A survey of emerging technologies for pricing new-to-the-world products

A report submitted to
Prof. Prantosh Banerjee

In partial fulfilment of the requirements of the course

Pricing

Submitted By – Group 2

Apurva Tomar 2011032

Iftekar Ahmed 2011089
Krithika GR 2011113
Prithviraj Patil 2011165
Shreya Saloni 2011238
Animesh Bordoloi 2011292

On

28-10-2021
Introduction: New product development has led to companies diversifying to improve their
existing products and meet the ever-changing consumer needs. A unique category of new
products known as the ‘new-to-the-world’ product is rising to be popular to ensure long-term
corporate success. Such new-to-world products have focused on maintaining optimum revenue
levels and market share amongst its competition. Since only one in ten product launches are
successful, managers find ways to reduce risks associated by improving decisions related to
product quality. The fundamental decisions which help determine the success of a new to world
product is correct pricing.

The idea of a new product can be launched in many different forms in the project management
arena. In this case a new to the world product is a novelty, which has no defined substitute on the
market at the time of its introduction. The price of these products largely depends on the
incremental utility provided by the uniqueness of this product as compared to any old technology.
This can be formalised as: P(new) = P(Comp) + V(New), where P(new) is the comparable price
of the product with old technologies, V(New) Is the incremental value the consumer places on the
unique features and P(New) is the fair market price.

And inclusion-based approach two new product pricing may not always accurately represent its
true price potential. Therefore, a more systematic approach that relies on formal processes of
market inquiry is needed there are three general approaches which have been traditionally used in
this area:

1. Direct questioning: it involves communicating with the consumer directly to understand

the level of value a product places in his mind.
2. Conjoint analysis: since indirect questioning the responses may be biased, an alternative
approach that clearly defines prices can be practiced. the conjoint analysis can be used to
estimate the impact of variation on multiple product attributes on consumer utility.
3. Market experimentation: in this case the product is introduced in various test markets,
and these test markets result and help in identifying an optimal introductory price for the
new product, by providing an estimate off sales level experienced at various price points.

Determining comparable price points: Competition based pricing utilise survey of similar
product prices in a marketplace can be determined with an appropriate estimate off
compatible price points a combination of competitive intelligence therefore allows want to
take an average open appropriate sample of prices 4 compatible products. This can be used as
an estimate of P(Com).

New technologies utilised for determining increment volume V(New)

1. Emerging direct questioning technologies: while traditional pricing research methods
deliver valuable information, such as consumer preferences and price thresholds, the
associated cost and time frame places limits on the reactive abilities of new product
developers. Online services are conducted in a digital format through consumer email and
therefore lead to immediate reduction in data collection costs and provide drastic
improvement in the data collection speed. Online focus groups are also gaining
acceptance since they operate on about half the cost of what traditional focus groups do.
However, an emerging variation of online focus groups in bulletin boards are still fighting
for credibility.
2. Emerging conjoint analysis technologies: conjoint analysis can be used for product
price determination and can be used on consumers by presenting a series of product
prototypes or descriptions also known as profiles and rating them to determine their
preferences. Multiple products which have been considered to have stagnated have
developed as newest and most complex areas of market research with great potential for
use in setting prices.
3. Emerging market experimentation technologies: test marketing is conducted by selling
and marketing new products in representative samples with define promotional mixes,
packages and branding variables. The most common method of test marketing online is
through company websites. Consumer product companies perform test markets on their
own branded and non-branded websites to analyse opportunities and market demand
trends.

Implications of pricing practice

1. True market value reflection: by utilising net-based markets in combination with

consumer bargaining techniques, product prices potentially merge two levels of reflecting
actual demand and true market value.
2. E-commerce facilitates price discrimination: price discrimination can be used as a
powerful tool in a variety of ways for example cookies, are used to identify individual
customers online and trigger customize product assortments at prices by marketers. It also
helps with dealing challenges of traditional consumer products by utilising new
technologies and online pricing research methods.
3. Primary strategies choice: the notion of consumer bargain only becomes more
acceptable by consumers with increase in the use of technological advances are available
to them. while pricing may continue to be a fundamental element of competitive strategy,
intensified price-based competition brings markets closer to optimum efficiency.