The Optimal Price Point
For the most part a van Westendorp Price Sensitivity Analysis (PSA) is a useful technique to gauge price expectations and optimal price points. This is based on an in-depth analysis of price and value ratings obtained from consumers. The key data is analysed from questions that ask respondents about what price is considered to be too high or low for a product or service.
Pricing is highly active and is constantly changing based on market conditions and what the industry competitors are doing. The market needs to be constantly monitored and price must be adjusted accordingly. Keeping track of the customer is always important and determination of where the product or service targets a high or low end consumer is key. It’s all about setting the right price based on the audience perceptions of the most enticing price.
The nature of purchase intention and purchase decision
For most market demand studies consumers can forecast the extent to which they will purchase in the product category, specific brands or even a specific product line. The ability of consumers to accurately forecast future purchase decisions depends on factors such as:
- The frequency of purchase (higher frequency equals higher accuracy)
- Rational consideration given to the purchase (higher rational consideration equals higher accuracy
- The relationship between the decision maker and the consumer (if the decision maker is the consumer then there is a higher accuracy)
newfocus prides itself on providing realistic and robust insights into product or service optimal price point and corresponding purchase intentions at each price point to advise on successful new product strategy.