Best Pricing Techniques

3222 Words May 17th, 2013 13 Pages
Choosing the Best Pricing Techniques to Address Consumer Goods Pricing Challenges
CONSUMER GOODS S E CTO R

A Current Best Practices Paper

Curt Stenger
Senior Vice President, Ipsos Marketing, Consumer Goods Sector curt.stenger@ipsos.com

Research Challenge Identifying the optimal price for a new product is a critical step in the innovation process – and correcting the price of an existing product is a necessary component of successful brand management. With the wide range of pricing research techniques practiced in the industry, it is not always clear which technique best addresses the business issue at hand. This paper describes the most common methods used for consumer goods pricing research and offers guidelines on when – and when not
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(Figure 1). This continuum helps describe how pricing methods can best be used to address particular pricing issues based on the level of competition needed to be considered and the depth of pricing knowledge needed.

Custom research pricing methods fall into two main approaches: (1) pricing the total product (pricing for a complete concept /product) and (2) pricing elements of a variable concept /product offering such as branding or features. This discussion will focus on pricing the total product. We are focusing on this because pricing elements (which is largely accomplished through conjoint trade-off models) tends to focus more on the features as either equal or superior to price and often needs to be used in conjunction with another method to fully understand the impact of price on brand success. Specific techniques that price the total product and which are covered in this paper are Gabor-Granger, price sensitivity measurement, monadic concept, brand-price trade-off, and simple discrete choice. Fuller profile discrete choice will be discussed briefly along with the simple discrete choice approach.

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Choosing the Best Pricing Techniques to Address Consumer Goods Challenges

Pricing the Total Product: Pricing the Product Individually vs. Pricing the Product Competitively
The vast majority of custom research pricing research falls into
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