How holistic is your approach to making decisions on the most important marketing lever?
Getting the right pricing strategy is very critical for CPG companies - more so in the alcoholic beverages (AlcoBev) category in India, because AlcoBev is a highly regulated industry subject to high taxes coupled with restrictions on distribution and mass media communications. This renders it very price sensitive and highly competitive. At Diageo India, we have developed an integrated brand pricing framework that encompasses the following dimensions: (i) consumers' current sensitivity to brand price; (ii) behavioural equity measure (total $ value that is the sum of functional and emotional benefits provided to the consumer by the brand, over and above price); and (iii) drivers of equity. This holistic framework enables maneuvering pricing in the market for the short-term while getting the right balance between price and total brand value, as perceived by consumers in the longer run and also driving actionability in terms of building up equity.
This paper establishes the relevance and need of an appropriate pricing construct (not price per se) in driving the profit growth and illustrates how research feeds into the construct. The same would be explained with the help of a case study in a B2B scenario (logistical services industry) in Asia Pacific. The paper also demonstrates, using a combination of research techniques, the importance of taking into account the interaction of price with brand, looking at pricing in the overall scheme of other factors, linking findings from different studies and linkage of research findings to the customer's database helps in the identification and implementation of an appropriate pricing policy, not to mention the usefulness of a common framework across countries in a region and across continents, thereby maintaining consistency.
This present chapter concentrates largely on ad hoc pricing research. Only a brief section on econometrics and simulated test markets is provided. In general, econometric techniques form a quite separate body, which cannot be adequately dealt with in the present chapter. While it is certainly true that econometric work can provide extremely useful pointers to the effects of price in a range of markets, it must also be said that there are many instances where it is simply not applicable. New product development (NPD) is covered, but only in relation to price.
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.
This paper describes a large-scale investment in a new business telephone exchange service, called Centrex, under consideration by British Telecom pic in the UK, and the work undertaken to forecast the effect of introducing the product.
In this paper, the authors describe a method which has been tested over many years. It offers a means for testing the sales effect of price decisions before the new price has been released on the market. Thus marketing companies can evaluate pricing decisions without revealing their intent to the competition. To date most 'laboratory' test methods rely on respondents who are solely shown the brand as a concept, this paper stresses the importance of collecting product-in-use data related to different price levels. Often it is the in-use evaluation of the brand which yields the most reliable estimate of price elasticity.
The situation on the oil market in Germany has been an extremely difficult one for a number of years. Permanent price fights of the established trademark companies among each other and with the petrol stations of consumer markets have, for a long period, made the earning situation particularly problematical.