Situation
The client was a manufacturer of sunscreen products. They were unclear of the relative “value” of different items in their portfolio. All products were priced in terms of gap to the major competitor. They wanted to see if they could develop the right “architecture” for the portfolio and also identify opportunities for new items
Approach
- Assessed the current pricing structure between client and competitive products
- Conducted a discrete choice analysis to understand consumer willingness to pay for different client and competitive items
- Examined the role of each item within the portfolio to identify items that could command a premium and which would compete on price
- Created a tool to test multiple price points and assess price impact on the portfolio
- Developed optimal pricing recommendations for the portfolio and identified the size of the opportunity
Results
- Results indicated a much higher willingness to pay for “baby” and “pure and simple” (chemical free) products
- Based upon this, recommended a bifurcation of the portfolio into “regular” items versus special purpose items
- Recommended a strategy to price special purpose items at a premium while aggressively competing on “regular” items
- Identified the opportunity from a more optimal portfolio and action steps to realize this opportunity