How to get pricing right, faster

What is in it for you?

Get pricing right and you protect your margin, defend your market share against competitors (be it private label or other A-brands), and give your brand a fair shot at being chosen over the alternatives on the shelf. Get it wrong and you either leave money on the table or push shoppers straight into the arms of a cheaper option.

Pricing has become a lot more psychological

Shoppers today are downtrading on the one hand, whilst also demanding lasting value-seeking habits in the products they do select.

A given is that, retail chain A-brands (we used to call this private label but that terminology is not correct anymore) keep gaining ground, putting a real ceiling on what your brand can charge. Fairness, transparency now sit alongside superior quality (lifetime value) as top reasons people choose one brand over another.

Academic research on FMCG pricing backs this up. Studies point to a clear fairness effect: consumers get far more price sensitive the moment a price feels out of step with expectations, and small cues, like pricing just under a round number or offering three tiers to nudge people toward the middle, shape choices more than most companies assume. Willingness to pay is not the same for everyone either. Low-priced, routine purchases run on habit, while higher-priced decisions involve real deliberation. Line pricing often does not fit every product in your range.

This is exactly where conjoint and price pack architecture come in

Price pack architecture (PPA) is about finding the right price and pack combinations across your whole range. Conjoint analysis is the tool that makes this possible: instead of asking people what they think they would pay, it puts them in realistic trade-off situations and reads what they actually choose.

This is not a soft science. A recent meta-analysis of 34 studies and almost 13 000 respondents confirmed that when conjoint studies are designed properly, predictive accuracy for market share developments improves by 12 percent, with even stronger gains for higher-involvement categories. Done right, conjoint does not guess at willingness to pay. It measures it.  

‍“We have partnered with Haystack Consulting on a couple of PPA studies across various international markets. Haystack Consulting proved being a reliable research partner that is able to deliver grounded recommendations based on their solid business understanding. They deliver impactful and actionable recommendations with a good portion of passion.”

Jeroen van Vliet, Head of CI/BI, Schweppes International Ltd.

Ready to improve value?

Get in touch with Haystack Consulting and let's find out what your consumers are really willing to pay, and why.

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