As businesses continue to expand each day, it’s always beneficial to explore new strategic opportunities that generate positive ROIs. Most companies are now turning to pricing research to increase profit.
Based on its scientific accuracy, it serves as a reliable way to improve pricing strategy and redefine positioning in a market. Moreover, effective pricing research can make a significant difference between a successful or a flop product or service.
This guide will provide an overview of pricing research and how it can be utilized for long-term business growth.
An Overview of Pricing Research
The research method associated with pricing research aims to discover the inclination of customers to buy a service or product. It can also measure the impact of change in prices on consumer demand and determine the optimal price for new products.
Customer insights allow organizations to improve customer response to the new price and identify the psychological effects of price points on sales. Pricing research provides the following solutions:
· Menu Bundling & Optimization
· Developing a Subscription Pricing Model
· Promotion Effectiveness
· Pricing Configurable Product & Services
· Product Portfolio Pricing Optimization
· Competitive Pricing Response
· New Product Pricing Insights
Whether a company is pricing a new product or planning to increase prices on consumer packed goods (CPG), research enables effective pricing strategy and helps make informed business decisions.
Conducting Pricing Research
Pricing research can help businesses discover and develop new business opportunities. The following “Five Cardinals of Pricing Research” can help you ensure pricing research is conducted accurately.
1. Defining Research Purpose – It’s crucial to understand the what, who, where, why, and how behind the customers’ pricing decisions. The research purpose will pay close attention to these elements of the buying process – key decision-maker, length of the buying process, and frequency of purchase.
2. Determining Your Tools – The key is to compare the data collection method to the pricing problem for which the company is seeking input.
3. Understanding how Customers Perceive Price – This helps in effective pricing research design.
4. Using Research to Sell and Set Price – Invest time to encourage your sales representatives, offering them full communication of the pricing research. This will help support all adjustments to the pricing strategy.
5. Using Segmentation to Select and Reject Customers – This will help determine which group of customers is the best to serve.
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