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The Good-Better-Best (G-B-B) approach to pricing implies the focus on features offered by companies that they would value the most, which influences their willingness to pay for them. The more excellent the perceived value of an offering, the higher should be the price (Mohammaed, 2018). The strategy encourages firms to create different versions of products, such as Netflix subscription plans, and price them depending on the willingness of customers to spend more on more expensive and valuable versions. The strategy contributes to the enhanced value exchange because it aligns value with pricing when offering different products in the market (Smith, 2011).
The G-B-B approach does not fit with the pricing discrimination strategy because the latter implied charging different prices for the same product or service depending on the perception of what the customer can agree to pay. There is also a degree of bias in price discrimination; for example, international customers may be charged for the same product more than domestic ones. G-B-B is concerned with creating value that would align with an increased price regardless of the customer profile and purchasing capabilities.
The critical challenge associated with the G-B-B pricing strategy is concerned with firms that market products with few distinct features or features that cannot be easily modified. Because of this, the strategy is complicated in implementation because of the need to identify effective fence attributes. There is also a risk of cannibalization of some products when signing off a Good offering in the market (Mohammed, 2018). Overall, despite the simplicity of G-B-B pricing, companies must discover that it is more powerful than organizations may see at a first glance.
References
Smith, T. (2011). Pricing strategy: Piercing the veil of value exchange. Ivey Business Journal. Web.
Mohammed, R. (2018). The good-better-best approach to pricing. Harvard Business Review. Web.
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