Abstract:

The Price Audit is a micro-analytic method for testing the effect of a change in price on a product’s market standing. Simple in theory and economical to put into practice, the method generates an impressive amount of data that enables one to develop a multi-faceted view of how a product’s position in the market ( in terms of how it is perceived and evaluated, its market share, and the consumer segments from which it draws) is influenced by its price and how that position might change given a change in the product’s price or in that of one of its competitors. In what follows, we will first discuss the theoretical and methodological bases of the Price Audit and describe each of the calculations of which it consists. We will then illustrate the method with an overview of the results from a recent application, and then close with a brief discussion of these findings and of various issues that arise in their interpretation.