PRICING RESEARCH

Pricing research involves first a pricing strategy assessment supported by strong pricing research capabilities.

Sound pricing market research requires a broad strategic perspective together with a focus on your pricing decision options.

Pricing research finds optimum price-product-feature configurations in the context of market positioning opportunities. In Pricing studies, we employ both qualitative research and quantitative research tools.

Pricing research usually concentrates on customers' sensitivity to pricing. This price sensitivity is driven by the nature of the market, the target within that market, the differentiation level of product or service, and the value of brand.

Pricing is one of the more technical areas of market research.

There are four main approaches:

Several different research methods are commonly used in pricing research—each with their own strengths and weaknesses. There are four techniques that are commonly used the four techniques are:

1. Gabor-Granger or Van Westendorp Price Sensitivity Meter

2. Concept Test

3. Conjoint Analysis

4. Discrete Choice Modeling

 

1. Gabor-Granger or Van Westendorp Price Sensitivity Meter (PSM)

In Gabor-Granger pricing research customers are asked to complete a survey where they are asked to say if they would buy a product at a particular price.

The price is changed and respondents again say if they would buy or not. From the results we can work out what the optimum price is for each individual.

By taking a sample of customers we can work out what levels of demand would be expected at each price point across the market as a whole.

Using this estimate of demand, the price elasticity (or expected revenue) can be calculated and so the optimum price-point in the market established.

The Price Sensitivity Meter (PSM) is used frequently by some researchers. The premise of the PSM is to ask respondents four price-related questions and then evaluate the cumulative distributions for each question.

Specifically, respondents are asked:

1. At what price would you consider the product to be so expensive that you would not consider buying it? (Too expensive)

2. At what price would you consider the product to be priced so low that you would feel the quality couldn’t be very good? (Too cheap)

3. At what price would you consider the product starting to get expensive, so that it is not out of the question, but you would have to give some thought to buying it? (Expensive)

4. At what price would you consider the product to be a bargain—a great buy for the money? (Cheap)

In this method, the optimal price point for a product is the point at which the same number of respondents indicate that the price is too expensive as those who indicate that the price is too cheap. Many pricing researchers question that this is the definitive optimal price for a product.

 

2. Concept Test/Concept Evaluation

The standard purchase intent question from a concept test is also commonly used for pricing research.

Respondents are presented with a product concept and asked how likely they would be to purchase this product at a specific price.

Typically the researcher will expose independent samples of respondents to different prices. The standard purchase intent question is shown below.

• (After introducing the product concept)

• How likely, would you be to purchase this product in the next 12 months if it costs Rs 9000?

• Definitely would purchase

• Probably would purchase

• Might or might not purchase

• Probably would not purchase

• Definitely would not purchase 

• To evaluate price sensitivity using this example, a sample of respondents evaluates this concept at Rs 9000, a different sample of respondents evaluates the same concept at Rs5000, and another sample of respondents evaluates the concept at Rs 14000.

A demand curve is constructed by evaluating purchase intent at each price.

3. Conjoint analysis:

Conjoint (trade-off) analysis is one of the most widely-used quantitative methods in Marketing Research.

It is used to measure preferences for product features, to learn how changes to price affect demand for products or service, and to forecast the likely acceptance of a product if brought to market.

Like concept tests, conjoint analysis presents concepts to respondents. However, instead of exposing each respondent to a single concept, in conjoint analysis each respondent is exposed to many concepts. For each treatment, respondents are asked to make hypothetical trade-offs between configured products. For example, a respondent might be asked to express his preference between two smart phone hand sets alternatives or between two VCR alternatives. 

In conjoint analysis, respondents are forced to make trade-offs between products and product features, much as buyers are forced to do when actually shopping.

Each respondent answers a series of trade-off questions; in each question the combination of features shown together changes. In this way, a large number of product features can be evaluated.

Each respondent provides enough information through his or her trade-offs that the utility of each product characteristic (including price) can be estimated for each respondent.

This individual-level estimation allows for the identification of individual differences that can lead to a market segmentation scheme and can be used to help predict acceptance of products by different individuals in a heterogeneous market.

These utilities also allow prediction of preference for any product that can be defined using the product characteristics in the study.

These preferences can be modeled in a market simulator. A market simulator allows “what-if” analysis for any configuration of products in any competitive environment. A demand curve can be produced from these simulations.

 

4. Discrete Choice

Choice-Based Conjoint (CBC) is used for discrete choice modeling, a research technique that is now the most often used conjoint-related method in the world. The main characteristic distinguishing choice-based from other types of conjoint analysis is that the respondent expresses preferences by choosing from sets of concepts, rather than by rating or ranking them. The choice-based task is similar to what buyers actually do in the marketplace. Choosing a preferred product from a group of products is a simple and natural task that everyone can understand.

CBC is often used to study the relationship between price and demand, and is especially useful when the price-demand relationship differs from brand to brand, and when only a few features need to be considered.

One of the strengths of CBC is its ability to deal with interactions, such as when different brands have different sensitivities to price changes. Most conjoint methods are based on "main effects only" models that ignore the existence of such interactions. In contrast, CBC may be used to evaluate all two-way interactions.

The researcher must decide on attributes and their levels, and compose whatever explanatory text is desired for the interview screens. Apart from that, everything can be done automatically. The CBC System provides all the tools needed to conduct a choice-based conjoint study via Web, CAPI (PCs not connected to the Web), or paper-based surveys. The CBC system includes three analysis modules and a market simulation module for testing "what if" scenarios.

In discrete choice, the respondent is presented with a set of products and the respondent is asked to pick one.

The results from discrete choice modeling are very similar to those from conjoint. For instance, both approaches are able to produce utilities at the individual level, and both discrete choice and conjoint allow what-if simulations. Discrete choice modeling has been used with great success in pricing research.

PACKAGING RESEARCH

MEANING: Packaging research is one aspect of product research. It deals with the needs and expectations of consumers about the package (size, shape, colour combination, durability, material used, etc.) used.

 Packaging research is useful for making product packages secured, attractive and agreeable to consumers.

Packaging research plays a positive role in modern marketing.

 It acts as a sales promotion technique.

 It makes the product attractive and agreeable to consumers.

 Packaging needs constant changes as per the expectations of consumers and also as per the current trends in packaging designs.

For achieving these objectives, packaging research is useful.

Moreover, the advantages of packaging (as noted above) indicate the importance and need of packaging and packaging research.

For large-scale marketing, attractive packaging is a must. It should be used for established as well as for new products. In addition, renovations should be made in the packages after some interval. For this package research is useful. Manufacturers, in India, now take active interest in package research. As a result, we observe new packages of varied sizes, shapes and colour combinations in the market for all types of products particularly consumer items such as soaps, cosmetics and oils.

Packaging research has special significance in export marketing as packaging of export items needs to be safe, secured, and also attractive to foreign buyers. Packaging needs to be as per the standard packaging norms used in different countries. In addition, packaging of export items needs to be as per the legal provisions made in different countries. For e.g. packaging rules and procedures are very strict in European countries.

WHY IS PACKAGING RESEARCH UNDERTAKEN? Packaging research is undertaken in order to find out reasonably correct and reliable answers to the following packaging problems/issues:

(1) Whether the existing package used for the specific product is attractive and agreeable to consumers and is also as per the current trends in the field of packaging.

(2) Whether certain modifications/alterations are necessary in the existing packages (used by the company) so as to make them attractive and as per the tastes and requirements of consumers.

(3) Whether the existing packages are eco-friendly (in regard to material used and colour-combination) and to introduce suitable modifications in them so as to make them eco-friendly. (e.g., avoiding the use of thin plastic bag or replacement of plastic containers through the use of thick paper, wood, etc.)

(4) Whether the packaging material used is safe, durable and gives full protection to the product against moisture, light, high temperature and shock and whether any other material which is more economical and safe can be used/introduced.

(5) Whether the existing package gives clearly visible identity to the product and its brand.

(6) Whether the cost of packaging is high and how to bring down the packaging cost and thereby to make the product competitive as well as attractive in the market.

(7) Whether the existing package facilitates proper disposal or reuse of the packaging material after the use of the product.

(8) Whether there is scope for improvement in the packaging so as to make it attractive, eco-friendly and easily/quickly saleable.

Package graphics and copy are critical marketing variables in many product categories, particularly for non advertised or under advertised brands in self-serve shopping environments. 

The package on a retail shelf is the last opportunity to influence consumers before they decide to buy. It’s the final sales pitch at the “moment of truth,” when the brand-choice decision is made. The better the package design and copy, the greater the likelihood that consumers will choose that brand. Any new package design, or significant change in an existing package, should always be subjected to the scrutiny of objective consumer feedback.

 

Following are the packaging research methods:

1. Package Screen

2. Package Check

3. Package Test

4. Custom/Ad Hoc Packaging Research

 

1. Package Screen

Early-Stage Package Designs: The package design process typically begins with the creation of a large number of “rough” or early-stage designs. Ten to twenty package designs, or more, are common at this beginning stage. The research objective is to identify the package designs that resonate with consumers, so that creative efforts can be focused on further development of the better designs. Package Screen is an Internet-based system to accomplish this winnowing task.

How Does Package Screen Work?: A representative sample of 200 to 300 target audience consumers are recruited from a panel. These participants are invited to come to a location and view the early-stage package designs. Each respondent sees all of the package designs one at a time (front panel only) on his/her computer monitor, in randomized order.

Then, each person views the package designs a second time and answers four questions about each design.

The answers to these four questions are fed into a mathematical model to calculate an overall score for each design. The highest-rated designs are recommended for further development.

 

2. Package Check

Diagnostic Feedback

The next step in the design process is to learn more about the better designs so that further improvements can be made. Package Check is, designed to provide this diagnostic feedback.

How Does Package Check Work?: A representative sample of target-audience consumers are recruited to as a panel and view each package design. The respondents see only one package design (i.e., a monadic test) and then answer a series of questions about their reactions, including a series of open-ended questions.

The report includes answers to standard questions, compared to the organizations action standards, as well as verbatim responses to open-ended questions. The verbatim detail is valuable to creative teams as they strive to improve the graphic design, as well as the copy, on the package. A typical Package Check study is based on 75 completed interviews.

 

3. Package Test

Finished Or Near-Finished Package Designs: As packages near the end of the design process, a more complete evaluation is required, with comprehensive measurements to assess all of the important elements of package design.

Package Test is comprehensive, testing system to evaluate finished (or near-finished) package designs. A representative sample is recruited. The panels, and qualified respondents are invited to evaluate the package design.

Respondents first see the package’s front panel, and later view the other panels. The research design is monadic. The report includes answers to standard questions, as well as the coded responses to all open-ended questions, along with an analysis and interpretation.

A mathematical model, based on a number of key variables, calculates an overall score for the package design and compares it to action standards. A typical Package Test project is based on 150 completes.

 

4. Custom/Ad Hoc Packaging Research

Package Communication

What is the package communicating? What is the package failing to communicate?

Depth interviews are typically used to explore package communication issues. Usually, the test package is shown at different time exposures (1/500 of a second, 1/200 of a second, etc.) using a tachistoscope.

At each exposure level, package recognition and communication are examined.

Then the respondents are asked to examine and to read the package in detail, with no time limits.

The consumer’s reactions to every detail of package graphics and copy are explored in the interview. The purpose of this research is to learn how to improve brand recognition and package communication.

 

5. Shelf Impact

Does the average consumer notice the package on the shelf?

To evaluate shelf impact, we typically build representative displays of the test package in a competitive environment.

These displays are photographed from angles representative of the consumer’s perspective. The test package is rotated within the display.

The best photographs (with correct rotations) are shown to a representative sample of consumers, at various time exposures (1/200 of a second, 1/100 of a second, and so on) with a tachistoscope. The respondents are questioned about what they see and what they understand, as the length-of-time exposure increases. This methodology helps determine the visibility (or attention value) of a test package, relative to competitive packages.

 

6. Simulated Display

The ultimate test of a package is whether it stimulates trial of a product.

To measure a package’s trial potential, a representative display of a product category (with all major competitive brands) is assembled. Matched samples of consumers are instructed to “shop” the display.

Their brand decisions, and the reason for those decisions, are explored in post-shopping interviews.

Simulated display allows us to measure a package’s trial potential and helps us learn how to improve its trial potential.

BRANDING RESEARCH

Manufacturers, traders and consumers support branding practice as it is useful to them in different ways. Large number of products are sold in the market by brand name as consumers develop affinity to such brands and refer to them when they visit retail shops.

In order to secure these advantages, brand selected should be promising. An ideal brand needs certain qualities. For example, it should be brief, simple and easy to remember and pronounce.

Similarly, it should be suggestive, decent, attractive and as per the current tests and fashions accepted by consumers. Research department suggests appropriate brand names to the products of the company. For this, surveys are conducted and information is collected through interviews, etc. Such studies offer suitable guidance to management for the introduction of appropriate brand name for the product.

The research team will provide necessary information on the basis of which the management will have to take final decision regarding brand name. This decision is critical as the results (good or bad) will be available only when the brand is actually introduced in the market.

Branding Research can be done at every stage of Brand building process, the various researches related to Brands are:

1. Brand Character Research: The brand character research can be done using both qualitative and quantitative techniques.

Qualitative research involves the understanding of:

 Personality of each option

 Fit with the name of each option

 Fit with the brand association of each option

 Fit on the pack

 Fit with the proposed role in advertising of each option

 Comparison among the character options

 Fit with specific brand extension options

 Quantitative research focuses on ascertaining the following information:

 Thoughts evoked by each options, and grouping of these thoughts as positive and negative

 Likeability of each option

 Specific likes and dislikes of each option

 Uniqueness of each option

 Comparison of each option with the symbols of the competition

 Rating of each option’s fit with the pack

 Preference amongst symbol options

 Preference amongst name options

2. Brand Logo Research:

When a new logo is to be chosen it is always advisable to evaluate it among two independent sets of people one to evaluate the logo in isolation and the other to evaluate the logo on the pack.

Evaluation of logo in isolation looks at its likeability, distinctiveness, comprehension of message conveyed, by logo options, preference among logo options, and preference of logo among key competition. Evaluation of logo on the pack also looks at the same alternatives along with the speed with which the respondent would identify the test logo pack among a clutter of other similar packs. This helps to evaluate how the logo would stand out in the shelf.

3. Brand Name Research:

A Brand name research is important for any brand throughout its lifecycle. It involves personal interviews in which some basic concept statements may be exposed to respondents along with the name. then the respondent are asked to recall the name after having read the same. This indicates the names notice ability and ease of recall. Then spontaneous responses are ascertained to name in terms of:

Latent Association

 What thoughts come to mind upon hearing this name?

 What negative and positive associations exist with new corporate name, product name or service name? What barriers have to be overcome with negative latent associations? How does sound symbolism or phonosemantics (the meaning of sounds) affect the evaluation of a name's latent association?

 What does the name mean to you?

 How would you pronounce this name?

 What do you particularly like/dislike about this name?

 Which product the name suit? Or not suit?

 Which name you like the most and why? 

After the ascertaining the responses to these, a preference ranking is done of the names and the best among them is chosen. This method also helps in ascertaining the names ability to communicate to the respondent, the barriers to comprehension, descriptiveness of the name etc.

4. Brand Association Research:

For existing brands or existing competition of new brands, respondents mind would already have brand associations. In such cases, the evaluation should include the following questions:

 Ascertain the current state of affairs, without exposing the respondents to the new concepts

 Expose new concepts

 Ascertain the response to new concepts

 Compare the responses generated before and after exposure of new concepts to understand their effects.

5. Brand Loyalty Research: Brand Loyalty research explore the relationship among brand trust, brand affect, and brand performance outcomes (market share and relative price) with an emphasis on understanding the linking role played by brand loyalty.

Brand Loyalty research generate both statistical and qualitative data — benchmarked, comparative and evaluative measures. These, combined with specific diagnostic data, provide the tools to effect improvements:

 Overall satisfaction

 Ratings of performance on specific aspects of the product/service

 Reasons for lack of satisfaction/poor ratings

 Salience and hierarchy of needs/preferences/expectations

 Gap Analysis/Strategic Priority Analysis

 Loyalty and propensity to recommend/re-purchase

 Drivers of satisfaction and loyalty

 Reputation/image of the brand

 Value for money

 Customer Segmentation

 and include, where feasible, lapsed and potential customers

6. Brand Health research:

The health of a brand is measured by its brand equity. Brands with high equity can command and sustain price premiums and are more successful with line extensions and new category entries.

Brand Health research allows companies to set competitive brand strategies and provides brand with a Brand Equity Index. The BEI can be analysed in relation to the brand’s market share and will help determine whether the brand’s share gain is at the expense of long-term brand equity or whether the brand has the potential to expand its market share.

7. Brand awareness research:

Market awareness and perceptions of brand can rise and fall quickly in a changing market. The first step is to obtain a systematic understanding of the shape of market perception of brand through survey research.

Typical Brand Awareness Research questions include:

 Which single company comes to mind first as a provider for IT solutions?

 Which other companies come to mind?

 What qualities does the market leader possess that the other companies do not?

 What factors drove your decision to select your primary vendor?

 To what degree are you aware of the company’s capabilities in the area of IT solutions?

 What three words best describe the company’s position in the industry?

 What is your perception of the company’s products? Experience? Technology? Service? Sales processes?

Based on understanding of the company’s direction how do it perceive its position over the next 12–24 months?

In the fast moving technology industry in which companies are launched, merged, acquired, and morphed into new business, Brand Awareness research is critical to establishing and maintaining the desired market awareness and perceptions of your company.

PRODUCT RESEARCH

 The purpose of product research is to develop a product line which meets the needs of consumers in general.

Product research facilitates the process of making products more attractive, useful and agreeable to consumers.

Meaning of Product Research:

Product research is one major area of MR. It is concerned with different aspects of a product which include name, features, uses, package used, brand name given, price, consumer support and so on.

The term product research covers all aspects relating to manufacturing and marketing of a product. Product planning and development, product innovation and modification, product pricing, product life cycle studies branding, labelling, packaging, etc. are the different areas aspects) of product research.

Packaging and branding are treated as two components of product research. This is because they are closely connected with the product itself. Moreover, sale depends on the product as well as on its packaging and branding. In product research, existing products of the company are made superior (in quality) and agreeable to consumers.

In addition, new products with promising market demand are developed. This is called new product research.

Product research is directly related to product-mix which is one component of basic marketing mix.

There are four components of product mix. These are:

1. Product range

2. Brand,

3. Package and

4. Service after sale.

Product research has two important aspects. These are:

a. Technical aspect of a product, and

b. Marketing aspect of a product.

Technical research of a product is conducted in the laboratory in order to develop a product with latest design and features at the lowest possible cost. Products marketing research relates to the attitudes of consumers and their preferences towards the specific product.

Product research is necessary at the product planning stage. This is because marketing will be easy and quick when the produce manufactured is as per the needs and expectations of consumers. For this, product opportunities must be studied and product must be adjusted accordingly. Marketing efforts will not be rewarded if the product to be sold is not as per the needs and expectations of consumers.

This suggests that marketing research should start at the product promotion stage.

The researcher should suggest the details of product (nature, features, packaging, etc.) which can be marketed effectively. This creates proper background for success in marketing efforts.

 

IMPORTANCE/ADVANTAGES OF PRODUCT RESEARCH:

Product research is important as it offers the following advantages:

1. Product research helps to explain the features of the product.

2. It helps to simplify the product line.

3. It enables a manufacturer to develop new products with good market demand in the existing product line.

4. Product research brings best sales returns.

5. It widens market for the product and also creates goodwill for the product and its manufacturer.

6. It facilitates appropriate price fixation of the product. Product research brings to the limelight the different uses of the product for effective publicity for sales promotion.

7. It facilitates modification and renovation of existing products so as to make them highly competitive and agreeable to consumers.

8. It enables a manufacturer to introduce attractive package and brand name to the product for sales promotion.

 

METHODS OF CONDUCTING PRODUCT RESEARCH:

There are three methods used for the conduct of product research as explained below:

Product Testing

1) Paired Comparison Testing – Consumers are not told about the brand being tested and are given a new and an old product and are asked to choose. The samples know that they are testing and are therefore aware about a probable difference.

FMCG’s would often do this since there are so many products. This is like the Classic Coke Test Case. This kind of testing tells us about branding – the strength of branding – are consumers aware of product variations?

Do people really understand the style that a fashion house stands for. Response rates for distinctions would be high because people know that there is a test happening. Placebo Testing also has an effect here because the palette assumes that there are differences – and thus the palette expects change and there is a false perception of things being different.

2) Staggered Comparison Test – Respondents Test 2 Brands with a time lag with the identities masked. One half of the respondents receive Brand A and the other half receives Brand B. The respondents are then given the same products in reverse and are asked to note any difference in the brands. This kind of comparison tests the ideas of respondents with respect to their influence by peer pressure and their association with a product with respect to how their choices are dictated.

3) Disguised Comparison Test: This duplicates the actual market where for different brands, the same packaging is used and the respondents are told that they will be asked about their reactions later. In this case, the respondents are studied in order to recognize if they have noticed any difference at all. Further, they are not aware of the test being taken and believe the products to be free samples

This is the opposite of the 2 above. The sample does not know they are part of the test. They are just given free samples. They just think that they are getting 2 free samples. They don’t know that they are getting test. Sometimes they don’t realize that its different. They think it’s the same product.

MARKETING RESEARCH

 Introduction to marketing Research

Understanding market research and using it to your advantage is vital in reaching out to your target audience and increasing your sales.

Understand the needs of existing customers and why they chose your service over competitors.

Identify new business opportunities and changing market trends.

Market research is one of the key factors used in maintaining competitiveness over competitors.

Market-research techniques encompass both qualitative techniques such as focus groups, in-depth interviews, and ethnography, as well as quantitative techniques such as customer surveys, and analysis of secondary data.

Need and Importance of Marketing Research

The most important task of a marketer is to get the right product at the right place with the right price to the right person. Besides, it was also necessary to go back and find whether consumer is getting optimum satisfaction, so that consumer remains loyal. These aspects made it imperative for the marketers to conduct marketing research.

The following points explain the need for and importance of marketing research:

1. Identifying problem and opportunities in the market: It helps in identifying new market opportunities for existing and new products. It provides information on market share, nature of competition, customer satisfaction levels, sales performances and channel of distribution. This helps the firms in solving problems.

2. Formulating market strategies: Today, markets are no more local. They have become global. Manufactures find it difficult to contact customers and control distribution channels. Competition is equally severe. The consumer needs are difficult to predict. Market segmentation is a complicated task in such wide markets. The marketing intelligence provided through marketing research not only helps in framing but also in implementing the market strategies.

3. Determining consumer needs and wants: Marketing has become customer-centric. However, large-scale production needs intermediaries for mass distribution. Due to prevalence of multi channels of distribution, there is an information gap. Marketing research helps in collecting information on consumers from structured distribution research and helps in making marketing customer oriented.

4. For effective communication mix: In an era of micro- rather than mass-marketing, communication plays a vital role. Marketing research uses promotional research to study media mix, advertising effectiveness and integrated communication tools. Research on such aspects will help in promoting effectively a company’s product in the market.

5. Improving selling activities: Marketing research is used to analyse and evaluate performances of a company within a market. It also studies effectiveness of a sales force. It helps in identifying sales territories. Such information helps the companies in identifying areas of shortcoming in sales. It also examines alternative methods for distribution of goods.

6. For sales forecasting: The most challenging task for any production manager is to keep optimum levels of inventory. However, production is undertaken in anticipation of demand. Therefore, scientific forecast of sales is required.

Marketing research helps in sales forecasting by using market share method, sales force estimate method and jury method. This can also help in fixing sales quotas and marketing plans.

7. To revitalize brands: Marketing research is used to study and find out the existing brand position. It finds out the recall value of brands. It explores the possibilities of brand extension or prospects of changing existing brand names.

The main purpose of marketing is to create brand loyalty. Marketing research helps in developing techniques to popularize and retain brand loyalty.

8. To facilitate smooth introduction of new products: Marketing research helps in testing the new products in one or two markets on a small scale. This helps in finding out consumer response to new product and develop a suitable marketing mix. It reveals the problems of the customers regarding new products. Thus, it controls the risk involved in introducing a new product.

9. Determine export potentials: The development in transport and communication has helped in globalization and digitalization of world trade. This has helped in boosting the growth of international markets. Marketing research helps in conducting market survey for export. It. collects information on marketing environment prevailing in a country. By collecting data on consumers from different countries, it indicates export potentials.

10. Managerial decision-making: Marketing research plays a vital role in the decision-making processes by supplying relevant, up-to-date and accurate data to the decision-makers. Managers need up-to-date information to access customer needs and wants, market situation, technological change and extent of competition.