Determine your optimal price strategy.

What will happen to the preference for your product if you raise the price by 5%? And what happens if your key competitor raises the price by only 3%? What is the optimal price for your new product to generate the highest possible interest among consumers? These are the kinds of questions that can easily be answered by MetrixLab's OPTIMIZER©.

Outline

OPTIMIZER© has been developed by MetrixLab as a research method based on conjoint analysis (Choice-Based Conjoint). Conjoint analysis allows you to determine the optimal price of a product and assess the impact of other attributes, like different sizes of packaging, different colours or designs of the product and other product features. Different market scenarios can be run to determine the optimal mix of price and features and provide insight into how preference for your product can be created and from which competitors potential buyers can be gained.

Methodology and setup

The choices respondents make in OPTIMIZER© mimic the purchase decisions they would make in real life. So instead of asking respondents directly how much more they would be willing to pay for a product, OPTIMIZER© is an effective way to derive this critical information from the choices consumers make. The choice tasks themselves are clear-cut and easy for any participant to perform: On subsequent screens, they simply keep picking their preferred option from a selection of pre-defined products, features and prices that go along with it. Although the potential different combinations are numerous, each individual respondent does not need to evaluate all options since these can be reconstructed during analysis. This approach guarantees a minimal strain on participants in terms of length of the questionnaire, which increases data quality. The use of visual material is recommended since it will enhance the realistic value of consumer decisions. The process in short:

• Some screening questions are asked to select the right consumers to be invited for the study.
• Respondents evaluate product alternatives (build-up by various attributes) and their corresponding price levels by indicating which product they prefer on 8 to 10 subsequent screens showing combinations of different product, brand and price options.
• Some additional questions are asked to gain a deeper understanding of the trade-offs consumers have made.

By analysing the results, OPTIMIZER© calculates the weights and preferences respondents place on the various feature levels and brands, resulting in the observed preferences of consumers. The strength of the conjoint analysis lies in the fact that not only will the price sensitivity of a product become clear, but it also shows the impact of offering an additional feature, increasing package size, etc. Additionally, it will help you to understand what will happen to your preference share under different market scenarios: What will happen to the preference share of your current (or your competitors') product when your new product is introduced with one or more modified features? Where does this preference share come from: your own current product users or your competitors' customers? How can you optimize your market share?

Your benefits

OPTIMIZER© provides you with the exact insights you need to enhance your market position significantly. MetrixLab offers you

• conjoint analysis based methodology providing in-depth information on consumer choice behaviour.
• the possibility to use visual material as part of the conjoint analysis, resulting in a realistic setup.
• minimal strain on participants, thanks to a limited number of questions and easy-access choice- based tasks.
• the possibility to run different market scenarios for a comprehensive view, resulting in actionable recommendations on how to move forward.

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