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  • June 2012
  • Article
  • Harvard Business Review

Pricing to Create Shared Value

By: Marco Bertini and John T. Gourville
  • Format:Print
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Abstract

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.

Keywords

Pricing; Marketing Strategy; Price; Customer Focus And Relationships; Customer Relationship Management; Value Creation; Fairness

Citation

Bertini, Marco, and John T. Gourville. "Pricing to Create Shared Value." Harvard Business Review 90, no. 6 (June 2012): 96–104.
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About The Authors

Marco Bertini

Marketing
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John T. Gourville

Marketing
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More from the Authors
  • Pearson: Efficacy 2.0 By: Elie Ofek, Marco Bertini, Oded Koenigsberg and James Weber
  • Consumer Reactance to Promotional Favors By: Marco Bertini and Aylin Aydinli
  • Holaluz: Taking on the Spanish Energy Market By: Elie Ofek, Marco Bertini, Oded Koenigsberg, Elena Corsi and Emer Moloney
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