How to Set Pricing Using the Van Westendorp Price Sensitivity Meter
 

How to Set Pricing Using the Van Westendorp Price Sensitivity Meter

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In this webinar, Dana Stanley of market research software firm Survey Analytics explains the common pricing research technique called the Van Westendorp Price Sensitivity Meter.

In this webinar, Dana Stanley of market research software firm Survey Analytics explains the common pricing research technique called the Van Westendorp Price Sensitivity Meter.

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How to Set Pricing Using the Van Westendorp Price Sensitivity Meter How to Set Pricing Using the Van Westendorp Price Sensitivity Meter Presentation Transcript

  • How to Set Pricing Usingthe van Westendorp Price Sensitivity Meter By Dana Stanley, Vice President, Marketing, Survey Analytics
  • Survey AnalyticsDIY software for data collection, analysis and visualization.
  • Old New
  • Completely New(Goldfish Carrier)
  • How Are PricesUsually Set?
  • Guessing
  • Fingerin the Wind
  • Negotiation
  • Negotiation
  • Trial and Error
  • Fear
  • Pricing Surveys
  • What PriceWould You BeWilling to Payfor ________? The “Willingnessto Pay” Question
  • Too Blunt
  • Too BluntLowballing
  • A Range
  • $20.00?
  • $20.00? $2.79
  • Priced too High Lost Sales
  • $100.00?
  • $100.00?$1,200.00
  • Priced too Low Lost Profits
  • Too LostHigh Sales Acceptable Price RangeToo LostLow Profits
  • VanWestendorp, P (1976) "NSS-Price SensitivityMeter (PSM)- Anew approach to study consumer perception of price."Proceedings of the ESOMAR Congress.
  • Too LostHigh Sales Acceptable Price RangeToo LostLow Profits
  • • Too ExpensiveHigh • Expensive • BargainLow • Too Cheap
  • • Too ExpensiveHigh • Expensive Price Signals Quality • BargainLow • Too Cheap
  • Too Expensive At what price would you consider _________ to be soexpensive that you would not consider buying it?
  • Expensive At what price would youconsider _________ starting toget expensive, so that it is not out of the question, but you would have to give some thought to buying it?
  • Bargain At what price would you consider _________ to be abargain, a great buy for the money?
  • Too Cheap At what price would you consider _________ to bepriced so low that you would feel the quality couldn’t be very good?
  • $1,799
  • Higher Ordinal Validation For each respondentBounding logic or post hocdata cleaning Lower
  • Plot CumulativeCumulative (Too Expensive)Percentages Inverse Cumulative (Not Expensive) Inverse Cumulative (Not a Bargain) Cumulative (Too Cheap)
  • X-Axis: Cumulative Proportion Y-Axis: Price
  • Point of MarginalCheapness (PMC)
  • Point of Point of Marginal MarginalCheapness Expensiveness (PMC) (PME)
  • Range of Acceptable Prices Point of Point of Marginal MarginalCheapness Expensiveness (PMC) (PME)
  • Range of Acceptable Prices Point of Point of Marginal MarginalCheapness Expensiveness (PMC) (PME) Optimal Price Point
  • Other OptionsMeasure purchase intent at key price levels uncovered by Van Westendorp analysis.Combine with profitability data to determine optimal revenue point. Box-plot of each of the 4 questions for alternate visualization.
  • By Product, By Target Group
  • Criticisms and Limitations• Assumption of rationality• Does not account for competition• Lowballing• Not used in conjunction with other techniques• Appears more precise than it really is
  • Any Questions?Use the GoToWebinar Control Paneldana.stanley@surveyanalytics.comhttp://surveyanalytics.comContact us with anyquestions after the webinar.Thank you!