Abstract:

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.