Customer-Based Pricing Research
Establishing Price
If the goal is to establish price, then
the basic research ques-
1. Establishing or man-tion is often, "What is the
aging price for a productrelationship between vari-Consumers are
or service. At what levelous levels of price and
expected toshould the price be set tocustomer demand for the
achieve sales objectives?product?" Typically, the
behave rationally
In this context, the ques-desired output is an esti-
tion is almost one of puremate of the demand forand prefer lower
economics. Price and pur-the product measured in
prices to higher
chase tend to be looked atunits as well as revenue,
in isolation, as if thereat various price levels.prices.
were no other relevant
Even this simple re-
influences.
search question has some
potential inherent compli-2. Improving the price-
cations. Is the issue whether the pricevalue of a product. Does the product
offer a good value, and what can be affects the amount of product purchased
•What are the business and marketing done to increase its value? At this step, by current users or is it whether new
the marketer asks whether the actual users are attracted to the product? Is itobjectives that lead to pricing research?
•How are these objectives translated price is "justified" from the customer's imponant to understand the nature of the
purchases or simply estimate how manyperspective.into specific research questions?
•What research designs are available3. Improving competitive position would be made in total?
to pursue the questions that have been through pricing action. Should prices be
posed?raised or lowered to gain advantage over Improving Price-Value
competitors, or to defend against com-When the goal is to understand price-
petitive action?value, the logical question is, "What are
4. Allocating marketing resources. the components of value?" They can be
Should price, advertising or promotion product attributes, such as quality of
expenditures be emphasized in market- ingredients; benefits, such as conve-
ing plans? What should the marketing nience; or image, such as "a product for
teenagers." Each specific component ismix be to achieve sales objectives?
viewed as having some worth to the cus-
tomer that can be measured.
Gordon A. Wyner is RESEARCH QUESTIONS
Senior Vice President. Mar-For some products and some attribut-
keting Science, M/A/R/C,Each of these objectives leads to spe- es, the customer may make trade-offs
Irving, Texas,cific research questions for which cus- between price and nonprice attributes.
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marketer. It is one of the basic building
blocks of the marketing mix, along with
product, place, and promotion. The mar-
keter wants to know how to set price for
his or her products and how to use it to
advantage in the marketplace.
The need to know about price has
spawned many research techniques and
methods, and research practitioners are
frequently challenged to come up with
new and improved methods for pricing
research. Apparently, there is some dis-
satisfaction with existing methods and
what they can contribute.
To assess the state of pricing re-
search, we need to ask some basic ques-
tions about what pricing research is sup-
posed to do and how well it performs.
Specifically: