Pricing research is a huge topic in itself, with many different methodologies all of which have merit. One approach that MRTS uses involves using a quantitative approach to price research that looks at price elasticity.
Pricing is a key component in your product strategy. Price says a lot, so its imperative to get it right.
There are seven simple steps to getting your pricing research right.
Price Positioning, business objectives, defining your product
Its not all about revenue, but also about brand value and positioning. So step 1 is to work out your over-arching brand and product strategy. You also need to define what it is you are testing, what product features you want to highlight. Respondents can’t respond to a price about something vague so it needs to be a very concrete description!
As part of the pricing research it is really useful to be able to understand what aspect of your product or service is actually driving perceived value. There are many ways to do that, and product research is a whole separate research topic. But as part of pricing research it is possible to gain some insight as well by asking supplementary questions about how specific features add value or are worth paying for.
Pricing landscape and quantitative research
A pricing methodology that is simple to administer and delivers quite intuitive date is an approach based on Van Westendorp modelling.
Before you start though you need to agree a pricing landscape. Know what price you would like to have, and know your competitors’ pricing. For this approach you need to design a set of price points from very low to very high – you might end up with 10 to 15 price points in total with your ‘ideal price somewhere in the middle.
Our research allows us to understand for each price point how many thought it was really cheap, though it was OK, and thought it was much too expensive.
Because respondent reaction to price is not linear, when we analyse, we get an idea of elasticity of response. This means the proportion of respondents who are ‘in the middle’ and they vary with each price point. These respondents are those for whom the price is ‘not too cheap’ but also ‘not too expensive’ so they are very important from a marketing perspective.
Overall, it’s an insight-rich approach that us easy to understand.
Support your insight with qualitative research
As well as doing the quantitative research, do a small number of in-depth interviews as well.
- See the language that potential customers use
- Understand what they immediately gravitate towards in your product or service
- Understand any current pain points so you can tweak your offering.
- Build all your results back into your strategy. Make sure everything is consistent and coherent, make sure your revenue generation is in line with strategy as well.
As with all research, the outcome ought to be very actionable and should easily be incorporated into your product and marketing strategy.
MRTS can help
MRTS is the premier research agency operating in Cambodia. We can design and deliver highly actionable pricing research to help underpin revenue growth and commercial success.
Contact us: vuthy@mrtsconsulting.com