The meaning of discrimination
Whenever we speak of discrimination, it is considered to be a derogatory term that seems to contradict the prevailing moral values. In fact, discrimination in economics is a neutral term, which is the corollary of choice。
(1) inevitability of discrimination
First of all, we need to understand the rule that discrimination is inevitable. Why? Because scarcity is the basic rule of the world, because scarcity requires that we choose, and that choice requires selective criteria, the criterion for which is discrimination。
For example, if there was a school where he had 200 students a year, but there were 1,000 students who wanted to go to the school, so at this time education resources were scarce and choices had to be made, and who had the right to enrol in the 1,000
The school has established rules and conducted an examination with the top 200 eligible candidates. This is discrimination, and schools discriminate against children with poor performance. Or the school made another choice, with 50 of the 200 places, and who invests the most in the school, the 50 places belong to him. This is another form of discrimination against children who cannot afford to invest in it。
So, in your view, discrimination is inevitable and, in any case, as long as scarcity still exists, we have to choose. Discrimination occurs when choices are made。
(ii) product manager, outright discriminatory
The conscious product manager sees it here. Ah, the work i do every day is discriminatory. It is discrimination that you choose to target the product; it is discrimination that you choose to satisfy a rather than b; and it is discrimination that you price the product 200 instead of 100。
Many people who do not know what the product works think that the product manager is just drawing a prototype, creating a bias that everyone is a product manager, although the slogan was originally good, but the threshold for dissemination is widely misunderstood as a product manager. Indeed, if the core competencies of a product manager are to be stated, it is the ability to weigh。
Every decision made by a product manager must be followed by a lot of thought. Because the resources of each enterprise are limited and the needs of users are unlimited, product managers have to trade, do and do nothing. If we choose to do a piece of music software, then figure out why i'm fit to do video software。
If we position the target users as white collars, it is clear which users we have abandoned, and whether they are worth more. If we choose to meet a's needs, it is clear that the b's and c's needs, which we have abandoned, are all opportunity costs, and whether they are of greater value to users。
2. The role of discrimination
Not only is discrimination inevitable, but it is sometimes justified and, if it is enforced, has serious consequences。
Discrimination is often a low-cost risk-avoidance strategy. Before the internet, for example, we often felt that the salesmen at the real store looked snobby and looked at people's dishes based on different customers' clothes. And while each of us is against it, let's think about it
In fact, each salesman has a limited time, and when there are several customers to serve at the same time, he has to choose, of course he will give priority to those who appear to be more able to consume。
Then why is it becoming less common in the internet age? Because the cost of discrimination has become higher, the internet has become too efficient to transmit information, and any bad case has the potential to spread rapidly from the media, discrimination has become fewer and more hidden。
The example above shows that discrimination is sometimes very constructive. A mandatory prohibition of such acts would have serious consequences. I think the most typical example is that of the subprime crisis in which everyone was impressed. The subprime crisis is attributed to the greed of capitalists or to financial innovation, which is not the real reason. Capitalists are always greedy, and financial innovation itself is not wrong, and we cannot stop progress in an industry. The reason for this is that the government has imposed a ban on discrimination by commercial banks。
The majority of those who had previously been able to obtain loans were white, and the chances of those from ethnic minorities and vulnerable groups receiving loans were much lower. Know that commercial banks are smart, and it costs to discriminate against a group. If a group can repay a loan, the bank does not lend, and the bank has a loss. Banks discriminate against these groups precisely because they are less likely to exchange for loans。
The media, however, have heavily reported capital discrimination against vulnerable groups, the government has been pressuring banks to lower their mortgage standards, and it has been able to compromise commercial contracts with commercial banks. As a result, bankers understand that the risk of lending is in the hands of the government. The bankers, of course, were happy to release the loan, and as you can see in the big open, anyone could easily borrow a few sets of property, and the debt was sold and sold, and the bomb exploded and the subprime crisis came。
It also states that the work of the product manager is a trade-off, and never think about making a large and complete product at a time. There may be many opportunities that we can see, but the resources at our disposal give priority to finding only one of the most likely points of entry, from 0 to 1 and then from 1 to n. It's a process from dispersing to consummation, that's what we're talking about。
Price discrimination 1. Psychological valuation
Before talking about price discrimination, there was a further concept called psychological valuation. Many have always thought that value is an objective concept, but that value is defined by human beings. In wikipedia, commodities are defined as a product used to satisfy the desires and needs of buyers, with a focus on meeting human desires and needs. That is, any product that human beings need has value; human beings do not need, it has no value。
As such, the value of a commodity is not fixed, and for different people the value of the same commodity is different. This leads to the concept of psychological valuation, which is the greatest price that everyone is willing to pay for a product。
2. Price discrimination
Western economics believes that prices are determined by the supply-demand nexus, but this is macroeconomic theory. Indeed, in a truly commercial world, the price of a commodity is shaped by a game between traders and consumers in a single deal。
For example, if there was such a commodity, i'd cost 50 bucks, and i'd be earning 51 bucks in theory. We price it on the basis of how much the consumer is willing to pay. If a person's psychological valuation is 200, we sell it to him. If a person's psychological valuation is 150, we sell it to him on 150。
If we can, in theory, hope that the price of each transaction will be perfectly close to the psychological valuation of the consumer, that is, price discrimination, in the words of the great white, that is to say, a human dish。
(1) maximum payment willingness of users
This form of price discrimination has long been typical of auction houses, where the person willing to bid the highest price for the commodity is found。
Boeing, for example, sells aircraft at no fixed price and the cost of the aircraft is determined through several rounds of negotiations. It was because boeing had to test the client's psychological valuation from several rounds of negotiations in order to get the highest price per guest。
(2) purchases
The most typical example is the wholesale market, where prices are selected on the basis of the amount purchased by the client, since a one-time sale of a large volume of goods saves many transaction costs。
(3) plasma pricing
This method of pricing discriminates on the basis of industry cycles, and when a new class or product emerges, there is not yet an accurate perception of its price, and there is a period of dividends. At this point, the firm will set a high price and draw a part of the higher profit. Then, when other competitors enter, the price drops slowly, as if the fat layer of milk had been removed first。
This method of pricing is often used in high-technology industries, where the psychological valuation of users tends to be higher and where it takes some time for competitors to follow suit. This gives the first-offer a window period of lipid. This is also the most common pricing method for apples, setting a higher price each time a new machine is sold, and then lowering the price slowly。
(4) pricing by population
This price discrimination is now most common among different population groups and is the most difficult to detect by users. With today's understanding of the concept of price discrimination, you can understand the logic behind many of the commercial discounts。
Why, for example, do you want to be a university student 69%? It was merely a means of price discrimination, and university students were not out of society, although they had a certain capacity to consume, but were not particularly strong, while university students tended to have more time. In the case of bottom fishing, a 69-percent discount is still earned and, apart from the fact that there are no special time periods for meals, it happens to be consumed by university students as a means of maximizing benefits。
Again, there are numerous days of discounts, 11 or 618, and why all the major platforms have to cut prices, not to subsidize users, but to screen those who are less able to consume. The needs of people are generated from time to time once in 11 years, and they do not want to wait for users with high psychological valuations。
And the low-value users, like a $200 commodity, who feel willing to buy it at a price of $180, would expect them to buy it if they were shoppers, waiting for a discount promotion day. So you should understand now that the two elevens were prepared for these users, with the aim of finding different users of psychological valuation。
There is also a particularly typical example of the past years of the flames, more often because of the way in which the acchi art is broadcasted in front of the audience. And now it's easy to understand this act of ecstasy, which is different for different users, to find those heavy fans, to find another batch of vvips in the vip, to eat them as much as possible. And whether this is the case or not, the matter at least tells the product manager that the value of the product is to be weighed against the value of the enterprise if the product is to be profitable on a sustainable basis。
New pricing strategies
I think the concept of price discrimination teaches all product managers that the price of goods is determined not by cost but by the psychological valuation of the user. More interestingly, it is often through psychological valuations by users that prices and production methods are determined, and then the cost of the product is determined, so the causality is the opposite。
For example, if we define it as warmness, then the user is willing to pay only $100, and if we define it as a holiday gift, the psychological valuation of the user may soar to $1,000 at once. That's why some businesses earn hard money, while others get more than profit。
Sales = flow* conversion * guest unit * repurchase rate, so the other conditions remain unchanged, and the price of the commodity should be determined by the user's psychological valuation in order to maximize sales。
In theory, the more we separate the particle size of the user group, the more we get the maximum price the user is willing to pay. In fact, however, there are costs inherent in fine-tuning the particle size of the user group, and this cost is not linear but exponential。
1. Willing pricing
But the advent of the internet has given people an entirely new way of pricing: willing pricing。
A willing price is a product that is not priced, paid for or paid, and paid only by the will of the user. I'm sure a lot of people would question whether this pricing is really going to cost users. Isn't this a long-standing case where a reward for live broadcasts is a form of willing pricing? No one will pay for a live broadcast, but if you're happy, you want to give it to the whole screen. You see, instead of the fact that nobody pays, there are countless cases of hundreds of thousands of cases。
Let's do an intellectual experiment, get a headmaster on the air. If the price is not a reward, but a ticket, you think the final profit will be more or less:
This leads to several advantages of willing pricing:
Of course, it's not an option for any product, and i think there are at least a few conditions:
The product itself has to have a strong psychological experience, and the students who saw my last user decision model should know that users need to be motivated to make a decision, taking into account the cost of making the decision. So the traditional way to price is to enforce the price, and when the desired price is set, the constraint is gone, and a new incentive is needed to pay for the push user. Emotion is a powerful motivation, and a product with a strong psychological experience can trigger many user emotions and drive users to pay. The marginal costs are extremely low, and it is believed that it is not too much to say that students understand. The product itself needs a certain user base, and we calculate it with a certain conversion rate, and the resulting income at least covers fixed costs, which is worth doing. 2. Data support dynamic pricing
In addition to willing pricing, the data generated by the internet offer the possibility of dynamic pricing. Dynamic pricing is not new to everyone, and big data killing is now prohibited. While this model is open to debate, it suggests that technology is ripe。
The pattern of big data killing does reach users, but does not mean that dynamic pricing is not desirable per se. We take the example of the air transport industry, and our constant price change for the same user would certainly be objectionable to the user. But if we change the way in which data can be obtained on a given day, how many users may have needs, and to what extent, it is possible to extrapolate the psychological valuation of the day. This way i believe that airlines can raise sales and users will have little sense。
To take another example of what has already been a success in reality, the economic value of a road in the united states cannot be realized because of its chronic congestion. What does it mean that the government finally made a decision to tax this road at peak hours? How much do you want to pay the driver on this road? There is a dynamic list on the road, which competes on the basis of real-time congestion, so that it can identify who needs the road resources more and solve the congestion problem。
Wrap-up articles:
Discrimination is inevitable, and there is a price to pay for it. The core work of product managers is to weigh the least costly forms of discrimination. Values are not objective but are defined subjectively based on the psychological valuation of different users. The price of the commodity is not determined by cost, but rather by the psychological valuation of the user. The concept of price discrimination, several forms of price discrimination and how to price the maximum sales。
