What is Pricing Research?
Pricing research aims to uncover what a customer is willing to spend money on a product or service. This then allows one to determine the right price for a product that will also maximize profit, revenue, or market share. By conducting pricing research, one can get a deeper understanding of the market's desire to purchase, capture an elevated return on product investment, and preserve the worth of your brand.
How Media Manager Conducts Pricing Research
While there are many ways to conduct pricing research, there are three main mythologies used: the Van Westendorp Price Sensitivity Meter, the Gabor-Granger Technique, and conjoint analysis. The Van Westendorp Price Sensitivity Meter is best suited for products that are ready to be sold but have no set price yet. This meter asks 4 questions to determine it's meter: What price would start making you think the product is too expensive? At what price would you begin to believe is too inexpensive and then question the quality of the product? At what price would you begin to believe the product is getting expensive, but you still would consider purchasing it? And, at what price would you believe the product would be a bargain? The analysis of these questions then creates a range of prices that would likely be optimal. The Gabor-Granger Technique asks their participants if they would pay a certain price for a product or service. It then raises the price higher each time and the answers of the participants would help determine the demand for the product or service at each price point. However, this technique does not consider competitive pricing. The conjoint analysis uses a discrete-choice model to determine a price.
Why Companies Need Pricing Research
Conducting this type of research helps maximize the currency flow for a product or service. By doing this work, one could gain thousands or even millions of more money in revenue and can help improve the product and customer levels.
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