This paper discusses the complex issue of price sensitivity analysis. The authors argue that the most effective method, currently available, of evaluating optimum pricing for established brands is conjoint analysis or trade off. The paper brings evidence to suggest this is not the case for new brands. However, the authors claim a critical area not accounted for in traditional conjoint analysis is that of interaction. Interaction is defined and a method that, in the opinion of the authors, is the most effective of measuring this factor is presented. Three case histories are analysed in detail dealing with product/price interaction, brand/price interaction and service/price interaction. Analysis of these cases includes discussion of the major corporate issue of brand equity.
Over a two year period the authors have been involved in the development of a new commercial testing system, that brings together, for the first time, measures of on-air recall and persuasion. The system named AD-VISOR, became officially operational in September 1987, for use in all the major markets of western Europe. The paper illustrates the problems and opportunities of European testing. Practical experience of evaluating commercials across Europe is discussed with the aid of case histories.
This paper summaries the authors' experience in estimating the sales impact of product quality improvements, made to new products. The paper describes the manner in which a particular forecasting technique takes account of product evaluation in its estimation process, and clarifies the specific components of sales affected by product quality. Case history material is shown to demonstrate the sales impact of product improvement. Four specific points are highlighted. First, the importance of high product quality in launching new brands. Second, the impact on sales that variance in product quality can have. Third, that the sales impact generated by product improvements can be estimated pre-launch. Fourth, that pre-test market systems can, and should, be used as diagnostic tools to evaluate product change.