Commandment 7: Perceived Value Establishes Price
Wow!.... did I learn some lessons from engineers about this rule or commandment. First sub-rule is don't let engineers deal with price....it is way beyond them to comprehend anything but cost+10%.

This commandment requires outside-in thinking. Most engineers and operators think inside-out.
What? Listen close. Outside-in thinking requires us to observe and absorb what the market is telling us about our product, price, promotion, and place decisions. Listening requires humility...also known a "teachableness." Listen GM, Ford, and Chrysler....you are ARROGANT and not teachable....and so you are going to shake the money tree instead of giving us what we want.

A story to illustrate.
When ready to graduate from BYU, I had bought a new Mustang so needed to shed the old chrome and blue 1958 Oldsmobile with the flower decal and the aftermarket a/c unit. We had been driving it for 3 years; it had 200,000+ miles on it..but what a screaming engine!!!!

I listed it for $100. No calls, no buyers. Puzzled, I didn't know what to do. Since I couldn't lower the price, I raised it to $300 and felt guilty doing so. [Inside-out thinking was working overtime.] At the new price I received about a dozen calls, and one fellow actually came over to see the car. He asked for a test drive. We drove around the block. Half way home the engine stalled, the balking ignition switch failed in the middle of the intersection, and the radio quit.

I figured he would walk away. He did. But only after he gave me the cash and I gave him the pink slip.

I couldn't understand what happened.

Here is what happened: nobody wanted a $100 car...it offered no hope of salvation or operation. However, a $300 car offered hope. The customers view determind there was value at both the new price point and with the demonstrated performance.

Commandment 8: Reward behavior you want repeated
Logical enough. But seldom used.
If you want continued performance reward it. The reward must first be appealing to the person. How often the person rewarded comes next. Both are vital to insuring the behavior is repeated.

So there are three elements which require very close attention:
1. First, specify exactly what behavior you wish repeated. The more precisely one does this the more likely the reward system employed will work. Done sloppily the reward system won't work because the person whose behavior is being targeted won't get "it."

2. Second, establish a list or catalogue of rewards which are known or believed to be attractive to the person. Care must be taken to insure inside-out thinking does not rule the day.....outside-in thinking is critically important.

3. Third, determine either at what interval or what rate the reward will be given. Determine if the rate or interval will be either variable or fixed. This design element requires careful and systematic analysis before a final solution can be employed. Much trial and error is likely to be required. Even for the smartest of you.

Finally, start rewarding the behavior you want repeated. Actually it can be done simply and quickly but it does require premeditation...aka...thought.

Call me for further discussion. 530.383.9079 or email me at stoddardconsult@yahoo.com
Note: I am not the author of all these ideas. We all stand on the shoulders of those who came before us and who ride along with us. To them I give great credit for lessons learned.