Pricing Optimization
Pricing is one variable in a complex set of variables that make up a brand’s overall strategy. These variables include product features and quality levels, pace of innovation, speed of delivery, strategic positioning, advertising messaging, advertising spending levels, package design, and distribution channels.
The central question regarding pricing optimization is: What combination of variables enables a brand to consistently maximize its pricing relative to the pricing of its competitors’ products and services? The answers to this question are the building blocks of a brand's pricing strategy.
Pricing Strategies
Below are some common pricing strategies:
Pricing Analytics Methods
Decision Analyst uses an array of research techniques and analytic methods to optimize pricing. The exact method chosen depends on a brand’s goals, budget, and timing.
Pricing Strategy Abhors a Vacuum
Regardless of the pricing strategy adopted and the research methods used along the way, companies must always consider the competition and other marketing variables (positioning, advertising claims and media spending levels, etc.) when setting prices. Evaluating potential pricing strategies with future-looking methods is critical because missteps alienate customers and damage margins. Successful implementation depends on how well the pricing strategy matches the overall corporate strategy. Companies must first decide who and what they want to be and then use pricing to support this overall vision.
If you would like more information, please contact Felicia Rogers, Corporate Executive Vice President, at [email protected] (or call 817-701-7185) or Bonnie Janzen, President, at [email protected] (or call 817-701-7178).
Researcher in neuropsychiatry and behavioral neurology. Applying DL/MS and advanced statistics/econometrics to discovery, modeling and prediction of individual' and cohort behavior.
1 天前Both articles have been very informative for me. I would add that regardless of whether the customer is a business (e.g., a potential buyer of marketing research) or a household (e.g., consumer shopping for eggs), he or she must be (a) interested in buying and (b) have some maximum, tolerable price level. Thus, the buyer’s available budget is always lurking behind any forecast of purchases (or dollar sales or profits), and we need to be aware of that. Yet while research may yield an estimate of (a), (b) is too often bypassed in pricing research. It’s not the same as “expected,” or even “desired” prices. And simulation of price responses easily overlooks individual buyers’ budgets. Historical survey items such as, “Assuming this product is available at a price you are willing to pay…” are not totally reliable and need be corroborated in, say, discrete choice data. Published research has shown that the buyer’s maximum budget price can indeed be estimated from correctly formulated discrete choice models, especially when other individual data is included. As a client, I would be impressed if a pricing research vendor was aware of and able to leverage such information.
Using consulting and insights to drive growth for organizations.
4 天前Pricing is critical, especially now. Good luck to all of you making tough decisions. We know that sound pricing strategies based on research can help.
Consulting To Address Your Company's Critical Business Questions Innovation | Brand Building | Comms | Customer Understanding
4 天前Regardless of the product or service category, there are effective ways to determine an optimal pricing strategy through well-designed research and analytics.