Pricing analysis can determine:

• The price elasticity of a product and the competitor’s product
• How price actions impact overall sales/profitability
• The amount possible to increase price without losing share

To test pricing, three approaches are most commonly used, either in combination or individually. One method uses a monadic design. It’s advantage is testing specific price points that are actual possibilities in the marketplace. Often used in a shopping environment, it shows how shifts will impact the brand, portfolio or market category overall.

A second approach, Choice Analysis, is used when specific price points are not available and instead, a low point and high point have been chosen. Choice Analysis is used most often to develop a demand curve within the range of chosen prices. Data is also collected within a virtual shopping environment using a modified shelf which includes key competitors.

And, lastly, a Van Westendorp model can be used. A series of value questions are exposed to respondents and analyzed to determine a range of acceptable prices. This model is best used when respondents are familiar with the products, and more often used in high involvement categories.

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