Question 9: Taiwanese products

From your internal Reference Price, can you name any Taiwan's product or service that will be successful by using PWYW to foreigners in TW?
Eg. Netbook, will any one of you consider to buy one netbook in TW because it's cheaper to buy here? If Acer offers "Aspire One 531" under PWYW conditions, how much will you pay then?
ps. Internal Reference Price is operationalized as the meomorized price of past purchases of the same (or comparable) products or services, please refer to page 48.

Under PWYW everyone would buy it for a dollar, ship it home and sell it in their home country. And I am not saying this as a joke I really think that this would happen.

There should be at least a minimal price for the product, competitive for external markets, but not as much that shipping it back would be profitable:)

In addition to information goods, I think "high-class restaurants" can also apply the "PWYW" pricing mechanism successfully. It is because their target markets are those who are far richer than the average people and who regard it as a shame to eat without paying a high price in a face-to-face interaction with the service providers.

Moreover, products of services of religious groups and social welfare groups are the other two industries that may succesfully adopt this innovative pricing mechanism. Because their "customers" are those who are kindhearted. When those people buy something from those groups, they think that themselves are "donating" or "doing good to the society." Since it is a benevolent action, the price they pay will centainly not lower than the cost of the product or services because the amount paid is not simply based on some economic theories.

The 'PWYW' pricing mechanism would definetely work with foreigners in Taiwan because of the difference in price level between many western countries and Taiwan. Foreigners might be willing to pay a very good price for Taiwanese products. Because they are already considered cheap compared to what they would pay in their homecountries.

I think Tapei's Big Club should try to organize some "Pay What U Want" Parties like in Paris, in order to attract more customers, to attract different kind of customers or to improve their image.

If there were this kind of parties here in Taipei (I mean you can decide of the price of the ticket, drinks, food etc) how much would u be willing to pay?

Since many clubs here already offer good deals, like the all-you-can-drink policies and the fact that according to some forum members the Taiwanese would not be very willing to pay much if anything I am not sure if this would be very profitable. In fact I wonder how certain clubs can remain open with their current policies.
In Paris which is a relative expensive city it is a great idea, I will surely go back there soon

I definitely think that the PWYW method would work for foreigners in Taipei, but not for all foreigners. As Kim said, Europeans for example find Taiwan prices relatively cheap. But this was not the case for me when I came to Taiwan...
I had China's prices in mind and was kind of surprised of the prices here...but anyway if I compare it with French prices it is cheaper so I guess I would pay a good price if I had to use PWYW.

The PWYW method is to be analysed with the Performance vs Expectations Ratio. Indeed, the better the performance is, the better the expectations will be filled. If the customers' expectations are met, he will pay a good price (even more than the normal price). If not, he may not want to pay at all ! For restaurants, it can be risky because the customer has to be happy when he leaves, so you have to be sure that your waiters are effective, smiling, that the dishes are okay... I can't count the times I have been disappointed in a restaurant (and still paid the salty bill). Well, in my opinion, PWYW can add pressure to the manager.

Off the topic~ As a Taiwanese, I am really glad to know that more and more foreigners get to know the difference between TW and China~ We are indeed, very different!

edith_bonnefond wrote:I definitely think that the PWYW method would work for foreigners in Taipei, but not for all foreigners. As Kim said, Europeans for example find Taiwan prices relatively cheap. But this was not the case for me when I came to Taiwan...
I had China's prices in mind and was kind of surprised of the prices here...but anyway if I compare it with French prices it is cheaper so I guess I would pay a good price if I had to use PWYW.

I think that PWYW strategy is in general a bad strategy. Most of the examples of PWYW have failed or only been used for a short period of time. This is in my opinion related to the nature of human. We are by nature selfish. Thats why the world looks as is does, unfortunately.

The same happens if taiwanesse companies start to offer PWYW to foreigners. First, foreigners are already willing to pay less when they come to asia, simply because its asia. Second, i agree with Bartek, foreigners would start to parallel import the products to their own countries. This is actually why mot brand designers like Gucci, la coste, ralph loren etc. have higher prices in asia then europe. Third, as i mentioned, people will always be a little as possible. There may be exceptions, however the average price will be lower than the cost. Thats almost a fact :-).

Hence, i dont think that taiwannese should use PWYW for foreigners.

So far, we have 3 kinds of business types that may earn more by using PWYW to anyone.
Which are:
high-class restaurants
religious groups (temples in TW)
social welfare groups

and

for foreigners, the Taiwanese products must
with lower price in foreigners' homecountries

but

arbitrage happens very possiblely.

So, PWYW can only work when
1. people will feel "shame" about not paying for it
2. people feel good and satisfied with the perishable service, not a solid product

Is that true?! any contrary case? opinions?

Another question you can try to answer is about quality.
Don't you think foreigners could doubt about the quality of the products "sold" with the PWYW method? Especially for food and restaurants operating like this, the first thing one could wonder is : "with such a (non)-pricing policy, the quality of the food must be low, in order the restaurant to maximize its chances to be profitable.
Could you think about any ways to avoid such a reaction?

edwige_aoudiani wrote:Another question you can try to answer is about quality.
Don't you think foreigners could doubt about the quality of the products "sold" with the PWYW method? Especially for food and restaurants operating like this, the first thing one could wonder is : "with such a (non)-pricing policy, the quality of the food must be low, in order the restaurant to maximize its chances to be profitable.
Could you think about any ways to avoid such a reaction?

I remember in the US, there is a chain of restaurants called Ryan's, it is like 5 or 10 bucks for an all-you-can-buffet (salads, hot dishes, grilled meat, desserts...) and free refills of drinks. And it is awesome !

More on the same topic, in Italy, they offer free salad buffet (hi-quality), and you just have to pay for your drinks ! If you don't want to drink, you can get a free meal (and it was every friday!)

florent_lefevre wrote:

edwige_aoudiani wrote:Another question you can try to answer is about quality.
Don't you think foreigners could doubt about the quality of the products "sold" with the PWYW method? Especially for food and restaurants operating like this, the first thing one could wonder is : "with such a (non)-pricing policy, the quality of the food must be low, in order the restaurant to maximize its chances to be profitable.
Could you think about any ways to avoid such a reaction?

I remember in the US, there is a chain of restaurants called Ryan's, it is like 5 or 10 bucks for an all-you-can-buffet (salads, hot dishes, grilled meat, desserts...) and free refills of drinks. And it is awesome !

More on the same topic, in Italy, they offer free salad buffet (hi-quality), and you just have to pay for your drinks ! If you don't want to drink, you can get a free meal (and it was every friday!)

When it's a chain of restaurants, you can more easily trust the restaurant. Even if it's not a sign of quality customers suppose at least that the hygiene is correct and the food is clean.
Another solution for restaurant could be promoting the food quality with advertisings, press releases but it although excludes small restaurants.

I agree with Stefania/Kim. Products here might be very well under the costs of the same product at their home country.
BUT I also agree with Bartek, people would probably purchase the product at a much lower cost than COGS and sell it for a profit somewhere else.

BUUUUT this would only work if there is no face-to-face contact between seller and buyer. This factor would encourage buyer to pay more than he wanted/product is worth just for the reason that the producer of said product is standing infront of him...

PS: I went on a volunteer/research trip with my rediculously goodlooking model friends to Timbuktu and fell in love with a sweet dimond digger kid, so I paid 5 kilos of flour for him... they use PWYW marketing system there to. It's rediculously great and it feel wonderful to help their economy, ya'know, right?

One thing that comes to mind, is the pricing selection to foreigners in Taiwan.
When we come over, we use our currency value to swap over and spend based on our standard of living in our home country. With that basis, we may potentially have higher thresholds and could potentially pay more unknowingly.

In addition, Taiwan has many pre-existing restaurants that are all you can eat style and quite successful do to the excess additionally goodies that help to curb your appetite.

Overall, the usage of this tool is best to the blind. Naive can equate to money. but be prepare for the backlashes and angry people.

Regarding doubts over quality foreingers could have for PWYW restaurants, I agree these latter could try to avoid this trough high advertising. But don't you think this could be too expensive for restaurants earning money with such a method?
Could you think about cost-minimizing way of avoiding any bad feelings regarding food quality of a PWYW restayrant?

I think foreigners in Taiwan are not a good target group for PWYW pricing. Because in order to determine a "fair price" you have to have a good knowledge about comparable products, cost structures, competitive prices and so on. As a foreigner, I surely know less about all these things than a Taiwanese. And I would hate the feeling of paying too much, just because I am not very familiar with pricing levels here. So I personally would always feel that I am paying the "wrong" price. Too few or too much. And if I got the choice, I would rather pay too few than too much. Consequently, even if I was ready to pay a "fair" amount, I would tend to underestimate prices. Or I would simply ask a Taiwanese for assistance, which takes the "foreigners view" out of the equation.

I think that quality has to be paid even in Taiwan. In the case of Italian restaurant, even the taste is good as Florent said, it does not mean that the product is fresh, natural or without fatness inside. How can a company make profit, have meals for free every fridays and be still able to buy the same quality products than other firms which are not introducing the friday's free for customers?
In my opinion, even foreigners don't know the level of purchase prices in Taiwan, if we consider that Foreigners have more purchasing power than taiwanaise people (because they have an higher currency or because of other economic reasons) , then it's fair to have the same product than Taiwanaise people for an higher prices (even foreigners try to get the lowest prices for shure).

Alexandra_Engel wrote:From your internal Reference Price, can you name any Taiwan's product or service that will be successful by using PWYW to foreigners in TW?
Eg. Netbook, will any one of you consider to buy one netbook in TW because it's cheaper to buy here? If Acer offers "Aspire One 531" under PWYW conditions, how much will you pay then?
ps. Internal Reference Price is operationalized as the meomorized price of past purchases of the same (or comparable) products or services, please refer to page 48.

The problem with PWYW is that if only one company use PWYW. The consumers have already a certain idea of the price. And lets say the price of the competitors are pretty low, this will make people less willing to pay high in a PWYW environment.

I think everyone may doubt the quality of PWYW products, in the very beginning, no matter he or she is a foreigner or not. So, as a client or a shop owner, he/she must strongly believe in the products, otherwise he/she should never use PWYW for any purpose. The bad WOM can spread much faster than you would think, while positive WOM always floats slower. But sometimes, it really depends. If the product is so good, it will attracts lot's of people indeed.

I would say PWYW is a good mechanism for pre-testing the product's true value of the target audience in a certain market. It could be a very important reference for marketers to do the pricing strategy.

edwige_aoudiani wrote:Another question you can try to answer is about quality.
Don't you think foreigners could doubt about the quality of the products "sold" with the PWYW method? Especially for food and restaurants operating like this, the first thing one could wonder is : "with such a (non)-pricing policy, the quality of the food must be low, in order the restaurant to maximize its chances to be profitable.
Could you think about any ways to avoid such a reaction?

Actually, I find that this kind of mechanism is fun and it tends to attract me, especially for restaurant.

Because I'm saying myself that if the service provider want to be paid, he has to be efficient and provide me a good quality service.

However, I'm not sure it's working well in the computer world, because sometimes people don't understand how much work is behind a software for instance.

chloé_laluc wrote:I think Tapei's Big Club should try to organize some "Pay What U Want" Parties like in Paris, in order to attract more customers, to attract different kind of customers or to improve their image.

If there were this kind of parties here in Taipei (I mean you can decide of the price of the ticket, drinks, food etc) how much would u be willing to pay?

Ohh come one Taipei Club are already overcrowded -_- The market is not mature enough for this one.

In Taiwan the cosmetic industry is very competitive and there is a great market of woman that are willing to buy make-up or any other cosmetic products out there. The market offers a wide variety of products from around the world and there is high level of competition between companies. Applying PWYW will be a very good idea to attract even more customers, not only foreigners but also Taiwanese market because here woman spend a lot of money on this kinds of products, and this way the amount of consumers will increase as well as the total amount of goods they buy.

This can be a good way for taiwan products to have more demand. I've compared prices from different brands of different countries and especially products from abroad are cheaper, because foreign companies lower their prices in order to be competitive in this market. PWYW would give more promotion to this kind of products and would attract foreigners to be more interested in buying Taiwanese brands. This would be a way for Taiwanese products to gain share of a different consumer segment in the market.