Estimating new product price elasticity before launching

Date of publication: October 26, 1987

Abstract:

In this paper, the authors describe a method that has been tested for many years. It offers a means for testing and evaluating the sales effect of price decisions based on consumer survey data at various price levels before the product's new price has been released to the market. Thus marketing companies can evaluate pricing decisions without revealing their intent to the competition. We have been able to test, as part of the BASES system product concepts and/or products with various price levels by using the unique calibration data base to evaluate the price impact on potential trial and repeat purchase. Manufacturers have the opportunity to estimate price elasticity at trial, as well as obtain estimates of repeat purchase and sales volume before product prices change in the market place.

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