Marketing Research - Price Sensitivity Pricing Background: Step one: Capture basic demographic and behavioral information on your respondents. For example, I might consider asking about: Gender Age How frequently the person buys a cup of coffee What type of coffee the person drinks Step two: Describe your product or service. You might consider showing the respondents an image of the product or service. Step three: You are then going to ask your respondents to ask two pricing questions. The first question is: How likely are to you purchase "product X at Y price? Very likely Likely Unlikely Very unlikely For the price, choose a price that you think is reasonable. You might check your local grocery store or Amazon for a reasonable price. For those respondents who said that they were either Likely or Very likely to purchase at Y price, ask the following question: How likely are to you purchase product X at Y +Z price? Very likely Likely Unlikely Very unlikely For example, if my first price was $15.00, I might ask those who responded either "Likely" or "Very likely how likely they would be to purchase at $17. You have to use your own judgment on how much higher to make the second price. It should be meaningfully more than the original price but not so high as to be unreasonable. For those respondents who said that they were either Unlikely" or "Very unlikely" to purchase at Y price, ask the following question: How likely are to you purchase product X at Y - Z price? Very likely Likely Unlikely Very unlikely For example, if my first price was $15.00, I might ask those who responded either Unlikely" or "Very unlikely how likely they would be to purchase a caf mocha at $13.00 You have to use your own judgment on how much lower to make the second price. It should be meaningfully less than the original price but not so low as to be unreasonable. Step four: Analyze your data. What percentage of respondents was likely or very likely to buy the product at the original price? Looking at your demographic and behavioral data, how were these consumers different from the consumers who said that they were unlikely or very unlikely to purchase the product at the original price? What percentage of these respondents was likely or very likely to buy the product at the higher price? What percentage of respondents was likely or very likely to buy the product at the original price? What profit would you make? What percentage of respondents was likely or very likely to buy the product at the lower price? (This would also include those likely or very likely to purchase at the original price.) What profit would you make? What percentage of respondents was likely or very likely to buy the product at the lower price? What profit would you make? Looking at your demographic and behavioral data, how were these respondents different from the other respondents? Research Requirements: Your pricing recommendation must be based on actual consumer insights, not your own personal beliefs. Therefore, you must conduct marketing research. You must interview with at least 25 people for this assignment. In addition to asking the ladders pricing question, capture demographic and usage information. . Deliverable: c o 0 PowerPoint presentation, delivered in class, approximately 10-12 minutes long Presentation should include the following: Overview of product/service chosen Research methods o Presentation of results Number of likely consumers at each price point tested Profitability at each price point tested Identification of market segments, if applicable Identification of target market, if applicable4l o Recommended price based on results. Note: you can only recommend a price that you have tested, i.e., you can't recommend a price between the original price and either the lower or higher price. 1 Background information on Coffee Pricing per Pound: Raw beans - $4.00 Roasting - $2.00 Transportation - $2.50 Retailer - $4.00 . Marketing Research - Price Sensitivity Pricing Background: Step one: Capture basic demographic and behavioral information on your respondents. For example, I might consider asking about: Gender Age How frequently the person buys a cup of coffee What type of coffee the person drinks Step two: Describe your product or service. You might consider showing the respondents an image of the product or service. Step three: You are then going to ask your respondents to ask two pricing questions. The first question is: How likely are to you purchase "product X at Y price? Very likely Likely Unlikely Very unlikely For the price, choose a price that you think is reasonable. You might check your local grocery store or Amazon for a reasonable price. For those respondents who said that they were either Likely or Very likely to purchase at Y price, ask the following question: How likely are to you purchase product X at Y +Z price? Very likely Likely Unlikely Very unlikely For example, if my first price was $15.00, I might ask those who responded either "Likely" or "Very likely how likely they would be to purchase at $17. You have to use your own judgment on how much higher to make the second price. It should be meaningfully more than the original price but not so high as to be unreasonable. For those respondents who said that they were either Unlikely" or "Very unlikely" to purchase at Y price, ask the following question: How likely are to you purchase product X at Y - Z price? Very likely Likely Unlikely Very unlikely For example, if my first price was $15.00, I might ask those who responded either Unlikely" or "Very unlikely how likely they would be to purchase a caf mocha at $13.00 You have to use your own judgment on how much lower to make the second price. It should be meaningfully less than the original price but not so low as to be unreasonable. Step four: Analyze your data. What percentage of respondents was likely or very likely to buy the product at the original price? Looking at your demographic and behavioral data, how were these consumers different from the consumers who said that they were unlikely or very unlikely to purchase the product at the original price? What percentage of these respondents was likely or very likely to buy the product at the higher price? What percentage of respondents was likely or very likely to buy the product at the original price? What profit would you make? What percentage of respondents was likely or very likely to buy the product at the lower price? (This would also include those likely or very likely to purchase at the original price.) What profit would you make? What percentage of respondents was likely or very likely to buy the product at the lower price? What profit would you make? Looking at your demographic and behavioral data, how were these respondents different from the other respondents? Research Requirements: Your pricing recommendation must be based on actual consumer insights, not your own personal beliefs. Therefore, you must conduct marketing research. You must interview with at least 25 people for this assignment. In addition to asking the ladders pricing question, capture demographic and usage information. . Deliverable: c o 0 PowerPoint presentation, delivered in class, approximately 10-12 minutes long Presentation should include the following: Overview of product/service chosen Research methods o Presentation of results Number of likely consumers at each price point tested Profitability at each price point tested Identification of market segments, if applicable Identification of target market, if applicable4l o Recommended price based on results. Note: you can only recommend a price that you have tested, i.e., you can't recommend a price between the original price and either the lower or higher price. 1 Background information on Coffee Pricing per Pound: Raw beans - $4.00 Roasting - $2.00 Transportation - $2.50 Retailer - $4.00