Understanding the reasons that direct people’s purchasing decisions is a constant and very complex task at the same time. For this, companies and brands constantly invest resources to reduce the uncertainty involved in making decisions in this field. Among the aspects that can be evaluated are those linked to price; one of the four “p”s of Marketing.
There are different means and characteristics that can be investigated within this last aspect. Let us remember that this variable is directed by factors as diverse as the cost structure within companies, political situations and even disasters. In this blog entry we want to list four conditions that in one way or another depend on the consumer’s perception and direct experience with their purchase and that can be investigated in a price elasticity study.
Minimum range. This element is very valuable because it usually reveals the smallest amount that a person is willing to pay for a product or service without questioning the quality of the good purchased. Although it may have other implications, this price is key because it determines the floor that should not be crossed so as not to sow doubts in people’s confidence regarding the offer that is being evaluated.
Maximum range. On the contrary, there is a maximum cost at which people would not buy a satisfier even if they want to buy it and without denying its inherent qualities. Generally, this amount is determined by income limitations and economic conditions of the place where the exchange between brands and consumers takes place.
Optimal price. In between the amounts listed above is a point that people generally consider best to meet their needs, aspirations, and purchasing power at the same time. In some cases it does not usually coincide with the mean and median of basic descriptive statistics. This cost may be influenced by situations such as prices of direct competitors or comparison with similar categories.
Cost and benefit relationship. Although it is possible to limit a price elasticity study to the most basic items, it would not yield major findings that explain the responses of the people who participate in our research. Therefore, questions can be included that seek to delve deeper into the reasons why the quantities discussed above were answered. For example, you can collect what set of characteristics the product in question must have to be purchased for a given optimal price.
In many cases it will not be necessary to carry out studies of the type addressed in our entry of the week because it will be a priority to balance the price of the offer with the logistics aspects of the companies. However, this implies assuming the risk of losing demand due to a negative response from consumers by implementing hasty reactive decisions. Price elasticity studies help to make changes with the greatest possible restraint and relevance.
At Acertiva we have a group of analysts and strategic allies who will help you develop market research of this nature. Our more than twenty years in Latin America are at your disposal so that your upcoming studies satisfy your requirements in a personalized way. Write to us today so we can tell you how together we can write your next success story.