Multidimensional Pricing

Abstract

Willingness of people to own products but at the same time avoid paying a single lump-sum payment has caused the marketers to literally flood the market with complex pricing schemes for products ranging from luxury automobiles to telecom services. Multidimensional pricing is the pricing of a product or service using multiple numbers. In this practice, price no longer consists of a single monetary amount (e.g., sticker price of a car), but rather consists of various dimensions (e.g., monthly payments, number of payments, and a down payment). Research has shown that this practice can significantly influence consumers' ability to understand and process price information. Multidimensional pricing may offer the firm the ability to increase consumer demand without dropping the effective price-for example by reducing the magnitude of one price dimension (e.g., monthly payments) and compensating for it in another dimension (e.g., number of months). Our CCS study focuses on the aspects like how do consumers perceive different dimensions of offer and what are the most important dimensions. Accuracy of evaluation of offer by consumers subjected to different format, complexity and number of price dimensions. Initial part of the study was focused on the secondary research and understanding the various frameworks affecting the price perception of the consumers and what are the various types of the multidimensional pricing schemes that exist in the market. Secondary research also focuses on the consumer perception of the multidimensional pricing and strategic challenges that a marketer will face while implementing the Multidimensional pricing strategy. In the second phase of the study, we conducted primary research to check the feasibility of implementing the multidimensional pricing in the PGP course. Our research on brought some important points like MDP in educational programs will be more suited for the programs which have considerable flexibility, uncertain effective duration and high cost. In the third phase of the study pricing strategy of justbooks was studied. Objective of the study was customer profiling and major benefits sought by the consumer. Apart form this, we have assessed the feasibility and importance of MDP in books rental pricing. The most important dimension in decision making process of the consumer is also studied and based on the findings recommendations for pricing are put forward.