeds Goldilocks principles is
observed in the road fingerless glove offering by Specialized. Six
different models are offered, ranging in price from £17 - £30.
From the
perspective of the consumer, more choice means more effort needs to be put into
making a decision and to establish the mid range price point. By average, this
mid range price point is £24.67, which does not match with the offerings at £23
and £27. In my view, this forces another level of decision-making and tends
towards the lower mid price point of £23. Still though, this is a step up from
the base model at £17 but perhaps a glove that meets this mid price point would
be a simple option for people to buy without much thought.
One last point
to mention on this example is the naming of the models and how this correlates
to other Specialized products including bicycle and clothing. The
Allez bicycle range features a sport model at the mid level price point and it
is only natural for consumers of this bike to associate the sport model glove
with this bike, yet in actual fact the sport glove is the lowest price model.
Friday 26 October 2012
Surface Modeling
This week I have been revisiting some Solidworks exercises that
use surface modeling techniques. Some of the tools that I have been experimenting
with include surface lofts and indents. Using these techniques allows more
organic, form based shapes to be created in software that is often used within
the confines of geometric shapes.
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