Outcome Sought and Delivered
A category-leading automotive aftermarket parts manufacturer was faced with a crossroads: Continue to support multiple sub-brands that competed in the same market and at similar price points, or make the difficult decision to discontinue one of the brands?
There was significant risk in making the decision to essentially kill a product offering and all of its market share; and such a weighty consideration brought with it an understandable amount of hesitance.
Using a series of research studies in a methodology known as Price-Value Mapping, the conclusions were clear, and the decision was made with confidence. What resulted, perhaps initially thought to be counterintuitive, was increased market share, all while reducing costs and administrative burden.
What Is Price-Value Mapping?
As explored at length here, Price-Value Mapping analyzes the relationship between what customers value about your brand or product and the price they are willing to pay. Since “value” can be subjective, it’s not always easy to measure. Yet understanding why and how much customers value your products and services – and recognizing trade-offs they may be willing to make – provides an abundance of knowledge that helps construct the most optimized offerings.
Three core inputs are used to develop a market-based price-value map:
- Value Drivers: Determining which features are most important and entice customers to pay premium prices
- Perceived Brand Performance: Measuring performance of competing brands in the market
- Pricing Insights: Measuring customers’ willingness to pay among various levels, features, benefits, and brands
Price-Value Mapping provides answers to key strategic pricing and positioning questions:
- What are the value drivers for your product/solution?
- How does your brand perform versus competition across key value drivers and loyalty metrics (e.g., awareness)?
- How should you position your brand to capture the value customers associate with it?
The end-result of the Price-Value Mapping exercise shows where a brand is positioned versus its primary competitors in specific categories and end markets.
In the case of the automotive aftermarket brand, a qual >> quant >> qual approach was taken to determine whether the brand’s two sub-brands were in, essence, redundant in the market or distinct enough in the market’s perception of value to support both brands, even though they would compete for the same customer segment and at similar price points.
Research Executed with Precision. Decision Made with Confidence.
The first objective in the study was to understand which features and benefits that were most important (i.e., those that drive value) for brand selection in the studied market.
Two dimensions were analyzed:
- Stated Importance – respondents’ ratings for specific features/benefits
- Derived Importance – the correlation of stated importance to overall satisfaction with the brand (e.g., what drives satisfaction)
The comparison of these two dimensions resulted in an importance weighting and prioritization scheme that helped our client isolate the most important drivers for generating and holding value in the minds of its customers.
Once key drivers of value are understood, we measured the perceived performance of the client’s brands versus competing brands. This generated a scorecard by which we could evaluate the relative strength of each brand in the competitive market.
The final piece of the puzzle was to understand what customers were willing to pay for the brands’ products versus its competing brands. To do so, we utilized a Van Westendorp Price Sensitivity analysis along with a Gabor Granger analysis to understand the relative price position (perceived) of each brand. This perceptual data was compared to actual pricing data gathered by our team and a detailed positioning picture painted for our client vis a vis its competition.
The result of this Price-Value Mapping study materially clarified the market position of all of the various brands in the competitive landscape, revealing the market’s perception (and current reality) that the parent brands’ two sub-brands were in direct competition with each other, essentially “sharing” market share — or competing against itself.
Decision Time
A final qualitative phase of research brought further validation of the decision the parent brand had to make. As a validation exercise, the research team drew upon preliminary conclusions drawn from the previous phases. This phase consisted of in-depth discussions conducted via telephone to better understand the “rationale behind the data” — one-to-one conversations with actual respondents and customers to hear them explain in their own words and reveal the WHYs behind their WHATs and HOWs.
In delivering the research team’s analysis to the client, a consultative story was presented explaining more than just the research results, and shining a light on what the data truly reveals and what actions should be taken. These insights were presented to the parent brand’s senior management and C-suite, and what began as hesitation and even confusion was transformed into clarity, confidence and conviction.
Results
The conclusion: It made more strategic, financial and competitive sense to eliminate the lesser of the two competing sub-brands and focus resources and investments on supporting and growing the market share of the better-performing products in the market — better, as expressed by the market itself.
In the end, the manufacturer was able to de-risk their decision and move forward decisively with confidence — even if there existed initial apprehension as to the ultimate outcome and despite what may have otherwise felt counterintuitive.
By going the extra mile to do the hard work of studying the market, and its stated and unexpressed preferences, costs were saved and market share was gained — the ultimate win-win.
Need help understanding and optimizing your product’s or service’s Prive-Value positioning in the market you serve?
Let’s have a conversation about what you need to know, how we can help, and what the future looks like for your pricing and product strategies.
Contact:
The Martec Group
+1 (248) 327.8005
