Pricing Research Through Conjoint Analysis
Ideally, price sensitivity could be estimated by analyzing the variations in demand that occur on the market, or by conducting experiments in real market situations (“test markets”). Scanners have made this type of analysis more viable than ever for many FMCG categories.
The fact is, however, that analysis of real market behavior, although often useful, presents us with many problems: market situations often don’t remain constant long enough to allow an adequate analysis of their effect, competitors introduce new products or apply promotions or discounts, etc.
How we do it:
Conjoint Analysis, although less realistic than a “test market”, is a very useful tool for making strategic pricing decisions:
- enabling adequate control of the variables impacting on the market
- making it possible to research broader price ranges
- enabling testing of varieties or formats that aren’t currently on the market
- it’s the way of obtaining customer information that most closely resembles their actual purchasing behavior.