The document presents two innovative approaches used by E-RM to measure price sensitivity and customer satisfaction. The first approach measures price sensitivity by asking respondents for price points at which a product seems too expensive/inexpensive and the optimal price point to maximize purchase intent. A second approach measures customer satisfaction by analyzing online customer reviews to identify attributes that drive satisfaction.
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*FOR A MORE CURRENT VERSION OF SIMILAR PRESENTATION, SEE
Reisman FairPay Overview -- Adaptive Win-Win Relationships / Revenue Strategy - Latest Version
http://www.slideshare.net/rreisman/reisman-fairpay-overview
FOR VIDEO SEE
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Provides practical tips on how to prepare to enter the marketplace with your product. Relevant for all start-ups that are still in a development phase and contemplating the various pieces that need to be in place for product launch.
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How to Set Pricing Using the Van Westendorp Price Sensitivity MeterQuestionPro
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.
Reisman on FairPay at MITEF "Better Strategies for Monetizing Digital Offerin...Teleshuttle Corporation
(SEE UPDATE AND VIDEO*) FairPay presentation by Richard Reisman, Teleshuttle Coprporation at MIT Enterprise Forum of NYC "Better Strategies for Monetizing Digital Offerings" 12/1/11.
*FOR A MORE CURRENT VERSION OF SIMILAR PRESENTATION, SEE
Reisman FairPay Overview -- Adaptive Win-Win Relationships / Revenue Strategy - Latest Version
http://www.slideshare.net/rreisman/reisman-fairpay-overview
FOR VIDEO SEE
http://www.fairpayzone.com/p/blog-page_14.html
Provides practical tips on how to prepare to enter the marketplace with your product. Relevant for all start-ups that are still in a development phase and contemplating the various pieces that need to be in place for product launch.
Neolite is invited to give a presentation on 3rd Summit of China Pharmaceutical Market Research Association which was held on Oct 7-10 in Suzhou. This is the presentation deck.
Igh presentation - value chain excellence in retail
Innovations In Price & Satisfaction Research E Rm
1. E-RM
E-RM
This deck presents examples from E-RM‟s
portfolio of two innovative and
flexible, hybrid analytical approaches for:
• Price Sensitivity
• Customer “Satisfaction”
Slide 1
E-RM, 2011. All Rights Reserved - Privileged and Confidential
2. 1. Measuring Price Sensitivity with Optimization
A well-known methodology grounded in
marketing literature, easy to understand
and implement in the field
…cleverly adapted for simplicity and
versatility.
Slide 2
E-RM, 2011. All Rights Reserved - Privileged and Confidential
3. Price Sensitivity Measurement – Methodology
GAUGING PRICE PERCEPTION WITH 4 PRICE RELATED QUESTIONS
Introduced by Dutch economist Peter H. van Westendorp in the 1970s, this approach is based on the premise
that a bounded price range exists with a maximum (above which the product is too expensive to consider
buying) and a minimum (below which consumers will doubt product credibility).
Methodology: By plotting proportions of respondents against price, four curves are created that correspond to:
Too Expensive, Too Inexpensive, Expensive and Inexpensive.
Too Expensive Too Inexpensive Expensive Inexpensive
At what price do you At what price do you At what price do you At what price do you
begin to perceive the begin to perceive the perceive that the perceive the product
product as so product as so product is beginning to be a bargain – a
expensive that you inexpensive that you to get expensive, so great buy for the
would not consider would feel that the that it is not out of the money?
buying it? quality cannot be very question, but you
good? would have to give
some thought to
buying it?
4 Points Of Intersection Between The Curves
Indifference Price Point (IPP) Point of Marginal Expensiveness (PME)
Point Of Marginal Cheapness (PMC) Optimal Price Point (OPP)
Slide 3
E-RM, 2011. All Rights Reserved - Privileged and Confidential
4. Price Sensitivity – Methodology
INTERPRETATION OF THE 4 INTERSECTION POINTS
Intersection between Intersection between
„Expensive‟ and „Too Indifference Price Point (IPP) „Expensive‟ and
Inexpensive‟, where an equal „Inexpensive‟, where an
number of respondents equal number of respondents
believes the product is believes the test product is
“Expensive” as that it is “Too Point Of Marginal Cheapness (PMC) “Expensive” as that it is
Inexpensive”. “Inexpensive”.
Intersection between „Too Intersection between „Too
Expensive‟ and „Too Point of Marginal Expensiveness (PME)
Expensive‟ and „Inexpensive‟,
Inexpensive‟, where an equal where an equal number of
number of respondents respondents believes the
believes the product is “Too product is “Too expensive” as
Expensive” as that it is “Too Optimal Price Point (OPP) that it is “Inexpensive”.
Inexpensive”.
IPP gives the median price paid by consumers already in market or the product price of a market leader.
PMC and PME bound the range of acceptable prices within which a competitive product should be priced in an
established market.
OPP is often taken as the Optimal Price.
Slide 4
E-RM, 2011. All Rights Reserved - Privileged and Confidential
5. Price Sensitivity – A Graphic Illustration
Price Sensitivity: Four Crucial Intersection Points
100%
IPP
% of Respondents
80%
60% PMC
40% PME
OPP
20%
0%
1 2 3 4 5 6 7
Price
Too Expensive Too Inexpensive Expensive Inexpensive
The curves for Too Expensive and Too Inexpensive lie below the Expensive and Inexpensive
curves, respectively. Generally, more people will find a price to be Expensive/Inexpensive than
Too Expensive/Too Inexpensive.
As price rises, the percentage of respondents finding the price Expensive or Too Expensive also
rises, thus these two curves are positively sloped. But, as price rises, the percentage of
respondents finding the price Inexpensive or Too Inexpensive falls, giving these curves a
negative slope.
Slide 5
E-RM, 2011. All Rights Reserved - Privileged and Confidential
6. Price Sensitivity Optimizer – The Adamek Adaptation
ADDS PURCHASE INTENT TO YIELD 4 POWERFUL QUESTION PAIRS
1. “At what price do you begin to perceive the product as so inexpensive that you would have serious
doubts about its quality?”
a. Now, please rate on a scale of 1 to 10 how willing you would be to purchase the product at
the above mentioned price (quoted as “too inexpensive”), where 1 means „not likely at all‟
and 10 means „most likely‟.
2. “At what price do you perceive the product to be a bargain – a great buy for the money?”
a. Rate on a scale of 1 to 10 how willing you would be to purchase the product at that price
(quoted as “inexpensive”) ,where 1 means „not likely at all‟ and 10 means „most likely‟.
3. “At what price do you perceive that the product is beginning to get expensive, so that it is not out of the
question, but you would have to give some thought to buying it?”
a. Rate on a scale of 1 to 10 how willing you would be to purchase the product at that price
(quoted as “expensive”), where 1 means „not likely at all‟ and 10 means „most likely‟.
4. “At what price do you begin to perceive the product as so expensive that you would not consider buying
it?”
a. Rate on a scale of 1 to 10 for how willing you would be to purchase the product at that
price (quoted as “too expensive”), where 1 means „not likely at all‟ , 10 means „most likely‟.
Slide 6
E-RM, 2011. All Rights Reserved - Privileged and Confidential
7. Price Sensitivity Curve – Maximizes Purchase Intent
Price vs. Willingness to Purchase: Optimal Price Point
Optimal Price
Point
Inexpensive
Too Inexpensive
Expensive
Too Expensive
Acceptable Price Range
Plot means for Price and Willingness to Purchase for four price points respondents perceive as
“Too Inexpensive”, “Inexpensive”, “Expensive” and “Too Expensive”.
As price increases from “Too Inexpensive” to “Inexpensive”, willingness to purchase rises. As
price increases further, willingness to purchase reaches its peak – the Optimal Price Point. With
continued price increases, willingness to purchase decreases.
Slide 7
E-RM, 2011. All Rights Reserved - Privileged and Confidential
8. Maturity of Markets – Different Price Sensitivities
SHAPE OF CURVE TELLS A STORY
A steep curve with a narrow peak indicates a market of consumers who are
familiar with the product category and well informed about prevailing prices.
Price tolerances are mature, small and well defined.
Alternatively, a low, flat shape suggests a less informed marketplace with little
knowledge about the product being tested. Perhaps a new product category in
which consumers are less familiar and experienced.
Slide 8
E-RM, 2011. All Rights Reserved - Privileged and Confidential
9. 2. Measuring and Modeling Customer “Satisfaction”
A methodology grounded in traditional, well
established modeling tools, but innovative
in isolating separate, underlying “drivers”
of happy customers and “drivers” of
unhappy customers.
Slide 9
E-RM, 2011. All Rights Reserved - Privileged and Confidential
10. Separate Drivers of “Satisfaction” vs. “Dissatisfaction”
The traditional customer satisfaction model uncovers 2-way “drivers”
of “Satisfaction” and Dissatisfaction (Up and Down):
Usual Model: Works Both Ways (Up and Down the scale)
E-RM‟s Split Model uncovers 1-way “drivers” (Up or Down) that may
exist beyond - or beneath - the usual full scale 2-way drivers (above).
Works One-Way -- Satisfaction (Up) Only
Works One Way -- Dissatisfaction (Down) Only
Result: We learn HOW attributes “drive” overall ratings Up and/or Down.
Ultimate Test of Value: Do we gain new information?
Slide 10
E-RM, 2011. All Rights Reserved - Privileged and Confidential
11. Drivers of “Satisfaction” & Drivers of “Dissatisfaction”
Predictor t values,
coefficients, etc.
Split Model Concept: How
attributes can “drive” overall
ratings Up and/or Down
Finds 1-way “drivers” within the
usual model‟s full range 2-way
drivers:
Both Ways (Up & Down)
1 Way: Satisfaction Only
1 Way: Dissatisfaction Only
News value: Attributes can
behave differently!
EXAMPLE ONLY: BASED
ON HYPOTHETICAL DATA
Slide 11
E-RM, 2011. All Rights Reserved - Privileged and Confidential
12. Comparisons Enabled by Two-Way Drivers Analysis
New Insights: Two Potent One-Dimensional Issues Revealed
Attributes H and I emerge as pure uni-directional “drivers”
Impacts Overall Pure Uni-Directional Pure Uni-Directional
Customer Satisfaction Impact on Impact on
AND Dissatisfaction “Satisfaction” Alone “Dissatisfaction” Alone
Attribute: E Attribute: E Attribute: I
Attribute: F Attribute: H Attribute: F
Attribute: G Attribute: F
Theoretical results are indicated above. Actual results are situation dependent.
Slide 12
E-RM, 2011. All Rights Reserved - Privileged and Confidential
13. Applications for Split Model of Customer “Satisfaction”
Use it to identify factors that can activate “Passives” (per
Goodman and Gonier, Quirk‟s - Oct. 2011) to high levels of
satisfaction, and avoid contrary factors that present risks of
“Passives” dropping down your “satisfaction” scale.
Use it to describe attributes based on the nature of their
contribution to the criterion variable, i.e., as potent in both
the Up and Down directions of that overall measure, or in
only one of them at a time.
In employee surveys, use it to efficiently operationalize
Herzberg‟s Motivation-Hygiene Theory.
Slide 13
E-RM, 2011. All Rights Reserved - Privileged and Confidential
14. Both Models Require Careful Handling
Price Value Sensitivity
Measurement must consider If you know your
possible brand effects, the customers‟ price/value
suitability of the basic or
adapted model, use of a considerations and what
bounded price range and “drives” their feelings of
question sequencing. happiness and
unhappiness with you…
“Satisfaction” Modeling
Test applications will indicate …what more do you
whether fuller implementation need to know?
with better attributes and a more
potent overall rating (i.e., not:
“satisfaction”) is well advised.
Slide 14
E-RM, 2011. All Rights Reserved - Privileged and Confidential
15. Call for a Consultation
Bart Zehren, E-RM
+1 847.864.7159
bz@your-research-resource.com
http://your-research-resource.com
http://www.linkedin.com/in/bartzehrenerm
Evanston, IL - USA
Slide 15
E-RM, 2011. All Rights Reserved - Privileged and Confidential