Price testing enables the optimum price for a product or service to be determined. The process takes into account factors such as consumer price sensitivity, product type and competition. Moreover, information gathered during the tests enables various versions of the product to be positioned in different price categories.
- What is the highest price at which my product would sell at the desired level?
- What set of parameters would make the assumed price acceptable to customers?
- What level of demand will my product generate if I wanted to market it as a premium or budget product?
Obtaining customer opinions and perceptions about product pricing is typically one of the most difficult tasks. In customers’ declarations, price is almost always the most important factor considered when shopping. It is also a key factor in influencing customer satisfaction and other aspects of the way a product and offering is perceived.
In price testing, it is crucial to work out the relation between the expected, acceptable and the highest price in individual target groups, as well as in comparison with competitor products. Product tests also enable PMR clients to position the different versions of a particular product in the most appropriate price category.
Depending on the structure of the test, the PMR report delivered at the end of the research project may include an analysis of price levels against the declared product demand, analysis of demand for individual product versions, product options relevant to the price levels tested, recommended price in view of the assumed production and distribution costs, as well as the expected increase in sales gain on sale. Product testing may also involve simulations to forecast sales volumes at the different price points.
How do we deliver
PMR Research typically conducts price testing in the form of interviews or surveys, the structure of which is adjusted to the objective of the study. Respondents are presented with a series of products or product versions and are then posed a series of questions concerning price. The same questions are asked for each product or product version. Tests are carried out on a group of respondents who have been identified as the consumers of the product or products in question. A separate requirement when recruiting participants for this type of study is the frequency with which participants buy the product in question or competitor products.