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In 1976, a Dutch economist, Peter Van Westendrop created the price sensitivity meter. It is a tool that assists in finding out the series of price points that are critically connected with the target audience.
Generally, this tool involves a series of survey questions to capture the consumers’ price sensitivity, their thought process, and purchasing power so that the businesses can get to know how much people are willing to pay for their specific product.
This way, Van Westendrop is a robust research model that has become the most popular pricing strategy technique in the market research industry over the last three decades.
Why Use The Van Westendorp Price Sensitivity Meter?
Below are three main scenarios where a Van Westendrop analysis will be helpful to you.
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Launching A New Product
You need to use the Van Westendrop while launching a new product to the market. For instance, by opening a new bake store, you want to learn how much you should charge for your premium products, like triple chocolate, pecan, and peanut butter cookies.
So, what is the best way to know what your consumers are willing to pay? You need to use the best tool that is Van Westendrop price sensitivity meter. It helps you get a market survey to search for the price the consumers will settle happily for your product.
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Repositioning A Product
If you are established in the target market and want to increase the price of your established product, Van Westendrop price analysis is also fundamental.
This tool will assist you in comprehending the consumers’ perception of your current price, what would be the consumers’ reaction when your price will increase, and at which price your revenue will be maximum.
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Changes In Product Features
Van Westendrop is a handy tool for making changes in product features. Will you believe that Snickers bar is about 11 percent smaller in size than it used to be before, and prices are almost the same? Moreover, every square of the Charmin toilet paper is about half an inch shorter, but still, the sales are at their peak.
Van Westendrop can provide you with a price sensitivity feature according to the target market and meaningful changes in your product features. It is also helpful for you if you don’t have to make changes in the price. The data collected through this tool helps you understand whether the price is essential for your consumers or other product features.
If price matters more, you need to reduce the cost to maintain the sales. Thus, with the help of this tool, you can maintain good revenue.
Winding Up!
In a nutshell, by using the Van Westendrop price sensitivity meter, you can easily make modifications to your established product pricing strategy or launch a new product with the most acceptable price. It will not cause any harm to your revenue as every action will be done according to consumers’ and market analysis.
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