Unveiling The Power Of Consumer Insights In Pricing Strategies
Price elasticity modeling and consumer willingness to pay research delivered pathway to success.
HOW WE DID IT
The inflationary environment posed unique challenges for premium brands like Good Culture, a leading dairy brand. As raw material costs surged and competitors took pricing actions, our partners at Good Culture were concerned about maintaining a competitive edge and bridging the price gaps with their rivals. In response, we collaborated with Good Culture to develop a robust pricing strategy that leveraged elasticity modeling and consumer willingness to pay (WTP) to address market dynamics. The output helped them make informed decisions that prioritized maintaining consumer loyalty.
Our work had a significant impact on Good Culture’s operations and profitability. Using insights from our studies, they could anticipate the impact price changes would have on volume. We identified crucial price cliffs and utilized this data to inform their operational plan, effectively managing their P&L.
Our partnership with Good Culture demonstrates the power of leveraging data-driven strategies to overcome market challenges. By harnessing elasticity modeling and consumer willingness to pay, we developed a consumer-informed pricing strategy that empowered Good Culture to navigate price fluctuations and strengthen its market position. By keeping their pricing below the identified consumer price cliff, they were able to prevent a 35% decline in a single item’s sales resulting in avoidance of over $3 million in lost sales.
“Based on the work we did with Acosta, we understood the gaps and the potential volume declines to help inform our P&L as well as our operational planning. As we did not cross any cliffs based on the WTP study, we have seen less declines in the business than we projected.”
