The document discusses various pricing research methods used to determine the optimal price point for products and services. It describes techniques like the Gabor-Granger pricing technique, price sensitivity meter, conjoint analysis, market price testing including monadic and price laddering tests. Key factors to consider in pricing research are objectives, sample size, data collection method, and demand, cost and competition analysis. Understanding customer price perceptions is important to set a price that maximizes revenue while attracting customers.
In this part, we define and classify marketing research and set out a six-step marketing research process. We discuss the nature and scope of marketing research and explain its role in decision support system.
In this part, we define and classify marketing research and set out a six-step marketing research process. We discuss the nature and scope of marketing research and explain its role in decision support system.
Theories of Selling
1. AIDAS” theory
2.“Right set of circumstances” theory
3.“Buying-formula” theory
4.“Behavioural equation” theory
Securing Attention
Gaining Interest
Inducing Actions:
J.A Howard
Non-triggering cues
Triggering cues:
Informational cues
A Reinforcement
Specific product information cues
Segmentation, Targeting, positioning, differentiation, bases of segmentation, advantages of segmentation, types of targeting, Steps in Segmentation, Targeting, and Positioning
Presentation on consumer behaviour and marketing strategyKARISHMA KUMARI
It is based on the consumer behaviour and their process and the marketing strategy how it influence on different products or brands. I took the example of PUMA its marketing strategy how it works and how it is brought to the market.
Theories of Selling
1. AIDAS” theory
2.“Right set of circumstances” theory
3.“Buying-formula” theory
4.“Behavioural equation” theory
Securing Attention
Gaining Interest
Inducing Actions:
J.A Howard
Non-triggering cues
Triggering cues:
Informational cues
A Reinforcement
Specific product information cues
Segmentation, Targeting, positioning, differentiation, bases of segmentation, advantages of segmentation, types of targeting, Steps in Segmentation, Targeting, and Positioning
Presentation on consumer behaviour and marketing strategyKARISHMA KUMARI
It is based on the consumer behaviour and their process and the marketing strategy how it influence on different products or brands. I took the example of PUMA its marketing strategy how it works and how it is brought to the market.
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.
Media Research- Types of Research
Descriptive vs. Analytical
Pure and Applied
Qualitative and Quantitative
Descriptive Research
Analytic Research
Fundamental or Pure Research
Quantitative vs. Qualitative
Value Based Pricing Strategy PowerPoint Presentation SlidesSlideTeam
Presenting this set of slides with name - Value Based Pricing Strategy Powerpoint Presentation Slides. Our topic specific Value Based Pricing Strategy Powerpoint Presentation Slides deck contains twenty four slides to formulate the topic with a sound understanding. This PPT deck is what you can bank upon. With diverse and professional slides at your side, worry the least for a powerpack presentation. A range of editable and ready to use slides with all sorts of relevant charts and graphs, overviews, topics subtopics templates, and analysis templates makes it all the more worth. This deck displays creative and professional looking slides of all sorts. Whether you are a member of an assigned team or a designated official on the look out for impacting slides, it caters to every professional field.
Value Based Pricing Strategy Powerpoint Presentation SlidesSlideTeam
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Introducing Value-Based Pricing Strategy PowerPoint Presentation Slides. With the help of a premium pricing PPT template, you can conduct market research in order to learn about customer demographics. By using this demand-based pricing PowerPoint presentation, you can highlight on various kinds of planning related to cost, competitor, and value-based factors. You can emphasize the steps which lead to the execution of data, thus you mention it using product preference analysis PPT visuals. By using a value-pricing plan PowerPoint presentation complete deck, you can create a report on the buyer’s personal data. With the help of pricing strategies PPT template, you can create a buyer’ persona on the basis of demographic, mindset, language, and customer journey. This premium pricing PowerPoint presentation contains sheets, charts, reports, and graphs with which you can create a market segment record. The product preference analysis PPT comprises content ready twenty-four slides to create a comprehensive presentation. Therefore, download this ready-to-use value pricing strategies PowerPoint presentation deck and improve profitability. https://bit.ly/34Pp7RN
This short article aimes the entrepreneur and the decision maker in the SME environment in order to help them valued their new product or solution and then fix a selling price consequently
Why is this book so important? One of the biggest lessons I have learned within the startup landscape is that even though pricing, together with the business model, remains by far the lever that most impacts revenue, the subject is a sensitive one.
Pricing is a strong — but often underused — tool available to capture a share of value created for customers
Pricing is one of the biggest challenges that startup face. The book is a practical toolkit that positively influences the pricing strategies of startups. It reveals insights in the different pricing methods and tactics used by successful companies.
PRICING
IMPORTANCE OF PRICING
OBJECTIVES OF PRICING DECISIONS
FACTORS AFFECTING THE PRICE DETERMINATION
COSTS OF PRICING
NATURE OF THE MARKET AND DEMAND
This document reviews best practice in pricing processes to provide a reference against which current practices and proposals can be tested. Our objectives have been: to research the attributes of world-class pricing through publications and academic sources; to investigate how these attributes are applied in practice to products and services; to assess pricing processes in successful businesses.
In recent years a new attitude toward pricing has emerged. Deregulation and international free trade agreements have increased competition. Price promotion has eroded the power of brand loyalty. Pricing has assumed greater importance to most businesses.
As markets increasingly assume a global dimension, customers can more easily compare prices between one region or country and another, using the internet or a fax machine. They can often locate the same product, or an
acceptable substitute, from another source. Customers are more demanding and fickle, and their expectations increasingly difficult to fulfil.
Price inflation in western economies is now at its lowest for decades. Price increases are no longer accepted without protest from customers, if at all.
The Chairman of General Electric has predicted the onset of the ‘Value Decade’. Global price competition will strengthen because of: reduced product differentiation; global over-capacity for production; significantly diminished trade barriers; efficient information and distribution systems; providing customers with easy access to the prices of suppliers; a growing lack of customers’ loyalty to individual suppliers. Choice will be increasingly driven by price.
This is a challenging scenario that reinforces the need for an integrated strategy and concerted managerial action on pricing.
Pricing processes have lagged behind developments in the market place. They are often characterised by internal conflict between accountants wishing to maximise profit per unit and marketing specialists who seek to maximise
throughput. They are also affected by the potential for strained relations with good customers.
Some companies have downsized their operations to a level where diminishing returns cause them to question the benefits of continuing to focus upon reducing costs. As they switch their attention from cost cutting to adding
value, pricing naturally assumes increased weight in the marketing mix.
We have found many companies reluctant to discuss their own processes.
Some may wish to avoid betraying a lack of sophistication.
The tour commentary is the tour guides primary tool of trade. Excellent tour guides pay attention to how they delivery their commentary on every tour by striving for continuous improvement. The slide explores some of the ways a tour guide can use his or her tour commentary to achieve excellence in guiding.
Tourist Security and the Role of the Tour GuideWhistling Crow
Today vacationers view their holidays as an escape from the worlds problems and worries. While on a tour, the last thing they wan to be concerned about is being victims of crime. Tourists while at destinations can be lucrative targets to crime, the thematic slide explores how tour guides may convert unprevented security calamity into a tolerable inconvenience.
Week 5 The Law of Agency in Travel and TourismWhistling Crow
Intermediaries in travel and tourism industries provide the linking point between suppliers and customers. It is because of their relationship with other service suppliers that they are considered as their representatives to customers. The nature of this business relationship and its outcomes are governed by the law of agency, its different facets and ramifications are captured in this presentation for readers seeking enlightenment in the legal area as basis for risk free agency business in travel and tourism.
Techniques in Tour Guiding 2018 by Paul OlolaWhistling Crow
Tour Guiding is increasingly gaining traction in tourism generating regions with guides expected to play multiple roles towards ensuring visitors have an enjoyable, memorable and meaningful experience. The lecture presentation discusses the different facets of guiding skills and techniques required for top-notch guiding.
Brand equity and customer purchase decisionWhistling Crow
Acquiring, retaining and ensuring customer loyalty are business firm's focus. However, in the 21st century, brand equity has become a key asset to be developed by organization's towards their customers as a customer driven strategy.
Brand Tracking Studies
What is brand tracking?
Why brand tracking?
Whom to track
When to track
What to track
Brand attributes
Case study iphone 5
Brand Matrices
Model for Brand Tracking
Why brand tracking studies fail
References
Come learn how YOU can Animate and Illuminate the World with Generative AI's Explosive Power. Come sit in the driver's seat and learn to harness this great technology.
It's another new era of digital and marketers are faced with making big bets on their digital strategy. If you are looking at modernizing your tech stack to support your digital evolution, there are a few can't miss (often overlooked) areas that should be part of every conversation. We'll cover setting your vision, avoiding siloes, adding a democratized approach to data strategy, localization, creating critical governance requirements and more. Attendees will walk away with actions they can take into initiatives they are running today and consider for the future.
Videos are more engaging, more memorable, and more popular than any other type of content out there. That’s why it’s estimated that 82% of consumer traffic will come from videos by 2025.
And with videos evolving from landscape to portrait and experts promoting shorter clips, one thing remains constant – our brains LOVE videos.
So is there science behind what makes people absolutely irresistible on camera?
The answer: definitely yes.
In this jam-packed session with Stephanie Garcia, you’ll get your hands on a steal-worthy guide that uncovers the art and science to being irresistible on camera. From body language to words that convert, she’ll show you how to captivate on command so that viewers are excited and ready to take action.
Monthly Social Media News Update May 2024Andy Lambert
TL;DR. These are the three themes that stood out to us over the course of last month.
1️⃣ Social media is becoming increasingly significant for brand discovery. Marketers are now understanding the impact of social and budgets are shifting accordingly.
2️⃣ Instagram’s new algorithm and latest guidance will help us maintain organic growth. Instagram continues to evolve, but Reels remains the most crucial tool for growth.
3️⃣ Collaboration will help us unlock growth. Who we work with will define how fast we grow. Meta continues to evolve their Creator Marketplace and now TikTok are beginning to push ‘collabs’ more too.
When most people in the industry talk about online or digital reputation management, what they're really saying is Google search and PPC. And it's usually reactive, left dealing with the aftermath of negative information published somewhere online. That's outdated. It leaves executives, organizations and other high-profile individuals at a high risk of a digital reputation attack that spans channels and tactics. But the tools needed to safeguard against an attack are more cybersecurity-oriented than most marketing and communications professionals can manage. Business leaders Leaders grasp the importance; 83% of executives place reputation in their top five areas of risk, yet only 23% are confident in their ability to address it. To succeed in 2024 and beyond, you need to turn online reputation on its axis and think like an attacker.\
Key Takeaways:
- New framework for examining and safeguarding an online reputation
- Tools and techniques to keep you a step ahead
- Practical examples that demonstrate when to act, how to act and how to recover
Mastering Local SEO for Service Businesses in the AI Era is tailored specifically for local service providers like plumbers, dentists, and others seeking to dominate their local search landscape. This session delves into leveraging AI advancements to enhance your online visibility and search rankings through the Content Factory model, designed for creating high-impact, SEO-driven content. Discover the Dollar-a-Day advertising strategy, a cost-effective approach to boost your local SEO efforts and attract more customers with minimal investment. Gain practical insights on optimizing your online presence to meet the specific needs of local service seekers, ensuring your business not only appears but stands out in local searches. This concise, action-oriented workshop is your roadmap to navigating the complexities of digital marketing in the AI age, driving more leads, conversions, and ultimately, success for your local service business.
Key Takeaways:
Embrace AI for Local SEO: Learn to harness the power of AI technologies to optimize your website and content for local search. Understand the pivotal role AI plays in analyzing search trends and consumer behavior, enabling you to tailor your SEO strategies to meet the specific demands of your target local audience. Leverage the Content Factory Model: Discover the step-by-step process of creating SEO-optimized content at scale. This approach ensures a steady stream of high-quality content that engages local customers and boosts your search rankings. Get an action guide on implementing this model, complete with templates and scheduling strategies to maintain a consistent online presence. Maximize ROI with Dollar-a-Day Advertising: Dive into the cost-effective Dollar-a-Day advertising strategy that amplifies your visibility in local searches without breaking the bank. Learn how to strategically allocate your budget across platforms to target potential local customers effectively. The session includes an action guide on setting up, monitoring, and optimizing your ad campaigns to ensure maximum impact with minimal investment.
Influencer marketing isn't just for big brands or consumer products anymore. In 2024, marketers face hurdles like escalating paid channel costs, diminishing organic reach, and building trust in their ideal customer accounts. This session offers practical ways to bring influencer marketing into your organization, to provide cost-effective access to niche audiences, countering budget constraints and rising CPMs. We'll discuss the impact of social algorithms on reach, the trust deficit in traditional advertising and how influencer partnerships offer genuine connections with audiences. Attendees will gain actionable insights to integrate influencer marketing into their strategies, leveraging influencers for impactful campaigns in both B2B and B2C environments. Join us to unlock the potential of influencers in navigating the evolving marketing landscape of 2024 and driving meaningful business growth.
Key Takeaways:
- Educate on the various types of influence we can use as marketers
- Establish the problems that make influencers a priority
- Walk through some practical tactics on HOW to run a program leveraging several of these influence channels
First Things First: Building and Effective Marketing Strategy
Too many companies (and marketers) jump straight into activation planning without formalizing a marketing strategy. It may seem tedious, but analyzing the mindset of your targeted audiences and identifying the messaging points most likely to resonate with them is time well spent. That process is also a great opportunity for marketers to collaborate with sales leaders and account managers on a galvanized go-to-market approach. I’ll walk you through the methods and tools we use with our clients to ensure campaign success.
Key Takeaways:
-Recognize the critical role of strategy in marketing
-Learn our approach for building an actionable, effective marketing strategy
-Receive templates and guides for developing a marketing strategy
Most small businesses struggle to see marketing results. In this session, we will eliminate any confusion about what to do next, solving your marketing problems so your business can thrive. You’ll learn how to create a foundational marketing OS (operating system) based on neuroscience and backed by real-world results. You’ll be taught how to develop deep customer connections, and how to have your CRM dynamically segment and sell at any stage in the customer’s journey. By the end of the session, you’ll remove confusion and chaos and replace it with clarity and confidence for long-term marketing success.
Key Takeaways:
• Uncover the power of a foundational marketing system that dynamically communicates with prospects and customers on autopilot.
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• Discover the art of automated segmentation, pinpointing your most lucrative customers and identifying the optimal moments for successful conversions.
• Streamline your business with a content production plan that eliminates guesswork, wasted time, and money.
Mastering Local SEO for Service Businesses in the AI Era is tailored specifically for local service providers like plumbers, dentists, and others seeking to dominate their local search landscape. This session delves into leveraging AI advancements to enhance your online visibility and search rankings through the Content Factory model, designed for creating high-impact, SEO-driven content. Discover the Dollar-a-Day advertising strategy, a cost-effective approach to boost your local SEO efforts and attract more customers with minimal investment. Gain practical insights on optimizing your online presence to meet the specific needs of local service seekers, ensuring your business not only appears but stands out in local searches. This concise, action-oriented workshop is your roadmap to navigating the complexities of digital marketing in the AI age, driving more leads, conversions, and ultimately, success for your local service business.
Key Takeaways:
Embrace AI for Local SEO: Learn to harness the power of AI technologies to optimize your website and content for local search. Understand the pivotal role AI plays in analyzing search trends and consumer behavior, enabling you to tailor your SEO strategies to meet the specific demands of your target local audience. Leverage the Content Factory Model: Discover the step-by-step process of creating SEO-optimized content at scale. This approach ensures a steady stream of high-quality content that engages local customers and boosts your search rankings. Get an action guide on implementing this model, complete with templates and scheduling strategies to maintain a consistent online presence. Maximize ROI with Dollar-a-Day Advertising: Dive into the cost-effective Dollar-a-Day advertising strategy that amplifies your visibility in local searches without breaking the bank. Learn how to strategically allocate your budget across platforms to target potential local customers effectively. The session includes an action guide on setting up, monitoring, and optimizing your ad campaigns to ensure maximum impact with minimal investment.
How to Use AI to Write a High-Quality Article that Ranksminatamang0021
In the world of content creation, many AI bloggers have drifted away from their original vision, resulting in low-quality articles that search engines overlook. Don't let that happen to you! Join us to discover how to leverage AI tools effectively to craft high-quality content that not only captures your audience's attention but also ranks well on search engines.
Disclaimer: Some of the prompts mentioned here are the examples of Matt Diggity. Please use it as reference and make your own custom prompts.
The digital marketing industry is changing faster than ever and those who don’t adapt with the times are losing market share. Where should marketers be focusing their efforts? What strategies are the experts seeing get the best results? Get up-to-speed with the latest industry insights, trends and predictions for the future in this panel discussion with some leading digital marketing experts.
2. Why do pricing research?
Price is the amount of money charged for a product or service, or
the sum of the values that consumers exchange for the benefits of
having/using the product or service.
Getting the price of a product or service right is one of the most
challenging issues facing an organization, this is because:
If they set too low price, they will miss out on revenues.
If they set too high price, they risk alienating customers and
loosing market share to competition.
Pricing research therefore reduces the uncertainty risk involved in
pricing strategy by:
Determining the optimum combination of product attributes and
price.
Estimating potential sales and market share.
Striving for competitive advantage.
Managing risks in a fluctuating market environment.
Choosing the right pricing strategy strengthens the chance of
achieving turnover and profit in line with the company objectives.
3. Factors to consider
In pricing research
What do you want to find out?
• How many pricing points?
• How will you select the best
price point to test?
Who to interview?
• What sample size will I need?
• Who do you want to talk to?
• Where will the sample come
from?
• Specific sub-groups you might
want to investigate?
What pricing method should I
choose?
• What research budget do I
have or need?
• What data collection method is
best? (web/telephone etc.)
In pricing strategy
selection
The demand for the
Product/Service in the
market.
Customers perception.
The image of the company
in the market.
Intensity of competition.
4. Methods of conducting pricing research
Gabor Granger Pricing Technique
The Gabor Granger Pricing Technique was created by
Andre Gabor and Clive Granger, and has been in use since
the 1960s.
It is a technique whereby respondents are asked about
the likelihood that they will buy a product or service at
a variety of different price points.
The price is varied till a point whereby the customer
would not buy the product/service is determined.
This is a simple method that plots the percentage of
people which would be likely to buy a product/service at
a number of different prices so that the effect of
raising or lowering a price can be easily seen.
Having identified the optimum price for each individual,
the expected level of demand for each price point can
be worked out and plotted on a price curve.
Price elasticity of demand can also be measured using
this method.
This method offers a good indication of the willingness
of customers to pay.
5. How it works
For example, consumers can be asked
their willingness to buy different
products A,B and C at different price
points.
It is assumed that this querying will
reveal the price point at which the
consumer will no longer be interested in
buying the product (Kshs 4,150 +…)
The method is sometimes called the
"buy-response method“ and consumers
respond with a "buy-not buy" response
to each price.
The constant querying enables the
pricing analyst to trace out a demand
curve for each product at different
prices.
Once the demand curve is derived, a
revenue curve can be overlaid to help
determine the optimal price.
The optimal price is determined where
the revenue curve is at maximum.
6. Disadvantage
It does not replicate the many
variables that might influence
actual purchase intention and
behaviour, such as available budget,
competitive context, brand value,
external market conditions, etc.
Advantage
It is a straight forward method
of measuring price sensitivity
This approach provides a simple
demand curve for the product,
which indicates the proportion of
respondents interested in buying
the product at certain price
points.
As such, it builds in demand (i.e.
this is useful since you may
generate a higher proportion of
revenue from a lower price point vs
a higher price point)
7. What is it?
The price sensitivity meter (PSM) was
initially created by Dutch economist
Peter Van Westendorp in 1976.
This is a technique for gauging
consumers‟ price expectations for a
finished product, often an existing
product in an established category.
It enables the marketer to see a range
of prices that might be appropriate, and
to see the fall off in consumer interest
that occurs as price rises.
Key data analyzed is from responses to
questions about what prices for a
product/service are considered too
high/low.
Plotting this information onto price
scales shows the high/low price
threshold as well as price points
considered optimal.
What is it for?
Used during new product
development phase to aid in setting
price either as an entry price
strategy or a premium skimming
approach to price. It can help
determine which strategy is best.
Established brands will use PSA to
guide pricing decisions like :
repositioning often used as an input
to a test market.
It determines range of acceptable
prices and an optimal price point
based on an analysis of price/value
ratings provided by customers.
Van Westendorp PSA
8. How does it work?
Consider a new Tooth product that
addresses sensitivity, bleeding gums and
whitens teeth brighter.
Respondents are asked FOUR questions
about a new toothpaste product.
Q1. So low that you feel you doubt the
quality. At what price would you consider
the product/service priced quality?
Q2.At what price would you consider the
product/service to be inexpensive?
Q3.At what price would you consider the
product/service is stating to get expensive
in that you would give some thought to
buying it?
Q4.At what price would you consider the
product or service to be too expensive that
you would not consider buying it?
The questions asked would produce
responses that can be plotted on a graph.
The best price is the one that raises
revenue.
Van Westendorp PSA….ctd
9. Van Westendorp PSA….ctd.Where price curves intersect the following
price points are identified:
PMC (Point of Marginal Cheapness)
Price point where more sales would
be lost because of questionable
quality than gained from those
seeking a bargain
PME (Point of Marginal
Expensiveness)
Price point above which the cost of
the product outweighs the perceived
value derived from it
OPP(Optimum Price Point)
Point at which an equal percentage
of customers consider the price too
expensive as feel it is so low that
quality is doubtful
IDP (Indifference Price Point)
Point at which the same proportion
of customers feel the product is
becoming too expensive as those who
feel it is cheap, i.e., where most are
indifferent to the price
RAP (Range of Acceptable Prices)
The difference in price between the
Point of Marginal Cheapness and
Point of Marginal Expensiveness
10. Van Westendorp PSA…pros & cons
Advantages
The Van Westendorp model
offers a simple but powerful
way to incorporate price
perceptions into pricing
strategy
The results from respondents
spread over several
distributions yields a number of
inputs for pricing decisions.
Easy to execute as questions
asked are easy to answer with
its tools easy to understand.
Disadvantages
When a product or service is
conceptually new, however, this
model is less effective as
customers are not familiar with
benchmark prices and their
knowledge is limited.
It does not take into account
the complexities of the actual
buying behaviour.
Depending on the way the
questions are phrased, some
respondents would make their
estimates low or high.
11. Conjoint Analysis
What is it?
Conjoint analysis is one of the
terms used to describe a broad
range of techniques for
estimating the value people place
on the attributes or features
that define products and services.
The goal of any conjoint survey is
to assign specific values to the
range of options buyers consider
when making a purchase decision.
Armed with this knowledge,
marketers can focus on the most
important features of products or
services and design messages
most likely to strike a cord with
target buyers.
Where does it work?
conjoint analysis evaluates
product/service attributes in a
way that no other method can
Traditional survey approaches ask
respondents to estimate how much
value they place on each attribute.
This is a very difficult task for
any person to complete.
These types of analysis include :
Discrete Modeling, Hierarchical
Choice, Card Sorts, Tradeoff
Matrices, Preference Based
Conjoint and Pairwise Comparisons
are some of the names used for
various forms of conjoint analysis.
12. Conjoint Analysis The technique has been used by
marketing researchers over years as
an effective method of evaluating the
value of different elements of an
offering.
There are a number of different
types of conjoint analysis, but
essentially the technique is a trade-
off model where respondents are able
to compare different offerings
alongside each other, and choose
between them.
For example, by identifying the value
of different features of a document
wallet sold locally. The wallet could be
differentiated by:
Colour
Type of sealing
Rigidity
Price
These different features present five
possible combinations which could be
presented to a respondent to find out
which they prefer as shown:
Concept sealing Colour Rigidity Price
(kshs)
1 Self-seal Red Hard 450/=
2 Knob Yellow Hard 400/=
3 Button Green Soft 250/=
4 Lace Orange Soft 200/=
5 Glue Grey Light 150/=
13. Conjoint Analysis….How it works
The value in Conjoint Analysis can be
elevated to gain a true judgment on
preference, it is important to assign a
price to each offering.
Assigning medium, low, middle and high
pricing allows researchers to test
respondents interests at different
price levels which provides different
options to put before respondents.
These concepts are presented to
respondents whom are asked which they
would be most likely to buy.
Despite the technique offering useful
evaluation of how buyers value products
and services, it works best when the
features of an offering are distinct and
simple like : pens, envelopes, batteries,
laptops etc.
Conjoint analysis then uses
sophisticated software to calculate
values attributed to different features
of the wallet despite not being asked
outright.
Adding options to the features chosen as
well as pricing levels gives a multitude of
permutations for respondents to consider.
Advantage
Allows for greater flexibility and
reliability in decision making.
Simulates the choices or trade-offs that
customers make between product
attributes like price and brands that
customers make in reality during
purchase decisions.
Disadvantage
It is limited in business to business
markets where relationship with the
salesperson or the account manager,
reliability of delivery and other non-
preference variables are assigned in
purchase decisions.
Only applicable in business to business
pricing research if more variables are
added like face to face relationships in a
multi-attribute level trade-off.
14. Market price testing
Monadic Price Testing
Monadic pricing studies are a fancy name
given to „single cell‟ pricing research where
respondents are asked a single question about
a product.
With Monadic price testing respondents are
shown (or read) a single concept, with a single
price, and asked about their intentions to
purchase or some similar attitude. When
more prices need to be measured, more cells
are added.
This kind of phrasing is less likely to
confuse respondents as they just have to
make a choice rather than naming a price.
This would at least get you more accurate
answers for your particular setting.
Advantage
advantage if you test a broad enough range
of prices, you can recreate a demand curve.
Disadvantage
A Potential Problem is by focusing the
customer‟s attention on a reasonable price,
you may be censoring extreme responses
Needs a lot of respondents to get an
answer. just lead the customer to behave
as though they are negotiating.
Need to ensure that the question is not
overly focused on the price.
Price Laddering
Laddering is a well-established technique from psychology
and is typically used to encourage self-analysis of behavior
and motivations.
Applying this process to test pricing helps us to gather a
more complete list of “consequences” and climb towards
the hard-to-reach “values”. These “values” are the most
useful tools for predicting behavior and identifying
potential new opportunities.
Disadvantages
The number of questions which it generates can be large,
and the process of repeatedly asking someone seems
boring. Having this in mind it is essential to explain the
theory behind the technique to the respondent before
beginning the questioning.
Answering the later questions can be difficult. Not
everyone will be able to do so, and attempting to force an
answer is counterproductive.
Recording responses can be complicated, so care should
be taken in preparing for and conducting the questioning.
The technique is designed to help people examine their
actions and experiences. It is not suitable for
investigating hypothetical decisions; people will often
find it difficult to answer and answers will be less
reliable.
Advantages
Price Laddering offers an obvious practical advantage
over Monadic with its smaller sample size requirements.
this technique remains a powerful tool for unlocking the
real drivers for things such as purchasing decisions in
consumer research.
15. Questions asked in surveys
Monadic Price Testing
1. “If a LG DVD player is priced at kshs 4,000/= how likely are you to buy
it?”
2. “If a LG DVD player is priced at kshs 4,000/= how likely are you to buy it
at the supermarket?”
3. “If a LG DVD player is priced at kshs 4,000/= would you buy it at the
stalls-shop in town?”
4. “If a LG DVD player is priced at kshs 4,000/= and SONY DVD player at
kshs 5,000/= at the stall-shop in town, would you buy it?”
Price laddering
1. "Why did you choose this product?" - to establish the important attributes.
2. "Why is it good/bad that...?" - to establish the consequences of each
attribute.
3. "Why is this important to you…..?" or "How does this relate to your core
values?" - to establish the values of the respondent which are affected by
each consequence.
16. Market price testing
Research for: Description Information required Sources of
information
Price signaling When consumers are
willing to pay more despite
lack of knowledge
regarding quality
Competitors prices and costs,
Legal constraints of price
signaling, Product and cost
information.
Internal records,
secondary data on
competitors prices, legal
data, inferential
information on
competitors costs
Price bundling Adopted when products
are non-substitutable,
perishable & there is
asymmetric demand
structure for them.
Demand characteristics on
various components of the
bundle, product and cost
information, consumer
preferences for various
combinations of the bundle.
Internal records, survey
data or customer
characteristics and
preferences, secondary
sources of information
on competitor costs and
prices.
To know how to price products and services in order to achieve the highest revenues requires
pricing points research in order to determine prices that:
Will generate the highest revenues.
Attract buyers and traffic.
There are however two key points to consider in market price testing:
1) There is flexibility in product/service pricing.
2) A small difference in the pricing of a product/service has a high impact on revenues.
Various methods can be used to test prices while in the market, these methods require research to
determine the optimum pricing points that organizations require. They include the following
research :
17. Market price testing. Ctd
Research
for:
Description Information Required Sources of
information
Skimming
pricing
Concept of pricing the product at the
point which profits will be greatest
until market conditions change or
supply costs dictate a price change.
Relative ranges of
alternative prices.
Internal Records
Secondary data
sources
Competitor prices.
Penetration
pricing
Strategy based on concept that
average unit production costs
continue to decrease as cumulative
output increases.
The lowest market entry
price below cost,
Costs of production of the
good/service.
Internal records,
Secondary data,
Competitor prices,
Legal data,
demographic
consumer data.
Premium
pricing
In price signaling the firm produces
inferior products at high prices, in
premium pricing inferior and superior
products are produced at high prices
to exploit joint economies of scale.
Product and cost information,
competitors prices and costs,
consumer characteristics like
maximum price they are
willing to pay for a product.
Internal records,
secondary sources :
markets and
transportation
costs.
Discounting:
Random,
second
market &
periodic.
When consumers in the market have
different reservation prices, firms
can start at high prices and
periodically discount them to draw
consumers with lowest reservation
prices. Some discount prices in a
random manner to take advantage of
consumers with heterogeneous costs
who buy at undiscounted price where
low price is offered.
Information about consumer
reservation prices. Product or
service and cost information.
Internal records,
survey research to
determine
consumers
reservation prices,
Internal records.
18. Cardinal rules for conducting pricing research
1. The Buying process is critical
Understand the who, what, why, where, when and how behind your
customers‟ pricing decisions to avoid receiving poor pricing information,
focus on capturing the following elements of the buying process into the
research design: the buying occasion – when and why they are buying;
frequency of purchase; key decision maker; and length of the buying
process etc.
2. Not all tools are created equally
There are several methods for collecting pricing data, but they are not
exactly same and not a single method can be used all the time. The key is
to match the data collection method to the pricing problem for which you
are seeking input.
3. Understand how your customers perceive price
Price often plays a highly emotional role in the customer‟s buying decision.
When the price is too high, customer‟s experience “shock” and either
defect to another supplier or wait until the price comes down before they
purchase. On the other hand, a high price can sometimes signal a
prestigious image; the customer is filled with a sense of exclusivity and
belonging, and is willing to pay premium prices.
In both cases, the price is perceived as high, but the customer‟s reaction
in each is different. Understanding how customers view price in the
context of their purchase is critical to effective pricing research design.
19. Rules for conducting pricing research….ctd.
4. Use pricing research to sell and not just to set price
Many organizations use research to make a pricing decision, but
don‟t share that information with the sales force to help them
successfully execute the pricing strategy. Educating the sales
facilitates buy-in to the pricing decision; allows for pricing
objections and concerns to be heard and dealt with; and
empowers sales reps with the confidence to sell the price, based
on the established facts.
5. Use segmentation to select – or reject – your customers
Pricing research in segmentation is often used to identify which
group of customers is the “best” to serve. Although these
customers are targeted, many companies can‟t resist the
temptation to sell their product or service to the whole market
in a misguided attempt to grab volume. Consequently, these
organizations get dragged down by serving the unprofitable at
the expense of their profitable “key accounts.”
By using pricing research and applying this framework to every
pricing initiative, you will be able to make better pricing
decisions and dramatically boost profits.
20. References
Kumar, V., Aaker, A., & Day, G., (2002). Essentials
of Marketing Research (2nd ed.) John Wiley
and Sons, INC.: Pennsylvania : U.S.A.
Kotler, P., & Armstrong, G., (2012). Principles of
Marketing (14th ed.) Prentice Hall
International Inc.: New Jersey, U.S.A.
Vithala, R., (2009). Handbook of Pricing Research
in Marketing. Edward Elgar Publishing Ltd,
Cheltenham.: U.K.