Pricing new products at better value for money
In today's tough environment, the pricing decision for a new product has become more essential for future profitability and also more difficult to make. Market Research can help on two key issues, dealing with new products under development : Price acceptance - given the new product, how is the consumer going to respond to the various possible price levels? Price importance - given a range of prices and possible characteristics of a new project, which product attributes would be the best 'value for money'? Which alternative would best trade-off a high consumer price? While the problem of price acceptance can he answered by classical methods of assessment of the buying response to price, the second problem requires using the more recent tool of conjoint measurement (trade-off) approach. Our opinion is that it is wiser for a marketing company to introduce the price parameter early in the process of new product development, rather than checking the price acceptance as the very last stage before launch. A review of the classical pricing research methods and a plea in favour of the trade-off approach are illustrated with examples.
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