Is the Price Right?
There are industries that traditionally make big blaring announcements when they change prices on products: airlines, used car dealerships, clothing stores. Asset management does not come to mind, which is why when industry giant Blackrock said this week the price for a sophisticated new product was “free” leaders from a wide variety of other industries took notice.
The world’s largest asset manager wants financial advisors to use its new “BlackRock Advisor Center,” a sophisticated portfolio tracker, in the hopes that the advisors will think of using BlackRock funds for their own clients. So, BlackRock is giving away the tracker. The move, along with recent big pricing decisions by Whole Foods and Disney, show how even industries with customers who traditionally aren’t particularly worried about costs are using both old and new pricing strategies to capture new customers.
Whole Foods was bought by Amazon last year and the online retailer is encouraging its Prime members to shop at the grocer with store discounts and free delivery. These moves are being done from positions of strength, says Craig Rowley global practice leader for Korn Ferry’s Consumer sector. The discounting is being done to help broaden Whole Foods’ appeal beyond higher-income shoppers. “Amazon has tens of millions of Prime customers who joined because they are value customers,” says Rowley. “Now the bargain hunter has reason to shop at Whole Foods.”
In Disney’s case, it’s news wasn’t about lowering price, but increasing it. The company is offering customers the chance to attend a six-hour preview of Pixar Pier, a new attraction at Disneyland California Adventure Park, on Friday, one day ahead of its opening to the general public on Saturday. The price for this one-day early sneak peak is $299, more than double Saturday’s admission price. The company believes there are many die-hard theme park and Pixar fans willing to pay for the early access.
Pricing strategies like Amazon’s and BlackRock’s are “as old as pie,’’ says Kathy Vrabeck, a senior client partner with Korn Ferry in the consumer digital practice and a member of the firm’s Consumer Marketing Center of Expertise. What’s new, she says, is that companies are using consumer data based on individual online shopping habits, allowing them to price products and services on a person-to-person basis. “The best companies are constantly testing price strategies and learning from the results,” Vrabeck says.