Textbook: Principles of Marketing for a Ditigal Age - Tracey L. Tuten

Opening Vignette: Philips Lighting's Smart Pricing

Philips Lighting created a connected lighting system which offered value in the form of a "smart building" with lighting technology fully incorporated within a building's heating/ ventilation/air conditioning, and security and fire systems. One approach to pricing in such situations is the product-as-a-service model. Philips Lighting used the lighting-as-a-service model, charging for long-term maintenance contracts instead of for lighting fixtures. Philips' contract maintenance program services the luminaires, sensors, and software to maximize product performance for the client.

1. Where were Philips' price leaks coming from?
2. How did its new pricing strategy guide future price discounts?
3. What was the most valuable change in Philips' pricing strategy?