Exploring what price consumers put on invisible features.
A food processing company developed a technology that preserved fresh foods for longer. This technology could help retailers reduce the amount of lost product, which would be a valuable benefit. However, the company had not previously pursued consumer-facing marketing strategies, so they didn't know what premium consumers might be willing to pay for the technology.
The company was concerned that most consumers were unaware of the product and its benefits. This meant that they might not be willing to pay a premium for the product, even if it could save them money in the long run.
What we did
To address this issue, we conducted a study to measure consumer willingness to pay for the product. We used a split sample design, where we randomly assigned participants to one of two groups. The first group was told nothing about the product's key features, while the second group was shown a short video describing the features. We then asked both groups to complete a series of choice tasks, where they were asked to choose between different products with different features and prices.
As expected, the group that saw the video demonstrated a much stronger willingness to pay a premium for the product features. In contrast, those who had not seen the video only slightly preferred them. This helped the company see that there was an opportunity to charge consumers a price premium, but only if they understood the product benefits. As a result, their marketing emphasis shifted from exploring price adjustments to building product awareness and education.
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