Price Modelling

The Brief:
The client is in the soft drink category in Asia.
The client needs are to:

  • Identify optimal price strategy for client products
  • Evaluate implications of rationalizing clients’ product range
  • Understand price elasticity & cross price elasticity
    implications across the category.

The Approach:
The recommended approach was BPCM (i.e. pricing product
pre TopPriceChoice).

The Results:
Client’s dominant market share product is already priced optimally. A recently released larger pack product by the client is overpriced and needs to be reduced. This product is better perceived by the market relative to their main market product. This has the potential to rationalize the clients’ range but it needs to be a gradual process in terms of lowering the new product price and increasing its distribution. Based on advantages in price elasticity and cross price elasticity for client products, this strategy has resulted in increased profitability to the client.