B2C Price-Value Research
Many factors contribute to a consumer’s final choice: brand power, purchase occasion, perceived product value, merchandising, and price. For pricing research to be effective and produce accurate results, all these factors must be taken into consideration.
The following case studies provide examples of our solutions to different types of pricing-research problems in the business-to-consumer (B2C) channel.
Product Line Gaps
A leading European alcoholic beverage manufacturer was challenged to optimize prices between distinct product quality categories. Optimizing the prices for an extensive product line is complex. Pricing Solutions developed a sophisticated forecasting model that analyzed the movement of product volume as prices were changed among the various brands, levels of quality, and package sizes. By understanding the financial implications of product-line cannibalization when varying the price gaps between the discount and premium categories, the client was able to determine the optimal pricing and promotional strategy, delivering millions of dollars in bottom-line profit.
Price-Point Optimization
The confectionery division of one of the world’s largest food companies questioned the effectiveness of its longtime established price points. Pricing Solutions conducted a unique in-store price-point test to determine the optimal price levels. The corporation’s conventional wisdom had been to maintain the “status quo.” However, the pricing research results highlighted several pricing opportunities never previously imagined. Based on the recommendations, the client generated $15 million in incremental sales revenue and dramatically improved its profitability.
New Competitive Entrant
B2C
Our client, in the competitive packaged-goods industry, was at a “pricing crossroads.” A new private-label product that had been launched by its leading retail customer was attacking our client’s leading brand. The product and packaging differences were minimal, but the projected price of the private-label product was 50% lower. In response, Pricing Solutions conducted a pricing research study to analyze price elasticities, and then facilitated the strategy development process. The decisions that resulted from this process led to a dramatic outcome in which our client fended off the private label, gained share from another competitor, and maintained margins.
Pricing Structure Change
B2C
The leader in the eye-care category wanted to know whether it was feasible to adjust its large portfolio of products with numerous price points into a simplified structure with fewer price points. Pricing Solutions conducted a pricing study to evaluate the wisdom of changing the pricing structure. The study analyzed the price elasticity of all the SKUs in the category, and then a financial model was developed to determine the economic impact of changing the overall pricing structure. Based on the findings, the client substantially reduced the number of price points in its product portfolio, thereby simplifying this large category for both the retailer and consumer.
Price/Volume Optimization
B2C
A leading North American paint manufacturer wanted to know whether its brand could support a price increase. Pricing Solutions undertook a pricing study to evaluate the wisdom of raising prices. The study analyzed the price elasticity of different consumer segments and the variation by region. Based on the findings, the client substantially increased prices over the next four years, adding millions of dollars to the bottom line while at the same time boosting its market share.
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