8.3 Performance-Based Value Pricing (Figures 8-11 and 8-12)

Analysis
Performance Factor
Finish Trim
Values  
None
0.00
 
Basic
0.60
 
Full
1.00
 
Range
1.00
 
Percentage Importance
54%
 
Paint Finish
Values  
Unpainted
0.13
 
Primed
0.60
 
Color
0.87
 
Range
0.73
 
Percentage Importance
39%
 
Price per sq ft
Values  
$1 sq ft
0.60
 
$2 sq ft
0.53
 
$3 sq ft
0.47
 
Range
0.13
 
Percentage Importance
7%
 
 
Poor
Avg.
Good
 
Poor
Avg
Good
 
25% Lower
Avg.
25% Higher
Product Positioning
Finish Trim
Paint Finish
Price per sq ft
Value
Competitor  
Preference Value
0.31
0.44
0.31
1.06
Company  
Value Index
1.00
0.56
0.31
1.87

Instruction: Input the positioning to competitor and company and corresponding preference values from table above.

Value Pricing Strategy VP1 VP2 VP3
Company Price
$1 sq ft
$2 sq ft
$3 sq ft
Competitor Price
$2 sq ft
$2 sq ft
$2 sq ft
Total Value
2.13
1.99
2.06
Value Advantage
1.07
0.93
1.00
Percent Value Advantage
50
47
49
Setup
Performance Factor Low Mid High
Taste Quality
Poor
Avg.
Good
Service Quality
Poor
Avg.
Good
Hamburger Price
25% Lower
Avg.
25% Higher

Instruction: Name each performance factor and specify three levels of performance for each going from low to high.

Starting Data
Option A
9
Finish Trim
None
Paint Finish
Unpainted
Price per sq ft
$1 sq ft
Option B
7
Finish Trim
Basic
Paint Finish
Unpainted
Price per sq ft
$2 sq ft
Option C
5
Finish Trim
Full
Paint Finish
Unpainted
Price per sq ft
$3 sq ft
Option D
8
Finish Trim
None
Paint Finish
Primed
Price per sq ft
$3 sq ft
Option E
4
Finish Trim
Basic
Paint Finish
Primed
Price per sq ft
$1 sq ft
Option F
2
Finish Trim
Full
Paint Finish
Primed
Price per sq ft
$2 sq ft
Option G
6
Finish Trim
None
Paint Finish
Color
Price per sq ft
$2 sq ft
Option H
3
Finish Trim
Basic
Paint Finish
Color
Price per sq ft
$3 sq ft
Option I
1
Finish Trim
Full
Paint Finish
Color
Price per sq ft
$1 sq ft

Instruction: Rank these options from 1 (most preferred) to 9 (least preferred). Place the preference in the blue cell next to that option.

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