Marco, a plumbing, heating and AC company located in California, has a simple but powerful product strategy: ‘Solve the customer’s problem no matter what, solve the problem when the customer needs it solved, and make sure the customer feels good when you leave’. The company guaranteed, same day service for customers requiring it. The company provides 24 x 7 services at no extra charge for customers whose AC dies in hot summer Sunday or whose toilet overflows at 2.30 AM. The company guarantees the price of a job to the penny before the work begins. Whereas most competitors guarantee their work for 30 days, Marco guarantees all parts and labour for one year. The company assesses no travel charges as “it’s not fair to charge customers for driving out.” The company owner says: “We are in an industry that doesn’t have best reputation. If we start making money our main goal, we are in trouble. So I stress customer satisfaction; money is a by-product.” The company uses hiring, ongoing training and education, performance measures and compensation that incorporate customer satisfaction, strong teamwork, peer pressure, empowerment, and aggressive promotion to implement its strategy. The credit manager says: “Those who want a nine-to-five job needs to go somewhere else.” Marco is a premium pricer. Yet customers respond because it delivers value – that is benefits for costs. In 8 years annual sales increased from $200,000 to more than $3.3 million. How should other areas of company (marketing, finance, personnel) support the product strategy?
Customary Pricing
There are various types of pricing strategies followed in the market. They are psychological pricing, odd pricing, free onboard pricing, customary pricing, prestige pricing, dual pricing, ruling pricing, negotiated pricing, mark up pricing, etc. each one can be explained as follows:
Multiple Unit Pricing
“Multiple-unit pricing is a practice where a company offers consumers a lower than unit price if a specified number of units are purchased.”
Marco, a plumbing, heating and AC company located in California, has a simple but
powerful product strategy: ‘Solve the customer’s problem no matter what, solve the
problem when the customer needs it solved, and make sure the customer feels good
when you leave’. The company guaranteed, same day service for customers requiring
it. The company provides 24 x 7 services at no extra charge for customers whose AC
dies in hot summer Sunday or whose toilet overflows at 2.30 AM. The company
guarantees the price of a job to the penny before the work begins. Whereas most
competitors guarantee their work for 30 days, Marco guarantees all parts and labour
for one year. The company assesses no travel charges as “it’s not fair to charge
customers for driving out.” The company owner says: “We are in an industry that
doesn’t have best reputation. If we start making money our main goal, we are in
trouble. So I stress customer satisfaction; money is a by-product.”
The company uses hiring, ongoing training and education, performance measures and
compensation that incorporate customer satisfaction, strong teamwork, peer pressure,
empowerment, and aggressive promotion to implement its strategy. The credit
manager says: “Those who want a nine-to-five job needs to go somewhere else.”
Marco is a premium pricer. Yet customers respond because it delivers value – that is
benefits for costs. In 8 years annual sales increased from $200,000 to more than $3.3
million.
How should other areas of company (marketing, finance, personnel) support the
product strategy?
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