There hardly is any other parameter in the marketing-mix with such a short-term breakthrough effect as a change of the price. That is why pricing strategy should be treated with particular care.
How do you develop the perfect price policy? That depends on your specific business case. nuggets will be happy to consult you on which instrument of pricing research is the right one for your objectives.
It is true for market research in general and even more so for the optimum pricing: the higher the research budget available, the more precise and valid the measurements will be and the better you can direct your pricing strategy to the conditions on the market.
Conjoint-based procedures often are first choice with price optimization. Especially if you want to achieve a comparatively high degree of measurement accuracy with a limited research budget. The strength of a conjoint analysis primarily is its participant-friendly approach: The participant makes purchase decisions from a choice of available products in a situation resembling everyday life. Due to the variation of prices, product features, packaging details and other characteristics, the objective of the study is hardly recognizable to the participant and the focus is not too much directed on the price when the preferences are identified.
The review of several options in price communications can be subject of a conjoint analysis as well. Because sometimes it is not the price itself that needs optimization, but the way the price is communicated. In this context a revision of promotion prices could be accomplished, for example.
We can also determine the benefit in money’s worth of individual product features with a conjoint analysis. This can be integrated into your business case. That way you can determine the impact on your margin and decide accordingly.
If you have market data at hand, for example on awareness, distribution, customer reach, market shares etc., we can adapt our conjoint model with a calibration to market conditions. That way, we achieve an even more realistic market simulation leading to even more valid results and can optimize the pricing for your products in a targeted way.
Brand Price Trade Off
The Brand Price Trade Off is an efficient and reasonable procedure, if pricing is the only issue. With this procedure, the participants are confronted with a selection of several products as well from which they decide for a purchase at an according price. The price for the chosen product is increased in the next choice task and the participants make a purchase decision again. In effect, you can estimate price elasticities with this procedure as well.
Price Sensitivity Measurement (PSM) According to van Westendorp and Gabor-Granger Method
If a price analysis is not the primary objective for research, much less extensive procedures can be integrated as well into a concept test, product test or packaging test. Especially with new products it is often helpful to get an idea of the price expectations of the potential customers and their willingness to pay. Measures like a price test procedure like van Westendorp’s PSM (price sensitivity measurement) or the Gabor-Granger procedure can be used for this purpose. Both approaches assess price independent of the competition, though.
PSM provides the benefit that the relevant price aspects can be researched unprompted – that means without mentioning any reference points. This can be an advantage, especially with newly developed products without comparable competitors on the market. The price sensitivity measurement primarily explores price expectation – but by using the Newton-Miller-Smith variation, willingness to purchase with the expected price range can be explored as well, making the result of the measurement more precise.
It is best to discuss in direct contact which price research method is most suitable for your objective and research budget. Feel free to call us or send an email. It will be a pleasure for us to advise you.
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