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Effective pricing methods that maximise profit

With data-driven and value-based pricing solutions, you'll learn how to listen to your customers, bring informed decisions and reach your revenue/profit targets. Drive long-term growth and get a competitive advantage guided by our expertise and deep industry knowledge.

Commonly solved business questions

Are our prices aligned to the customer value?

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By measuring brand equity, evaluating price perception, and using sell-out prices, boobook identifies how well current pricing is aligned with the perceived brand value. Following this, we also measure price elasticity to advise the right price strategy.

How resistant are our brands to price increases?

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Willingness to pay, or price elasticity, is valuable information every brand should know and understand. We support companies in measuring price elasticity by analysing existing transactional or market research data. The analysis results in a demand curve used as input to any ‘what-if’ scenario, such as future price increases.

Who are our biggest competitors in terms of brand power?

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Any company/brand operates in a competitive environment. Through consumer listening and analytics, we provide insights into how a brand compares to its key competitors regarding brand performance, image, and price elasticity.

How do I build pricing expertise capabilities in my team?

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While at boobook, we often build pricing strategies for our clients based on consumer understanding, we also support some of our clients on how they can develop value-based pricing expertise in-house. We take our clients through various training and coaching sessions, from business goal definition to translating insights into a strong pricing plan.

Is my brand more or less price elastic versus competitors or versus the sector?

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Over the past 20 years, boobook has conducted pricing research across many industry sectors and brands, including measuring price elasticity. Hence, we built a massive database with benchmarks, as any number is only useful when it can be compared to something else.

Should we go for monthly licence fee pricing or stick to one-off payment?

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The “Netflix model” is gaining popularity among many companies and products as it offers a long-term revenue stream, including upsell strategies. But how do consumers react, and what is their willingness to pay when moving to a monthly subscription? Through various consumer understanding techniques, such as conjoint, we measure consumers’ appetite for different pricing models. We translate the insights into sustainable and profitable pricing strategies.

“The pricing optimisation we conducted with boobook was incredibly valuable to our pricing and revenue management strategy. It gave us insights into customer behaviour and preferences and enabled us to make data-driven decisions that boosted revenue growth and customer satisfaction.”
Frédéric Vandermeulen
Revenue Management & Pricing Director at Center Parcs Europe

Insider insights on pricing

Level up your business with inspiring articles where we share our knowledge and practical know-how.  

Category
min. read

Pricing 360°: How understanding consumers’ perception of your brand is key to making better pricing decisions

How can businesses achieve unparalleled growth and maximize profitability in today's competitive landscape? At boobook, we believe the answer lies in our data-powered strategic consulting, anchored firmly on four interconnected pillars: brand, product, pricing, and customer/consumer. By understanding and leveraging these fundamental elements, we guide businesses toward excellence and sustainable growth.

In the coming weeks, we're excited to share a series of articles focusing on these pivotal pillars, more specifically on how strategic price setting is driven by the other 3 pillars. This insight is crucial in an era where gaining a competitive edge is not just beneficial but necessary for survival and success. Understanding the intricate relationship between these pillars enables businesses to boost growth and ensure maximum profitability effectively.

Kicking off our "Pricing 360" series, we begin with a topic at the heart of product success or failure in the market: Brand perception. The way consumers perceive your brand has a profound impact on their purchasing decisions, a fact no business can afford to overlook. We will demonstrate how a deep, nuanced understanding of your brand, seen through the eyes of your consumers, can empower you to make pricing decisions that not only resonate with your target audience but also drive growth and success.

Why having a clear view of your brand perception matters

The equilibrium between brand perception and pricing decisions is crucial for businesses striving for strategic growth and a stable market position. It involves a complex analysis of supply and demand economics combined with brand psychology. Contrary to common belief, a high price doesn't always signify premium value, and a lower price doesn't necessarily mean affordability. To truly enhance pricing strategies, understanding the signals your brand sends out in the market is essential.

Pricing strategy involves setting the optimal price for your products or services to maximise revenue or profitability and achieve business objectives - without pricing your brand/products out of the market or course. Pricing decisions will significantly impact sales volume, but also market positioning, and, indirectly, brand perception. The right pricing strategy can also help you attract (new) customers or maintain competitiveness.

So, what is the connection between these two essential components of your overall marketing strategy, and why should you align them? Brand understanding and aligning your pricing strategy with your desired brand positioning is essential because it helps you to create a consistent and coherent brand experience for your customers. When you achieve an accurate and positive customer brand perception, this, in turn, enhances their trust and loyalty, which is translated into increased sales and profitability.

When companies benefit from brand understanding

Here’s an overview of when and why companies will benefit from understanding how the market perceives their brand.    

  • Linking pricing to brand positioning: Understanding how customers/consumers perceive your brand helps you identify and define your brand's unique position in the market. It allows you to understand how customers perceive your brand, and it enables you to identify the key differentiators that set your brand apart so you can create a compelling value proposition. This, in turn, influences pricing decisions. If your brand is perceived as offering unique benefits or solving specific customer problems, customers may be willing to pay a premium price. For example, if your brand is associated with high-quality and premium features, you can set a higher price point to reflect that perception. On the other hand, if your brand is positioned as affordable and value-driven, a lower price point may be more suitable.
  • Launching a new product or service: Brand perception analysis is extremely valuable when developing or launching new products, product features, services or even (sub)-brands.
    It helps companies understand customers’ expectations, motivations, or feelings towards your brand. By mapping the target market's perception of your brand as well as your competitive landscape, companies can make strategic decisions to extend their offer purposefully and successfully.
  • Rebranding/repositioning: When a company undergoes rebranding or decides to reposition its brand in the market, brand perception analysis becomes essential. It allows companies to assess their current brand identity and their brand DNA and identify gaps or opportunities for improvement. Companies can strategically plan and execute their rebranding efforts by understanding how the brand is currently perceived vs. how it should be perceived.
  • Competitive analysis: Brand understanding is an excellent approach to conducting competitive analysis. By mapping competitors' perceptions and positioning, companies can identify opportunities for “the blind spots in the market” and build further on their strengths and weaknesses. This analysis provides the foundations for developing effective strategies to gain a competitive advantage and stand out in the market.
  • Marketing and communication: Developing effective marketing and communication strategies isn’t the easiest task. However, with brand perception analysis, companies can better understand how their brand characteristics align with customer needs and expectations. By leveraging these insights, companies can create targeted marketing that resonates with their key audience, increasing brand awareness and customer engagement.

How to measure and understand brand perception

There are different ways to capture the market's view of your brand and your competitors. Note that the view of competitor brands is critical in this exercise, as a brand is always perceived in comparison to other brands.  

One view might be to look at sales. Who sells most and least, especially how the volume changes when a brand is on promotion, as promos tend to be less necessary for more premium / high-quality brands. However, we know that sales (even promo sales) will only give a limited view of how brands are perceived.  

Another possibility is to collect brand perception views from the sales team, as they are often the closest to the market. However, these views might be biased towards specific customers or retailers.  

The best option is to talk directly to the consumers to get their view on how they perceive different brands—brands they either bought or are aware of. I.e. Which brands do they associate with high quality, reliability, trendy, premium, fun, innovative, mainstream, etc.? Alternatively, some of these perceptions can also be captured through social media analysis.  

Typically, the outcome of such an exercise is presented in a two-dimensional map called a "brand image map". It visually shows which characteristics brands are associated with and in which competitive space they sit, i.e., who the main competitors are from a brand image perspective.  

A close-up of a diagramDescription automatically generated

Ideally, a brand sits in white space, meaning competitors do not closely surround it and are away from the middle. The more a brand sits in the middle, the more its image is less distinct.  

Depending on the brand's goals, its desired brand image will differ. Value-driven brands strive to be considered premium and exclusive, while volume-driven brands will be closer to the mainstream.


In conclusion

Brand perception analysis is a vital tool for your branding and pricing strategy. When used effectively and complemented with other types of insights it can support businesses in strategic decision-making and help build strong brands.

Brand image analysis and pricing strategy are clearly intertwined in building a successful brand. By understanding the perception of your brand and its unique value proposition, i.e. your brand identity, you can effectively align your pricing strategy to maximise profitability and achieve your business objectives.  

Combining the insights gained from a brand image map with a landscaping exercise on current competitive pricing will further help you establish the optimal price (as in a price in line with the market) for your products or services, ensuring that you attract the right customers and drive long-term success.  

If you need to optimise your brand positioning and pricing strategy, get in touch! Our team is here to assist you in developing your ideal pricing strategy.

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min. read

Demystifying AI: How to use (and not use) artificial intelligence for insights creation and strategic consultancy

Artificial intelligence has pervaded every aspect of our lives, driven in large part by the remarkable popularity of generative AI applications. Among these, ChatGPT stands out as the app that boasts the most rapidly expanding user base in history, sparking extensive discussions around the boundless possibilities and future potential of this cutting-edge technology. Naturally, with such fervour comes a fair share of misconceptions and misinformation circulating.  

In his influential 2004 paper, John McCarthy defines artificial intelligence (AI) as “the science and engineering of making intelligent machines, especially intelligent computer programs. It is related to the similar task of using computers to understand human intelligence, but AI does not have to confine itself to methods that are biologically observable." The goal of AI is to develop a machine that can think like humans and mimic human behaviours. But let's debunk the myth right here - AI isn't a looming menace ready to overthrow the industry (or take over our jobs) - no matter what the media is trying to tell you. Instead, it's a game-changer, a potent tool reshaping our sector in ways we could barely have imagined a few years ago. ChatGPT, or more broadly, Large Language AI Models (LLMs), have become ubiquitous in our lives. LLM (Large Language Modelling) is an AI technology that efficiently processes and condenses vast amounts of information. LLM excels in tasks such as summarising and creating analytical models, but it does not possess the ability to think or discern between good and bad, it doesn't make any judgment, nor can it validate what it creates. Hence, human supervision is necessary to evaluate the accuracy and significance of the AI-generated output.

Imagine AI as an e-bike for your brain. It equips you to go further, quicker, and with less effort. However, just as the cyclist needs to pedal to propel the bike forward, human intervention is indispensable for AI to perform at its best.  

However, AI does come with its share of shortcomings. While AI has groundbreaking potential to overhaul the way we work, it is not designed to replace human intellect but to augment it and help us be better at what we do. While it's great at crunching colossal volumes of data, businesses need clear and actionable strategic advice, not basic data digests. Moreover, AI falls short when grasping sarcasm, irony, and other nuanced linguistic expressions. In such instances, humans still need to peruse the text to decipher the intricate layers of communication. Emotional interpretation, negotiations, imagination, and vision of the future are still strong qualities of humans, underlining the irreplaceable role of human understanding and contextual interpretation in harnessing the full power of AI.

Impact of AI on insights and analytics

Here at boobook, exploring new methodologies and learning about innovative technologies has always been in our DNA. Over the last year, we’ve been exploring working with AI, and we believe it offers great assistance in the process of gathering, creating, and presenting insights.  

One of the biggest advantages of AI is that it revolutionises the data analysis process by eliminating the risk of human error and bias. Additionally, AI automates the time-consuming tasks of data cleaning and preprocessing, freeing up valuable resources.

AI can greatly assist the industry in multiple ways:

1. Efficiency Increase

By harnessing the power of AI-powered algorithms, organisations can analyse vast amounts of data faster and more accurately than ever before. This capability reveals hidden patterns, trends, and correlations, providing invaluable insights and expanding organisations’ research capabilities in several groundbreaking ways. Let’s take a look at its various applications:  

  • Predictive analytics leverages AI algorithms to forecast market trends, consumer behaviour, and product demand.  
  • Natural language processing (NLP) algorithms can quickly analyse qualitative information from sources such as focus group transcripts, survey responses, social media posts, reviews, etc.  
  • Sentiment analysis enables a nuanced understanding of public sentiment toward products or brands by analysing online content, social media, and customer feedback.  
  • Price optimisation, on the other hand, uses AI algorithms to analyse pricing dynamics, competitor strategies, and market conditions.  
  • Another critical application of AI in data analysis is demand forecasting. By analysing historical data and external factors, AI models facilitate accurate predictions of future demand patterns for products or services.  
  • Additionally, AI aids in fraud detection by identifying anomalous patterns in transactions and user behaviour, enhancing risk management, and ensuring the integrity of research-related financial processes.  
  • AI also enables 24/7 focus groups and interactive questionnaires, allowing businesses to gather real-time insights and feedback from their target audience.
  • Furthermore, chatbots powered by AI technology provide instant and personalised support to customers, enhancing their experience and streamlining communication.
  • The capabilities of AI extend beyond text-based data analysis. Image and video analytics have become increasingly sophisticated, enabling businesses to extract insights from visual content such as images and videos.  

2. Inspiration

AI has the potential to inspire innovation and creativity within the industry. It can generate fresh ideas, identify emerging trends, and offer novel perspectives that fuel growth and progress. For example, you can use AI tool to add value for more profound segmentation. By asking questions such as “Who is your ideal customer?” and “How is your ideal customer feeling?” you can get interesting output when consulting on how to connect with that segment.  

3. Summarization

AI-powered systems excel at generating accurate and concise summaries of large volumes of information. This capability saves time and effort by distilling complex content into easily digestible formats. Numerous tools are available to help you efficiently grasp the core message of any text, but it’s crucial to prioritize the use of closed-loop mode apps to guarantee data confidentiality.

The future-proof MI professionals: Embracing opportunities & acquiring relevant skills

​​The adoption of AI is bound to open up new opportunities for professionals in all industries, and experts in the insights industry also have to rethink how they allocate their time and the skills needed for success. With AI taking care of routine and repetitive tasks, professionals can dedicate their time to interpreting data and extracting meaningful insights with confidence.  

Additionally, AI can also be a valuable tool that allows more coaching and enablement. By automating specific processes, professionals can devote more time to mentoring junior team members and nurturing their growth. This shift allows for a more strategic approach, where professionals can focus on driving innovation and strategic initiatives instead of being weighed down by mundane tasks.

Furthermore, the integration of AI reduces the technical benchmark required for entry-level professionals. With AI handling tasks that traditionally demanded hard technical expertise, junior profiles can contribute more effectively to data analysis and insights creation.  

Even though the benefits of AI are straightforward, professionals are concerned that their jobs are at risk of being replaced. However, it's not actually AI itself that poses a threat, but rather those who are adept at utilising it. Let's discuss new strategies and essential skills that will help future-proof MI (Market Intelligence) professionals to ensure their continued relevance and success:

  1. Embrace and engage: Rather than fearing the rise of AI, MI professionals should embrace it as a valuable tool in their arsenal. Learning about AI algorithms, machine learning, and data analytics will broaden your skill set and enhance your ability to work effectively with AI tools.
  1. Prompt engineering: One of the critical skills for a future-proof insights professional is the ability to ask the right questions to an AI-using machine. AI can provide vast amounts of data, but it's up to humans to determine which questions to ask to extract meaningful and actionable insights.
  1. Insights / Consultancy / Storytelling: At Boobook, we understand the power of storytelling, as we know this is an essential tool to bridge the gap between raw data and strategic, meaningful decision-making. By conveying information concisely and engagingly, insights professionals can demonstrate their value and assist organisations in making effective choices.
  1. Advising on AI adoption: By understanding the capabilities and limitations of AI, MI professionals can guide, inform and give the needed nuance to decision-makers on how to use AI tools effectively. This includes identifying the right AI solutions, evaluating their potential impact, knowing their strengths and weaknesses, and meeting ethical considerations.
  1. Be extra critical of information sources & validation: AI is only as good as the data it is fed, so ensuring accurate and trustworthy information is mandatory. MI professionals should meticulously cross-reference multiple sources, verify the credentials of their data providers, and analyse the validation methods used.
  1. Prioritise and validate: Typically, AI splits out way too much information without stressing and prioritising insights. Not all data is equally valuable, and not all insights are similarly relevant. By identifying and prioritising the most critical data points and insights, you can save time and resources while maximising the impact of your analysis.
  1. Make insights actionable: MI professionals should be experts in data analysis and possess a strong sense of business acumen. By interpreting data in the context of the organisation's goals and challenges, you can effectively communicate the implications and recommendations to decision-makers.  
  1. Specialise: By deepening your knowledge and understanding in a particular niche, you can position yourself as a valuable and sought-after expert, with AI assisting you in that particular niche.

Unlocking the potential of AI in the insights industry

This year, generative AI has quickly gained momentum, leaving many people feeling challenged to keep pace. Ever since ChatGPT burst onto the scene in November 2022, it has been the talk of the town, attracting businesses eager to seize its immense value. The innovation adoption curve of AI may have had a slow start, it’s growing rapidly, and we are seeing new and exciting applications of it every day. This fast change is not easy to grasp, and for some, it might be just a bit overwhelming. However, it’s important we don’t see AI as a threat but as a liberating force for the industry. It's high time we realise that AI is not designed to replace human intellect but to augment it and help us be better at what we do. By dispelling fears, embracing opportunities, and leveraging AI for insights creation, professionals can unlock the full potential of AI and drive innovation in their fields.  

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min. read

Crafting a successful pricing strategy: Where strategy and consumer insights meet

Pricing products and services is one of the most complicated aspects of any product or marketing strategy. It has a direct effect on sales, revenue, and profit. Furthermore, understanding how price impacts brand perception and vice versa is another important consideration. While it’s important not to price too low (which could lead to long-term issues in achieving business goals), pricing too high might limit the trial use of products – leaving companies with limited volume growth potential down the road.  Finally, achieving equilibrium between marketing and sales teams which typically have different goals when evaluating pricing plans, is also vital for success.

Three approaches to price setting

There are many different ways of deciding how to price a product, but broadly speaking, there are three approaches, each with pros and cons.

- Cost plus pricing: Internal focus

Cost-plus pricing involves calculating total production costs (including materials, labour, and overhead) and adding a markup for profit. To use this method, you must identify production costs and analyse market factors to determine an appropriate markup. Cost-plus is well-known and reliable, but it doesn’t necessarily reflect the value of the product/brand to the consumer. This could lead to missing out on high-value sales, i.e. leaving money on the table.  On the other hand, if too much profit is accounted for in the cost-plus approach, anticipated sales could be misjudged.

- Competitive-based pricing: Competitive focus

Competitive-based pricing is a model where other businesses heavily influence your price points in the same market. This outward-facing approach differs from cost-plus pricing, which looks at your costs. It’s a popular option as it feels like the ‘least risk’ approach. It definitely has its advantages as competitors are an important factor for any setting prices.  It is typically used by ‘price followers’.

- Value-based pricing: Customer/consumer focus

This approach considers perceived value rather than cost or market competition to set price points. It depends on customers' needs and desires, as well as their willingness to pay. People don't think about a product's cost to produce but what value it gives them. Consider handbags, shoes, perfumes, or brands such as Apple, Nike and Starbucks; customers are willing to pay more as they attach high value to these. The cost of these products is often only a fraction of the retail price. This method helps identify a brand/product's pricing power and value. The stronger the brand, the higher the pricing power and prices, and products with a lot of price power are less influenced by inflation.

So, what would be the best pricing approach? 

Unsurprisingly, value-based pricing has the most potential to create a successful long-term strategy. However, costs also need to be taken into account, as any price should result in profit, and keeping an eye on what competitors do is a no-brainer too. We recommend a combination of the three with value-based pricing as the foundation.

5 steps to successful pricing

1. Use the overall company strategy as the goal for pricing

Should your organization win on volume, revenue and profit margin? Winning all three is usually impossible since each requires a different pricing approach. For example, focusing on volume often means lower pricing for less premium products, while profit margin goals require higher pricing.

2. Decide on being a price setter or follower, and act accordingly

Achieving the status of price leader requires dominance in the market, strong branding, or a superior product. Market size is not always a reliable indicator of price leadership, nor is brand prestige. Carefully choose your strategy and maintain consistency in your channel partnerships and marketing communication.

3. Look beyond the price and the business KPIs

The company strategy and the vision is the starting point of any price setting; however, there are other key factors which contribute to the success: (1) your brand, (2) your product/service and (3) the consumers/customers.

Companies often assume adjusting the price will improve sales, revenue, and profits, but it is not the only factor of success. Brand recognition, product quality, and the target audience’s ability and willingness to pay are all key components that should be considered – in some cases, more so than the price.

4. Listen to the customers/consumers

Analysing consumer feedback should guide any pricing strategy. Digging deeper to understand how consumers perceive your brand/product, if it meets their needs, and the value it brings are essential questions to answer. It will tell you, e.g. if your brand is strong enough to sustain a 10% price increase.

5. Educate and create a win-win situation for the different players in the sales channel

Price changes often require approval from multiple levels between the manufacturer and shopper, such as wholesale, distributors, retail, installers, etc. Without approval, there’s a risk of delisting, reduced visibility, and weaker negotiation power. Showing your understanding of consumer needs and what they are willing to pay is key to establishing trusted long-term relationships with sales partners.

Next up

In the following weeks, we’ll share with you more on each of the above 5 aspects and how to choose the best pricing techniques and tools for your business. 

In the meantime, if you need help optimising your brand's portfolio pricing, get in touch with us. Our team is here to assist you in developing your ideal pricing strategy.

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Pricing strategy isn’t one size fits all

Our approach starts by understanding your business challenge thoroughly, asking the right questions, and crafting a customised strategy by blending different methodologies.

Conjoint analysis

Conjoint is an elite pricing tool that gauges consumer preferences and product elasticity. Its simulator identifies optimal pricing for maximum profit.

Learn more

Transactional data analysis

Prioritizing customer feedback over transactional data aids in accurate predictions. Analyzing data correlations using machine learning refines market strategies, but past data has its limitations.

Learn more

Gabor Granger

This pricing method presents customers with varying price points for a product and asks their willingness to purchase, resulting in a demand curve that identifies optimal pricing for maximizing sales, revenue, and profit.

Learn more

Insights that empower businesses, regardless of the sector

For over 20 years, we’ve been working closely with international clients from various sectors, supporting them in achieving outstanding results. Our approach is based on personalised solutions that tackle the specific challenges of each industry.

Contact us for a consultation

Retail and FMCG

In a highly competitive retail and consumer market, brands need to adapt to inflation and address consumer concerns about eco-friendliness, sustainability, and health. We offer guidance on staying competitive through product portfolio optimisation, value-based pricing strategies, and streamlining offerings.

Technology and software

The technology industry is constantly evolving, shifting towards subscriptions, cloud-based solutions, multi-platform compatibility, and AI-driven innovations. We provide expert guidance on product development, refining pricing models, and positioning brands for growth and market leadership.

Hospitality and entertainment

The entertainment and hospitality sectors face unique challenges as the pursuit of pleasure and sustainability often seems at odds. Additionally, in today's world, are consumers still willing to spend money on unique experiences and luxurious holidays? We advise companies on refining holiday products, including implementing the right pricing strategy, to meet current consumer needs.

Luxury industry

Value-based pricing is the cornerstone of the luxury industry. While the target audience for luxury products often has more disposable income, they are also more discerning and have specific needs. We translate these needs into clear pricing strategies that enhance profitability and drive sustainable growth for luxury companies.

Manufacturing

When your customer is not the end consumer and multiple players are involved in the sales chain (resellers, wholesalers, retailers), it can be tricky to optimise product development and set prices. We provide advice on creating an optimal product, pricing, and promotional strategy that benefits you, your customer, and the end consumer.

The 3-step framework
made for success

Schedule a call with us
01.

Alignment and input workshops

In the initial phase, we work closely with you to understand your business needs, objectives, and knowledge gaps. Through interactive workshops, we align on the project scope, discuss the business context, and gather enough input so we can help you define your goals and create the winning strategy.

02.

Consumer/customer listing

In the second stage, we carefully listen to your customers/consumers and delve into existing data, leading to invaluable insights about both your products and of your competitors. This customer-centric approach guarantees well-informed strategies driven by the needs and preferences of your target audience.

03.

Learn, act and optimize

In the final phase, we turn data and knowledge into action plans. Thanks to business expertise, in-depth analytics, and effective storytelling, we provide wisdom through practical recommendations. We help you implement, monitor, and optimise your customer-oriented strategies for sustainable growth.

Unlock the secrets to success

Take examples from successful companies who collaborated with us and found the right answers to important business questions.

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Renewed insights on how to best measure price elasticity and pricing power

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How Center Parcs Europe optimised revenue management and increased profits

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Mastering Path to Purchase: How Pernod Ricard UK unlocked invaluable shopper insights

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Behind the success of Ballantine’s Light

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How to strategically balance brand equity and profitability: Pernod Ricard's pricing and portfolio optimisation

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Revitalizing cinema advertising: How Brightfish transformed pricing strategy for optimal value and increased revenue

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business decisions

Explore our success stories and learn how we've successfully helped different businesses. Or get in touch with us to schedule an introductory call.