Pricing beyond the 'Homo Oeconomicus'

Date of publication: September 15, 2010

Company: IRIS Network

Author: Florian Bauer

Abstract:

Price optimisation is the most efficient lever to maximize profits but all classical price research tools fail to deliver optimal results as they still assume consumers to behave like a 'Homo Oeconomicus'. Using several examples, this paper will highlight the shortcomings of classical tools like conjoint analysis or PSM and develop an open source pricing research framework the 'Psychological Price Profile' that helps to broaden the research scope while still leveraging the advantages of the classical tools. Moreover, this paper will present the core results of a multi-national study involving 16 countries and 10 product categories.

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