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4.14 Conclusion

In this chapter, we have illustrated a model for constructing PD curves that draws on the dynamic tension that exists between developing Midas and Hermes products. The key points are the following:

  • PD curves are used to increase revenue and foster experimentation and R&D.
  • A versioning curve is the same thing as a PD curve.
  • Midas products and services are feature-rich versions of a product that are developed using extravagant engineering and design. Midas versions are high-end products for nonprice-sensitive consumers.
  • Hermes versions of products and services are developed using frugal engineering and design. Hermes versions are for price-sensitive consumers.
  • Atlas products and services are the result of the dynamic tension created between Midas versioning and Hermes versioning.
  • Atlas products and services are designed for mainstream consumers. Atlas products and services incorporate the product design features that will attract the broadest customer base and will also be profitable.
  • Even standardized products can be versioned.
  • There are a variety of version strategies available and some of them require R&D and some of them can be developed through packaging and marketing.
  • A customer segment is a group of prospective consumers with similar products and services. Versioning complements and amplifies customer segmentation.
  • Versioning assists in developing and executing pricing strategies.

As noted earlier, we believe that using a combination of pricing and product-versioning strategies facilitates product experimentation and the ability to observe economic behavior in action and perform research and product development. It allows the company to monitor purchase behavior and determine which features and products consumers deem most desirable. The next chapter will introduce a variety of product differentiation versioning strategies that are being used by businesses to compete.