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Pricing

Finding the right price strategy for products is one of the most important tasks marketing faces today. The times when one could simply add a reasonable share to production and distribution costs and call this a “pricing strategy” are definitely over.

At IfA we offer you a range of tools that help you find the right price. Based on the tasks at hand we employ the following methods:

Garbor Granger

... provides basic information on the perceived value of a product. The method is easy to realize. Respondents are merely asked if they would purchase a product at a pre-defined price. Output (among other things) is a graph that shows a price / sales volume function. Disadvantage: focus is solely on the test product - competitors are disregarded.

PSM: Price Sensitivity Measurement

… is usually recommended for new products when no clear idea of a price range exists. This method is quite easy to realize. Each respondent has to answer four questions:

  1. What would be a good price for the product?
  2. At what level would you consider the price too cheap because it jeopardizes quality?
  3. What would be an expensive - but still acceptable - price?
  4. At what level would the price be too expensive to be considered for a purchase?

PSM shows you a price range for “sure buyers” and a price range for “possible buyers”. PSM also shows the “best price” and a “suitable price” for the test product along with upper and lower margins for the price range.

BPTO: Brand Price Trade Off

… uses purchasing scenarios to explore the relationship of two factors: branded product and price. At what price are different products preferred more than others?

BPTO shows you (a) the upper price margin for a branded product; (b) which monetary differences between branded products are perceived by the respondents; (c) which “market shares” a branded product achieves at different price levels among the tested competitors.

Price Scan

… employs conjoint analysis to determine the best price by taking into account a wide set of features (like brand, equipment level, taste, size, additional services,…).

The result shows how much a consumer is willing to pay at max for a certain extra feature of your product. How much is a certain feature worth? Which additional costs does the target group accept as an upper limit for a certain feature? Key phrase: monetary added value.