In this segment we will cover what pricing means at a very fundamental level, almost as a recap. And I will emphasize the nature of B2B2C pricing, and that involves adding value from many different dimensions. And in the related vein I'll talk about how we have to understand our buyer's benefits and cost. But that said, we also have to understand our benefit, what we can add to our value but also our cost as well. So let's get started. Okay, so what is pricing? Well, pricing at a very simple level, is what you pay for a product. But what you pay is not necessarily out of pocket. Because it may involve the other non-price aspects such as inconvenience, such as other tansactional costs. And maybe, a better word for pricing is value, and we can think of pricing as being this equation, this ratio of benefits over costs, and because this may vary by buyer, this is why Noon Nopi matters so much even in B2B pricing. Okay, so a word that I like to use often is B2B2C. And we talked about that in product. So the TC of course is referring to the end user. And we have to think about how our buyer can add value ultimately to their buyers. Which here often is referred to as C, because we're talking about consumers. So as we can see, as compared to the B2C pricing definition, with B2B2C pricing, we can think about four different dimensions. Not only the value adding that we add to us, but also the value adding that we can add to the buyer or immediate buyer in terms of how he can create value to his end user. But also we can think in terms of the value equation, the impact that we have on his costs. But finally, we also have to think about our costs as well. So what this all implies together is that we have a lot of wiggle room. Instead of just thinking about pricing, it's involving something adding to costs. No, it's not just our cost, but it's also the buyers cost. It's not just value added top us, but it's also value added to the end-user. Okay, so the implication therefore is that we have more options than in a B2C. So we have to have a broader perspective of value-adding, we have to have a broader perspective of cost. And intertwined with total product system is pricing, because here too we have to know to whom we're talking about value and costs. And according to a TPS we have pre-marketing, we have main marketing, and we have post-marketing. So, this can vary by stage, and by stage it can vary by member, because as we learned in product, the targeting may vary by stage. So ultimately pricing can be about who and who here can mean our captain, the member of our selling center, sells what? What is emphasized in terms of value or cost and ultimately to whom? Which here refers to the buying center number. Okay, so in terms of adding value, we have to think about value added in use. And so, whether it's our buyer or the buyer of our buyer, indicates a B2B2C. The keyword here is application and the value can vary by application. It could be the same product, but depending on it's used, the value may vary. So one of my all-time favorite examples of that of adhesives. And adhesives can be used in various applications, but I'll just talk about two. One which is very simple, so in the case of, let's say, toys, where you hardly need any adhesive, the value added is kind of low. It can be as low as 25 cents per pound. But conversely, let's think about an application where the needing to have something stick is crucial, and that can be in the case of false teeth. So in the case of false teeth, even though it's essentially the same product, the value perceived is much higher. The value added is much higher and therefore, the pricing can be much higher. As high as $25 per pound. Again the same product, but 100 times more potentially valuable and therefore more expensive. But the key caveat here is that we have to segment by the buying center member. So that perception of value, that will vary by to whom were emphasizing this value. And the odds are that the purchasing department will care less about that kind of value added, as compared to, let's say R&D, where you're constantly thinking about new applications, new valuable applications. And also marketing and sales, where they have to make that pitch to the ultimate end user. Also in terms of value added, EVI, which stands for early vendor involvement, matters. Because we have establish early on what the problem that our potential buyer needs to solve, and what the solution is. And ideally that solution has to be us. And if we can get in early, we can lock in our buyer with the perception that our product is valuable per that application, especiallyvis a vis other suppliers.
