Service - Price Sensitivity Modeling
Background - Boudin was embarking on menu innovations to drive new customers while working hard to not alienate their current user. The menu items were more unique and therefore a bit more expensive to make than current menu items. Boudin needed to understand if the prices they would need to charge would fit customer’s willingness to pay as they made the shift to higher profile items.
Methodology - We utilized a price sensitivity modeling technique with their previously segmented database of customers to find out what customers felt was the ideal price after seeing a picture and reading a description. We also asked likeability and willingness to purchase without price, then asked for their price sensitivity and finally their willingness to purchase after we stated the intended price of the product. We could tell Boudin what the ideal price was and what % of customers they would lose as they moved the pricing up.
Client Action - Boudin was able to price their new products with confidence in roll out and knew where they stood with consumers perception by product by customer type.