Around the world people are still reeling from historic inflationary pressure. As a result, price is in the marketing spotlight, particularly for new products. To ensure that a new product launches at the right price, it is critical to get consumer feedback early in the development process, when there is still time to optimize the offer before the final launch.
1 in 3 brands fail to justify their perceived price
A recent, global analysis of 44,000 brands measured by Kantar BrandZ found that 34% of brands failed to justify their perceived price. With inflation taking a bite out of disposable income, those brands are the ones most at risk when people consider where best to spend their money. If people perceive that the brand is trying to squeeze out extra profit at their expense, then sales, brand equity, and reputation can all suffer, leading to a snowball effect that is tough to stop once it gets rolling.
New product pricing must feel right
Now imagine how much more challenging the situation is for a new product. Price can make or break the sale. The decision to buy something new is different from that made when buying a familiar favorite: more deliberative, less instinctive. A successful new product must not only be meaningfully different, but it must also be priced acceptably. Unless people can easily recognize that the price is right, they will likely pass on the opportunity to try the new product and instead stick with something tried and tested.
Test for price acceptability early
Fortunately, access to automated research tools like ConceptEvaluate on Kantar Marketplace means innovators can quickly and easily get an early indication of how well their new product justifies its price point before it launches. Based on Van Westendorp's Price Sensitivity Meter, the new price sensitivity module in ConceptEvaluate provides marketers with insights on the price range most consumers find to be acceptable, when the price might be perceived as too high or so cheap they doubt the quality, and whether there are price thresholds that trigger a rapid change in perceptions.
Make sure you know how consumers might react to your price
All too often innovators become so invested in their own products they are blinded to how everyday consumers might think about their innovation. Building price into concept testing helps keep things real. If the launch price is likely to be too high, then there is time to address the problem. If the price is likely to be too low, why leave money on the table? Not every product category suffers during inflationary times. Whether you are assessing if a new organic snack can support a price premium, understanding what fee might seem reasonable for a new bank card, or identifying whether a new menu item is priced acceptably, getting an early read on price is critical.
Identify what price is acceptable to consumers most likely to try
Even when inflation is low, not everyone is similarly price sensitive, nor does inflation affect everyone equally, so it is important to explore how price acceptability and sensitivity varies by different consumer groups. Perhaps most important, those most likely to try something new are probably more willing to pay for it. Making sure the price is right for this group is essential if the launch is going to get off to a good start. Early testing can answer the following questions. What price do those most likely to try consider acceptable? How much less price sensitive might they be? And are there price thresholds to avoid?
Consumer feedback can reset expectations
Early feedback on pricing can often reset expectations about what consumers will value most. For instance, when developing the new price sensitivity measure, we investigated which pricing strategy might be optimal for a conceptual new dairy brand. We looked at several options, including mainstream and premium concepts. While it may seem counterintuitive, we found that people were willing to pay a bit more for the mainstream option than the premium. While consumers expected the premium product to cost more, the mainstream product was more relevant to consumers, and therefore better able to justify its price.
Does your new product justify its price?
Price has been an often-neglected component of the marketing mix, but today’s inflationary pressure has thrust it back to the forefront. Getting the price right for a new product is more important than ever. If you are debating whether your new product’s price point is right, check with the ultimate decision maker – the people you want to buy it.
Book a demo to see how ConceptEvaluate on Kantar Marketplace and the new price sensitivity measure can help you build winning concepts with a pricing strategy that will drive brand growth.