Marketing Module Assignment: BP's Good-Better-Best Pricing Strategy

This assignment provides a comprehensive analysis of British Petroleum's (BP) potential application of the Good-Better-Best pricing strategy, a marketing approach that involves offering different product versions at varying price points based on the value they provide. The paper begins with an introduction to pricing strategies and their impact on a company's growth and sales, then delves into the core principles of the Good-Better-Best model. It explores how BP, as a global oil and gas firm, could implement this strategy by categorizing its petroleum fuels into good, better, and best options, each with a corresponding price. The analysis includes recommendations for successful implementation, such as market feasibility assessments, effective marketing, clear value differentiation, and a phased rollout. The assignment also addresses potential challenges, including customer perceptions and the need to maintain product quality across all tiers. The conclusion reiterates the effectiveness of the Good-Better-Best approach in attracting customers and enhancing sales, emphasizing its relevance for BP.

PRE-ASSIGNMENT
MARKETING
Contents

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Introduction...........................................................................................................................................1
Good-Better-Best strategy.....................................................................................................................1
Utilisation of Good-better-best strategy by BP......................................................................................1
Recommendation while using this strategy............................................................................................2
Issues that might be faced by BP while implementing this strategy......................................................3
Conclusion.............................................................................................................................................3
References.............................................................................................................................................3

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Introduction
Every company needs to select pricing strategy that is capable of giving competitive
advantage over the rivals. This is also done by the company to enhance their scope in
different parts of the world. Pricing strategy selected by the company has direct impact on the
growth and sales of the company. There are different kinds of approach that is taken by the
company in the areas of designing the pricing strategy (Mohammed, 2018). Customers are
highly price sensitive hence companies have to be alert about the approach that they select for
their pricing. British Petroleum (BP) is one of the biggest oil and gas firms from UK. This
report is going to highlight the Good-Better-Best strategy used by BP.
Good-Better-Best strategy
Good-better-best is a pricing strategy that can be used in the organisation in an appropriate
manner. This strategy suggests to keeps the prices of same products higher or lower in terms
of the value that they provide to the people. This means that the variation in the product in
terms of value should decide their price i.e. the product version that provide higher value to
the people can have higher price (Nagle & Müller, 2017). People automatically get attracted
towards the best priced products and if they are unable then they can purchase the product
with good pricing. There are many examples in the past where companies have used this
strategy. These examples illustrates that once the customers will start using their product they
will look for the better product and if the company is giving them the better version of the
product then they are ready to pay higher (Perfficiency, 2018).
Utilisation of Good-better-best strategy by BP
This oil and gas company has business in different parts of the world and since there major
areas of operations are in the countries that are highly developed, they can easily utilise
Good-better-best strategy for having higher sales in the market. In order to apply this
approach they will have to first classify their products in terms of the quality and value they
are offering to their customers. Company needs to bring three kinds of petroleum fuels in the
market, first with the lowest quality which can be tagged with good pricings mark, second is
bit better kind of fuel which must be tagged with the pricing slightly higher than the previous
one and the best or super fuel will have the highest cost. Super oil will keep the engines safe

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and will also improve the mileage of their vehicles. Since it will provide the best value to the
customers and will increase the lifetime of their vehicles hence pricing can be done on the
higher side. The differentiation between the costs should also be significant and not too much
far that it makes the customers sensitive about their purchasing. It should show the value that
they are offering (Bobaljik, 2012). It is seen that once the customers gets addicted to the best
quality products (here fuels) then it very unlikely that they will shift to the lower versions of
the fuel. However the company should also look at the aspect that even their lowest priced
product meets the international standards and are competitive with their competitors.
Applying this pricing strategy in BP will also enhance the chances of sales. This is because
people will be likely to pay as per the quality they demand for and they will know that there
are different kinds of fuels that are available in the market. This will also give the boost to the
growth of the internal pricing competition in the petroleum market. This pricing approach can
also be applied in BP as the company’s reputation is good and they have strong holds in
many markets. This is because since they will have control over the market then they will be
able to manipulate the pricing according to their wish (Babaioff, Dughmi, Kleinberg &
Slivkins, 2015). People that are rich will always be ready to pay extra if they find that the
product that they are purchasing is of higher quality and can reduce their cost of maintenance
of their vehicles.
Recommendation while using this strategy
There are several things that an organisation will have to make sure while implementing this
pricing strategy in the market. It is recommended that company looks for feasibility of their
prices in the market i.e. if the company’s best product prices are much higher than the
purchasing power of most of the people in the country then it will not support their growth.
This strategy is also effective when marketed well i.e. providing the details about the benefits
of using their different kinds of products and the price value that they are adding to their
products (Mohammed, 2018). It is also recommended that they clearly differentiate in terms
of value and the prices should be reasonable because if the customer feels that they are
cheated and there is no significant difference in their different product versions then there is a
greater chance that this pricing strategy will fail. It is also recommended that trial should be
done in the bigger cities before implementing it in the whole country (Dholakia, 2016).

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Issues that might be faced by BP while implementing this strategy
The biggest challenge with the implementation of this pricing strategy is that it reduces the
faith of the people on the company that cannot purchase high quality and high priced
products. There is a psychology that company differentiates between the customers on the
basis of their purchasing power (Condense preferred, 2019). Another bigger challenge will be
to make people believe that they are coming up with the products that actually provide them
better value. This is because it is the mileage that is the only parameter through which
customers can see the value of their money and the internal benefits to the vehicle are not
easier to trace.
Conclusion
In conclusion it can be said that Good-Better-Best approach to pricing is an effective strategy
to attract customers and improve their sales. BP can apply it on their different quality of fuel
where the best or super fuels are having the highest price.

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References
Babaioff, M., Dughmi, S., Kleinberg, R., & Slivkins, A. (2015). Dynamic pricing with
limited supply. ACM Transactions on Economics and Computation (TEAC), 3(1), 4.
Bobaljik, J. (2012). Universals in comparative morphology. Universals in Comparative
Morphology.
Condense preferred, (2019). Why Good-Better-Best Pricing Works, And How To Implement
It. Retrieved From: http://www.cadencepreferred.com/why-good-better-best-pricing-
works-and-how-to-implement-it/
Dholakia, U. (2016). What Consumers Should Know About Good-Better-Best Pricing.
Retrieved From: https://www.psychologytoday.com/us/blog/the-science-behind-
behavior/201602/what-consumers-should-know-about-good-better-best-pricing
Mohammed, R. (2018). The Good-Better-Best Approach to Pricing. Retrieved From:
https://hbr.org/2018/09/the-good-better-best-approach-to-pricing
Mohammed, R. (2018). Why Good-Better-Best Prices Are So Effective. Retrieved From:
https://hbr.org/2013/02/why-good-better-best-prices-are-so-effective
Nagle, T. T., & Müller, G. (2017). The strategy and tactics of pricing: A guide to growing
more profitably. Routledge.
Perfficiency, (2018). Pricing Strategy – Good – Better – Best. Retrieved From:
https://www.perfficiency.com/pricing-strategy-good-better-best/