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* Extending pricing issues to branding Studies which are primarily about branding provide valuable insights into what makes a brand stronger and what drives its preference. However, getting the branding right is often only half the problem - even a very strong brand can fail if the pricing is not right. Pricing techniques are therefore an important part of understanding branding. The best way to understand the value of a brand is often to establish who will pay for it and how much they will pay. The price premium that a brand can command may be seen as an expression of its brand equity. Pricing techniques are therefore often included as part of brand equity studies. Extending pricing to innovation and product improvement Improving a product or service requires investment, so it is important to identify whether that investment is justified. Sometimes this involves investigating reactions to changing prices as well as service/product changes. We may wish for example to establish whether the cost of implementing changes can be recouped through higher charges for the improved offer. Extending pricing to Customer relationships / service development In other cases, the aim is to establish whether service improvements lead to increased satisfaction / loyalty to a service provider, and indeed, whether customers are prepared to pay for service improvements. It is common therefore, to combine pricing techniques with customer satisfaction studies to put the service findings into context of other drivers of choice, such as price and brand. * * * * * * * * * Elasticity varies widely between market: typical FMCG market = elasticity of -2 (a price increase of 10% = a loss in share of 20%) very brand loyal markets, e.g. newspapers = elasticity of less than -1 (a price increase of 10% = a loss in share of less than 10%) some markets can be very price sensitive = example shown * * * * * * * * * * * * * Conjoint analysis works by breaking down the product or service into i
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