A cruise line example illustrates how to use discrete choice to determine marginal value in this piece published in Quirk’s Marketing Research Review, How to Price an Island.
- Achieve the financial goals of the company (e.g., profitability)
- Fit the realities of the marketplace (Will customers buy at that price?)
- Support a product's positioning and be consistent with the other variables in the marketing mix.
Pricing is, in essence, a risk management strategy—pricing research. Pricing research offers a variety of quantitative methods to measure the ‘right’ price.
The most effective quantitative approach addresses a wide range of research problems, such as customers’ willingness to pay, price sensitivity, and perception of value. As with anything else, the benefits of a quantitative approach must be balanced against its costs; pricing research should be used as a supplement, not in place of, other types of strategic research and brand positioning.
But when utilized, pricing research should be done right.
Several different research methods are commonly used in pricing research—each with their own strengths and methodologies.