Imonic Services - Price Point Analysis
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Price Point Analysis

Struggling to get the customer 'from price' and into 'specific preferences' that you can supply and that they are willing to pay for?

Getting to grips with a customers' fundamental priorities is usually achieved through face to face discussion, however these are often simple and idealistic, taking no account of the 'trade-offs' customers make in given situations.

Price Point Analysis

Price Point Analysis is a technique used by Imonic to uncover real bottom line insight to understand and measure individual priorities your customers have. This technique allows us to throw some light on the hidden rules customers use to make 'trade-offs' between different products and services and to uncover the values they place on individual features.
Its best use is in price sensitive markets or where you see future margins threatened and where you are not the lowest cost provider. Price Point Analysis is a natural extension to Imonics' 'Moments of Truth' style Key Account Survey, which as a platform provides a lead-in to explore further detailed customer views. It consists of a series of 'forced choices' of preference, over a number of product or service attributes, e.g. if we were to examine, 'Price Vs Quality', 'Quality Vs Delivery', 'Delivery Vs Packaging', 'Packaging Vs Price', 'Delivery Vs Price', 'Quality Vs Packaging', etc.
Statistically, by comparing the weighting given by the customer to each of the permutations of the four variables we can identify current priorities, we can then test this further by moving one of the variables and re-testing, e.g. if the price point were moved up a level, if delivery was next day instead of two days, if split quantity packaging were available, or there was a measurable quality improvement and so on.
Once you are able to prioritise what the customer values, the result is that these various choices and ratings have mapped out the customers 'order of needs'. The next step would be to identify who the customer perceives is best in the marketplace for each individual priority.

What will Price Point Analysis do for me?

This approach will allow you to:

  • Work on the 'Right Things' (Concentrate on, and match your services to a customers preference)
  • Determine Customer Vulnerability (If a customers' priorities do not match well to your strengths, e.g. If a customer is totally price driven, then you know lowest cost supplier will always win. However, if quality is the is the priority, then work must focus on differentiating yourselves in this area, report rigidly on quality, react very fast to quality problems, pre-advise even minor changes to the standard etc.
  • Gain a clear understanding of customers' 'Order of Needs'
  • Test your price against other customer priorities and identify the 'Price Point' at which priorities change.

Please Test Our Concept - See for Yourself

Motorcars are one of the best and simplest ways to test this approach amongst your colleagues over coffee or lunch. Take 3 or 4 standard vehicles, all one type e.g. saloon, sports or estate. Identify 4 or 5 features e.g. price, badge, interior, performance etc. then identify the choices of your colleagues, then move some of the features, eg price stays the same, leather interior is dropped for cloth or vice - versa.
Test the price point (up) and change the features (down) and see which features they are willing to sacrifice and which they are not, ultimately see how long a colleague stays loyal to his or her vehicle choice.
Faced with having to sell them a new vehicle, add-ons and options, how much easier would it be when you know this information?
Consider the advantages of this approach with your own products or services.