Price Research benefits the marketing team as well as the pricing department: they get insights into willingness-to-pay and can better determine the optimal price. But what about Sales? In a recent sales conversation we were asked if price research could be used when e.g. putting price increases through. The short answer is "Yes". The longer answer is it depends. (And the legal answer is: yes, but don't dictate resale prices).
When pricing internationally, pricing research can provide a firm platform for superior performance:
- Understand true differences in willingness-to-pay and don't fall into the trap of harmonizing prices across borders, just because it is easy.
- Understand global as well as local value drivers and adjust marketing messages accordingly. Don't do global marketing on Benefit A, if this benefit is only appreciated in Japan but not in Germany.
- Base local pricing on true willingness-to-pay rather than gut feel.
- Force the pricing team getting closer to local markets and customers, by having to do pricing research in all (key) markets.
- Take the guesswork out of pricing: with price research you know he real market facts instead of guessing.
- Make price increases more successful by reflecting local specifics and willingness-to-pay insights, rather than one-size-fits-all price increases
- As exporters: understand customer dynamics and willingness-to-pay even in markets around the globe and without a large local market team in place.
- Use price research and willingness-to-pay insights as proxies for brand health, and adjust marketing spend levels accordingly.
- Make global or regional product launches more successful by understanding willingness-to-pay in each market ahead of launch.
- Use local willingness-to-pay insights to better negotiate with international customers who are looking to harmonize prices across countries.
Shameless self-promotion: at PriceBeam we specialize in pricing research and provide insights in over 70 countries world-wide. Get in contact or even sign up for a free trial of our powerful price research solution.
When pursuing a value-based pricing strategy, the core focus is on Willingness-to-Pay. What are customers willing to pay for given product or service. This can of course be on the overall level but for proper value-based pricing, it should also be on the feature level. How much value do customers put on individual features or combinations of features. This is where Conjoint Analysis comes in handy.
When setting the price for a new product*, willingness-to-pay research can be a strong decision support tool. But there are different types of WtP research and different situations that require different methodologies.
In many organizations this is the time of the year for making marketing budgets. Marketing teams build plans for the coming year and petition various stakeholders for (additional) funds.
Willingness-to-pay research can be very useful to plan and defend marketing budgets, and the starting point can be something as straightforward as this:
If a product has a current price that is higher than the value customers put on it (i.e. their willingness to pay), then that product is over-priced. Similarly, if the current price is lower than what customers are willing to pay, then it is under-priced.
Willingness-to-pay insights can easily and rapidly be identified using PriceBeam's solutions.
Even before Philip Kotler wrote his famous book about the 4P's in marketing, pricing was very important to marketers. Pricing determines how much money is made, but pricing also sends signals to the customers about the value of the product or service. It sets the level of premiumness and expected quality, and it often also communicates about how the product should be perceived vis-a-vis competition. Therefore, Marketing should also be very much involved in pricing.
Despite the emergence of e-commerce and direct sales, it is still the norm in most consumer goods industries that most of the sales goes through trade partners, either retailers or distributors. For consumer goods manufacturers this means that there is both a price to charge to the retailer and also a price that the retailer charges the final customer. In most jurisdictions it is illegal to directly dictate end-customer pricing, but knowing what the end-customer is willing to pay, and what s(he) values the most, can still be very useful information for the manufacturer as well as for the retailer.
We are excited to announce our latest webinar about how to use Willingness-to-Pay research to optimize prices for bundled services, e.g. technical support services, after-sales services etc.
You can sign up for free here: https://info.pricebeam.com/pricing-support-services
In the webinar you will learn about how analyze willingness-to-pay for such services, and how to align your pricing with the value drivers of the customers.
We have an exciting webinar coming up on August 17th called "Emerging Markets Pricing: Driving Transformation with Willingness-to-pay Research". Our own Jesper Hansson and Finn Helmo will be presenting how willingness-to-pay insights can help you when building and executing a strong emerging market approach.