Research methods involved in product pricing
Product pricing is one of the most important steps while launching a product. It would decide the success or failure of the product and whether the customers are ready to accept the product. Product pricing is done before launching the product during the market testing phase. There are many factors with respect to product which would decide the price such as production cost, level of competition, price sensitivity and total market share but the most important part is how the product is perceived by its target market and what price they are ready to give so as to maximise the profit.
Research design and method helps us to classify this problem. As the product is to be newly launched he manufacture is unaware of the variables which are prominent for influencing the product price. Thus we go forward with the exploratory study. Within exploratory design we have various research methods like Survey, Focus group discussion, Delphi, Case study, Projective technique etc. The main objective of the exploratory Study is to identify which all parameters and variable are considered by the customer.
Once we are done with the exploratory study we go for descriptive method to identify the effect of each parameter and variables in a qualitative way. Bases on the budget, the company may go for further study of price discovery or they may consider the descriptive research results and their experience to decide the price of the product in the market.
Starbucks has used research method for analysing the best price possible for their products. They used qualitative research method for analysing the non-quantifiable information. They used various research methods like Interviews, Observations and small number of questionnaires, focus groups, subjective reports and case analysis for their price discovery. The main focus of research method was mainly on collecting and analysis the data. While setting the price high Starbucks used a higher cost for their product based on the surveys and analysis. They found that there was a target market ready to accept their product at higher cost.
While using various tools for research method it is very important to understand the psychological study behind the customers minds with respect to product and how they response to the various research methods.