Product Development and Price Optimization
Companies need defensible market research to develop strong products and identify optimal price points. Backed by decades of product development experience, Pivot designs studies to assess real market opportunities, identify unmet needs, and test full product concepts and the price vs. feature trade-offs customers make.
When it comes to market forecasting accuracy, it is best to triangulate findings using multiple methods. A qualitative-quantitative hybrid approach allows us to
- understand product/service features and unmet needs thoroughly in a qualitative setting, and then
- measure potential demand for a new product/service at varying price scenarios using quantitative methods.
Focus groups allow us to gain a thorough understanding of unmet needs and assess feature appeal. Using online buying simulations in a qualitative approach, we test products displayed in online shopping situations to understand buyer behaviors and trade-off decisions through live discussions.
Maximizing market penetration and profitability requires the perfect combination of features and price. Choice modeling, conjoint and market simulation models are quantitative research tools that help us model market dynamics and define the optimal feature/price balance. Pivot uses these methods to measure the perceived values of specific product features, learn how demand for a particular product or service is related to price, and forecast what the likely acceptance of a product will be if brought to market.
To support price-related findings, Pivot uses an exploratory technique called the van Westendorp price sensitivity meter to determine the right price point of a product. This technique is based on the premise that there is a range of prices bounded by a maximum that a consumer is prepared to spend and a minimum below which credibility is in doubt. Setting prices also requires a consideration of profit at expected or probable levels of sales volume.
When it comes to product development studies, Pivot employs a variety of methodologies based on various factors:
- Whether research participants must handle/hold the product
- Volume and nature of visuals required to present the product (graphics, photos, diagrams, lists, etc.)
- The need for interactive applications for choice modeling or simulation exercises
- The need for confidentiality or control of information dissemination
- Sample size required to represent the population
- Project budget
Pivot’s qualitative and quantitative research can answer the questions below to make critical product or service design decisions:
- How do we assess and understand the market opportunity (i.e., size and demand) for our new or redesigned product/service concept?
- What price point will maximize demand and overall profit?
- What is the right feature mix?
- How do we distinguish between the “must-have” and “nice-to-have” features?
- When and where is it best to launch our new products?
- Should we bundle our products or offer them separately to maximize revenues?
- How will the marketplace react if we or our competitors make a price or feature change?
- How would a new product or a product line extension affect our existing offerings?