Objective
The goal of this method is to determine the interrelationship between product alternatives and price positions. It investigates which products are most preferred at what price.
The following questions are answered:
- What are the maximum acceptable prices for a product?
- What differences in monetary values are perceived by consumers between the products being presented?
- What market shares can a product achieve at different price levels in an environment in which it competes with other products?
Product alternatives could be things such as brands, different packaging sizes or design variants. The products under study are firstly presented to the respondents at base prices in a purchase scenario. The price of the selected product is then increased by a set amount until it is no longer selected.
Prerequisites
Because the only matter of concern is the relationship between the product as a whole (e.g. the brand or the packaging variant) and the price, clearly discernible product alternatives must be presented. If the variation is in the brand its associated image is included in the respondent’s rating. Variations in a brand, such as those relating to pack size or design, should be relevant, i.e. their implementation should be feasible. The variation is only evaluated as a whole. A breakdown into components (such as design), as is the case with conjoint analysis, is not possible.
To ensure that the findings obtained are valid, relevant price ranges must be used for all products. Starting with overly high prices or using upper limits acceptable to most participants will reduce the usefulness of the findings.
