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However, the chances are that in order to close the deal, they were offered a discount of some form.

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This personal experience will have fuelled expectations of discounts in the future — but what size of discounts? To fully understand the price perceptions of their target consumers, auto manufacturers need to know what their car buying experiences tended to be last time around. These three factors will ensure that each second and third-generation buyer negotiates for their new vehicle with a strong feeling about what a fair price should be.

However, manufacturers cannot afford to make the assumption that this will simply be the lowest price they can get. As in more developed markets, consumers want a price that aligns with their expectations of what is reasonable — not one that undercuts those expectations. So how can brands in rapid growth markets set about assessing buyer expectations of a fair price for a particular car model? They must start with a clear sense of the appropriate price range that their brand commands amongst the buyer segment they are targeting — and this is where their approach to pricing strategy may well need to make its greatest adjustments.

Western brands with long heritages in Europe and the US cannot expect to import that heritage wholesale to new markets. In China, for example, Porsche is the brand of the Cayenne and Panamera rather than the As they build brands from new starting points, manufacturers must have a precise sense of how their brand and price premium adjusts as a result.

Most consumers of course, do not buy a vehicle on brand alone. It is equally significant for manufacturers to identify the particular vehicle features that consumers are prepared to pay for: the elements that make the greatest contribution to the probability of them buying at a particular price point. Offering the right features at the right price is the key to achieving sales and growth targets.

Lastly, a manufacturer must understand the complex interplay between list prices and transaction prices at dealerships. Set the list price too close to the price that buyers consider fundamentally fair and those buyers may be disappointed that they are not offered a larger discount from the dealership. Set the price too high, and the larger discounts offered to secure a deal could damage credibility, raise suspicions and undermine brand equity.

The gold rush of setting list prices in the expectation that consumers are ready to pay them is over. In rapid growth markets, the real game of setting pricing strategy and securing market share is about to begin.


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Rush is Over – Now What?

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As Soon As the Rush is Over

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