{"id":328,"date":"2012-11-13T10:03:32","date_gmt":"2012-11-13T18:03:32","guid":{"rendered":"http:\/\/www.gordonbenzie.com\/blog\/?p=328"},"modified":"2023-05-22T22:07:32","modified_gmt":"2023-05-23T05:07:32","slug":"communicating-pricing-in-a-multi-tiered-distribution-model","status":"publish","type":"post","link":"https:\/\/www.gordonbenzie.com\/blog\/communicating-pricing-in-a-multi-tiered-distribution-model\/","title":{"rendered":"Communicating Pricing in a Multi-tiered Distribution Model"},"content":{"rendered":"<p><a href=\"http:\/\/www.gordonbenzie.com\/blog\/wp-content\/uploads\/2012\/11\/communicating_pricing_strategy.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright size-medium wp-image-329\" title=\"Communicating pricing strategy\" src=\"http:\/\/www.gordonbenzie.com\/blog\/wp-content\/uploads\/2012\/11\/communicating_pricing_strategy-300x285.png\" alt=\"\" width=\"300\" height=\"285\" srcset=\"https:\/\/www.gordonbenzie.com\/blog\/wp-content\/uploads\/2012\/11\/communicating_pricing_strategy-300x285.png 300w, https:\/\/www.gordonbenzie.com\/blog\/wp-content\/uploads\/2012\/11\/communicating_pricing_strategy.png 373w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>It is no secret that companies regularly charge different prices for the same product. Just look at the airline industry as one example. Nearly every seat has a different price, which can vary depending upon the day of the week, your status as a frequent flyer and how close the flight is to departure. The strategy behind this pricing decision is valid \u2013 lost seat revenue from departed flights can never be recouped. Airlines must try to fill every seat for the highest possible rate to maximize revenue. This pricing dichotomy can create a potential communications challenge, but only if the rationale behind this difference\u00a0isn&#8217;t\u00a0reasonable.<\/p>\n<p>I would propose that the car rental industry\u2019s pricing strategy\u00a0doesn&#8217;t\u00a0make sense, and as a result, that industry is communicating poor messaging resulting in a loss of consumer loyalty and repeat purchases. Speaking from my own experience, I see the purchase of a rental car as a commodity item, one that is identical regardless of what provider I choose to patronize, with one exception \u2013 Enterprise. They will bring the car to you. This is great service, and truly a competitive differentiator.<\/p>\n<p>Here is my source of confusion \u2013 if you take the time to create an online profile with your preferences, including personal identifying information about what you like to rent and where you like to rent, this privilege you are bequeathing to the car rental company comes at a price \u2013 you are charged a higher rental fee! One might think that a \u201cpreferred\u201d member should at least be given a coupon or some sort of advantage for going through the hassle of creating the online profile..<\/p>\n<p>Let\u2019s assume there is some sort of loyalty program that gives repeat buyers a discount. If that were the case, then the choice to purchase through a third party might be worth less to a car rental company \u2013 a commission must be paid to these purchases, reducing the economic value of such a purchase. The reality is just the opposite, and the price difference is unbelievable. At Hotwire.com, I can rent an economy car for $15 per day, provided I can create an alert and check back periodically to when that rate comes available. Alternatively, if I go directly a car rental company and try to book the same car, the price is about $80-$90 per day, for the same period, same location and same type of car, a rate increase of 400-500% higher. The only difference is that the $15 rate is non-refundable, so clearly there is some value in being able to cancel without penalty.<\/p>\n<p>Perhaps, this is a reasonable pricing decision and worthy from an economics perspective to continue this practice. I don\u2019t know, as I am not privy to this information. My point is that from a consumer messaging and business communications perspective, this discrepancy simply\u00a0doesn&#8217;t\u00a0make sense. For example, the car rental companies could offer a \u201crefundable\u201d and \u201cnon-refundable\u201d rate, if that is indeed the source of the extreme pricing difference. Then, it starts to make sense.<\/p>\n<p>In the same way that an empty \u201cseat\u201d on a flight represents revenue that will never be recaptured, rental cars sitting on a lot overnight represent the same opportunity cost. Clearly, a multi-tiered pricing strategy is logical. The challenge how do you execute a sensible pricing and communications messaging strategy that can be a win-win for both the company and its customers?<\/p>\n<p>Does your business or industry have its own pricing \u201cnuances\u201d that only you, as an insider, understand? If so, maybe it is time to fix them.<\/p>\n<p><strong>Gordon Benzie<\/strong> is a marketing adviser\u00a0and business plan writer that specializes in preparing and executing upon business plans and marketing strategies.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>It is no secret that companies regularly charge different prices for the same product. Just look at the airline industry as one example. Nearly every seat has a different price, which can vary depending upon the day of the week, your status as a frequent flyer and how close the flight is to departure. The &hellip; <a href=\"https:\/\/www.gordonbenzie.com\/blog\/communicating-pricing-in-a-multi-tiered-distribution-model\/\" class=\"more-link\">Continue reading <span class=\"screen-reader-text\">Communicating Pricing in a Multi-tiered Distribution Model<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3,4,30],"tags":[66,70,65,72],"class_list":["post-328","post","type-post","status-publish","format-standard","hentry","category-brand-integrity","category-marketing-communications","category-pricing","tag-brand-integrity","tag-business-strategy","tag-marketing-communications","tag-pricing"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Communicating Pricing in a Multi-tiered Distribution Model - Making Every Word Count<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.gordonbenzie.com\/blog\/communicating-pricing-in-a-multi-tiered-distribution-model\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Communicating Pricing in a Multi-tiered Distribution Model - Making Every Word Count\" \/>\n<meta property=\"og:description\" content=\"It is no secret that companies regularly charge different prices for the same product. Just look at the airline industry as one example. Nearly every seat has a different price, which can vary depending upon the day of the week, your status as a frequent flyer and how close the flight is to departure. The &hellip; Continue reading Communicating Pricing in a Multi-tiered Distribution Model\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.gordonbenzie.com\/blog\/communicating-pricing-in-a-multi-tiered-distribution-model\/\" \/>\n<meta property=\"og:site_name\" content=\"Making Every Word Count\" \/>\n<meta property=\"article:published_time\" content=\"2012-11-13T18:03:32+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-05-23T05:07:32+00:00\" \/>\n<meta property=\"og:image\" content=\"http:\/\/www.gordonbenzie.com\/blog\/wp-content\/uploads\/2012\/11\/communicating_pricing_strategy-300x285.png\" \/>\n<meta name=\"author\" content=\"Gordon Benzie\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Gordon Benzie\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.gordonbenzie.com\\\/blog\\\/communicating-pricing-in-a-multi-tiered-distribution-model\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.gordonbenzie.com\\\/blog\\\/communicating-pricing-in-a-multi-tiered-distribution-model\\\/\"},\"author\":{\"name\":\"Gordon Benzie\",\"@id\":\"https:\\\/\\\/www.gordonbenzie.com\\\/blog\\\/#\\\/schema\\\/person\\\/73f83175cad0c07bed5148c9f843650f\"},\"headline\":\"Communicating Pricing in a Multi-tiered Distribution Model\",\"datePublished\":\"2012-11-13T18:03:32+00:00\",\"dateModified\":\"2023-05-23T05:07:32+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.gordonbenzie.com\\\/blog\\\/communicating-pricing-in-a-multi-tiered-distribution-model\\\/\"},\"wordCount\":628,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.gordonbenzie.com\\\/blog\\\/#\\\/schema\\\/person\\\/73f83175cad0c07bed5148c9f843650f\"},\"image\":{\"@id\":\"https:\\\/\\\/www.gordonbenzie.com\\\/blog\\\/communicating-pricing-in-a-multi-tiered-distribution-model\\\/#primaryimage\"},\"thumbnailUrl\":\"http:\\\/\\\/www.gordonbenzie.com\\\/blog\\\/wp-content\\\/uploads\\\/2012\\\/11\\\/communicating_pricing_strategy-300x285.png\",\"keywords\":[\"Brand Integrity\",\"Business Strategy\",\"Marketing Communications\",\"Pricing\"],\"articleSection\":[\"Brand Integrity\",\"Marketing Communications\",\"Pricing\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.gordonbenzie.com\\\/blog\\\/communicating-pricing-in-a-multi-tiered-distribution-model\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.gordonbenzie.com\\\/blog\\\/communicating-pricing-in-a-multi-tiered-distribution-model\\\/\",\"url\":\"https:\\\/\\\/www.gordonbenzie.com\\\/blog\\\/communicating-pricing-in-a-multi-tiered-distribution-model\\\/\",\"name\":\"Communicating Pricing in a Multi-tiered Distribution Model - 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