Control Value-to-Customer

Hermann Simon and Adam Echter
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Hermann Simon: Simon-Kucher & Partners
Adam Echter: Simon-Kucher & Partners

Chapter 6 in Beating Inflation, 2023, pp 47-53 from Springer

Abstract: Abstract The relationship between inflation and value-to-customer is crucial. Perceived value-to-customer is the driver of willingness-to-pay and pricing power. Therefore, it makes sense to increase value-to-customer in order to mitigate resistance to price increases. The key question is whether and how such increases can be achieved quickly enough under inflationary conditions. By far the most important instrument for increasing value is innovation. However, the results are disappointing. Seventy percent of the managers say that innovations do not meet expectations in terms of increasing willingness-to-pay. Since it’s all about perception, effective value communication forms another important tool. Additional services and extended guarantees can have a positive influence on willingness-to-pay and expand the scope for price increases. All these measures take time to implement and to take effect, and they produce additional costs. It is therefore necessary to examine very carefully which measures are actually suitable under inflationary conditions. Caution is advised.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-20093-9_6

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DOI: 10.1007/978-3-031-20093-9_6

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