Sunday, February 27, 2011

Pricing for Overall Value

Image representing The Walt Disney Company as ...Image via CrunchBase
In my Social Media research, I have read about a lot of places where you can get inspiration for a blog posting.  Going over a Direct TV ad was not one that was listed.  I noticed that a lot of the Disney Channels came in the lower cost plans while other high interest channels were in the higher pricing buckets.  Somehow, this made me think about Disney's pricing strategy.  I don't have any insight as to what they actually do, but this process is one many small businesses should use to create overall enterprise value when they have a family of product offerings.

Lets look at some of Disney's Children oriented segments leaving out their ESPN and ABC segments.  To attact families with children they have:
  • Numerous TV Channels via cable or satellite
  • Theme Parks
  • Disney Stores
  • Branded Products
  • Disney Movies and DVD's
  • Online Disney
Now my children love the Disney Channels and I would pay more to have them if they weren't in the lower priced bundles.  However, by having the Disney channels available to more customers, Disney is generating a brand presence that helps drive demand for their Branded Products that you can find in many retail stores in addition to Disney Stores.  It also helps drive demand for Movies and DVD like the Hanna Montana and Wizards of Waverly Place movies.  If they had priced their channels so that they were in the higher bundle cable or satellite packages, then they may not have as large an audience to drive sales for their other products.

In other words, they could sacrifice a little yield in their TV channels to generate incrementally more sales and margin in their other segments to increase overall enterprise value.  This pricing concept is something small businesses that offer a family of related products needs to consider to optimize their enterprise value.

How does your business balance pricing to drive overall enterprise value?

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