Case Study 5

PRICING STRATEGY FOR NEW-TO-WORLD PRODUCT

 

Situation


The company created a new-to-world fire protection product to address an emerging issue in protecting communities, homes and assets from wildfires in the wilderness/urban interface. The company struggled to create a pricing strategy that would be perceived by the customer as a “good” value while providing sufficient margin to fund R&D efforts and make the company profitable.

Challenge


Because the product was new to the market, the market didn’t understand the benefits and value proposition. There were no clear direct competitors, thus no easy price point to compare against. At the time, the market addressed the “pain” through available products and practices that seemed to be sufficient. The major competition was the status quo. The company needed to establish the value of its product offering. In addition, it needed a credible price point and demonstrable data to validate its price strategy.

Solution


iNPD created and validated an early market pricing strategy. We educated client on pricing dynamics in early stage markets and how pricing strategy will evolve as the market adopts the product.

To create and validate the strategy we interviewed industry experts and potential early adopters to discover pricing levels market attractiveness. We worked with company to create a positioning strategy to support the pricing strategy. Finally, we helped the client understand its cost structure to derive a price floor for a better price decision.

Results


Based on market inputs, two distinct pricing levels emerged – a premium and a penetration price. iNPD helped the client choose its strategy based on its ability to execute, given the newness of the product and their lack of market capabilities. It successfully negotiated with the target OEM using the premium pricing strategy. The company was able to launch its product and achieved early market acceptance.

     
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