Methods for Assessing Consumer Price Sensitivity PPT
This PPT slide, part of the 21-slide Price Sensitivity Meter (PSM) PowerPoint presentation, presents an overview of the Price Sensitivity Meter (PSM), focusing on various methods to gauge consumers' Willingness to Pay (WTP) for products. It outlines 4 distinct approaches: Direct Elicitation, Direct Elicitation using the Van Westendorp Method, Indirect Elicitation, and Indirect Elicitation using Conjoint Analysis.
Direct Elicitation is the simplest method, where consumers are asked directly about the price they would pay for a product based on a single description. This method is easy to execute and requires minimal effort from consumers, allowing for a range of responses. However, it carries the risk of bias due to the direct nature of the pricing question.
The Van Westendorp Method enhances Direct Elicitation by incorporating 4 key questions in a market research questionnaire. These questions help identify price points perceived as too cheap or too expensive, enabling the calculation of optimal prices and price sensitivity. This method provides a structured approach, but may still be influenced by consumer biases.
Indirect Elicitation shifts the focus from price to the inherent value of the product. It assesses the likelihood of purchase by asking consumers to attach a price to a product description. While this method is not ideal for initial product development, it offers a more nuanced understanding of consumer perceptions.
Finally, Indirect Elicitation using Conjoint Analysis involves presenting consumers with various product sets that include price and other features. This method encourages consumers to select the option they would most likely buy, often including a “None” choice to refine price estimates. Each method has its strengths and weaknesses, and understanding these can help organizations select the most appropriate approach for their pricing research needs.
This slide is part of the Price Sensitivity Meter (PSM) PowerPoint presentation.
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