Pricing Optimization

Of all elements in the marketing mix, pricing is uniquely important. For example, pricing tactics can:

• Determine whether a consumer will consider the purchase of a good or service.
• Convey image and quality.
• Provide a way for marketers to segment a market based on different quality and service levels.

Pricing optimization is a powerful tool with strong influence on profits and market share. For most businesses, a price change of a few percentage points creates a much larger effect on operating profits. There are few activities a company can undertake to affect profitability as quickly as pricing tactics and price changes can also affect sales and market share.

Pricing research often underestimates the impact of price on purchase decisions and satisfaction, in part because consumers often process price differently than other aspects of a product or service. Pricing research must recognize that customers may not think about pricing in the same manner in which they think about other attributes, such as quality or service.

MMR Strategy’s pricing optimization studies start with the understanding that customers evaluate price within a very broad context that typically includes a wide range of considerations relating to products, product lines, distribution, history, positioning, and other factors.

We use sophisticated tools and analysis methods to help our clients optimize pricing and set pricing tactics, including:

• Concept and Product testing methods that incorporate price in the study of new concepts and products.
• Conjoint, MaxDiff, and Discrete Choice methods that measure how consumers trade off price versus other attributes.
• Demand curve analyses that use pricing surveys to optimize pricing by projecting revenues and demand at different price points.

MMR Strategy has extensive experience with measuring the perceptions of price and value and has helped clients to:

• Set prices for new concepts and products
• Evaluate the pricing of items on restaurant menus
• Optimize pricing tactics for a wide variety of new products and services

Contact us to discuss pricing optimization and pricing studies. Contact us.