Brand-Price Trade-Off (BPTO) is a specialised tool that helps answer pricing questions for consumer goods in a competitive context, such as:
The methodology borrows from the ideas and algorithms of conjoint analysis and Gabor-Granger. It is a choice-based technique that reflects consumers' differing preferences for SKUs/brands as well as budget and psychological pricing constraints.
✅ The tool works best when:
🆕 The tool works for pricing NPDs as well as re-pricing existing products.
😎 The tool takes into account:
🙈 This tool, however, does not take into account:
.95): Monadic (“A/B”) price testing or Brand-Specific Conjoint is a better fit for this type of research questions.
Using an example study we conducted for a new line of Conjoint.ly soft drinks, we walk through the outputs that BPTO produces for new products and prices, including volume share simulations, movements of volume share, acceptable price ranges, price elasticity, and revenue/profit index.
The study examined different price points for Conjoint.ly's new line of soft drinks, and produced several outputs;
NPD volume share simulation. Through simulation, we can estimate Conjoint.ly's volume share following the introduction of our NPDs; performance is compared before and after adcepts are shown to the respondent. This helps to assess the effect that awareness/advertising has on the adoption of our NPDs.The example study shows that NPD Lemon has the highest adoption rate, even before the adcept is displayed:
Movements in volume share. Movements in volume share show the increase and decrease in each of the current SKUs after introducing our NPDs. This helps to determine whether each NPD's increased volume share is derived from our existing SKUs or from competitors.Our example study shows that each NPD’s market share sources different proportions from our competitors:
Price elasticity. We're able to calculate the specific co-efficient of price elasticity of demand for our NPDs by selecting two points on our simulation chart (the approximate price elasticity of demand is automatically calculated and displayed in Conjoint.ly). This helps us to understand how market volume will perform at the different price points our NPDs were tested at.The example study shows that for Conjoint.ly Kiwi, demand is elastic (i.e., an increase in price by 1% leads to more than 1% drop in volume). Revenue does not vary greatly, regardless of price point:
Revenue/Profits Index. Through simulation, we can learn how our NPDs' revenue and profitability will perform at different price points. Revenue projections are displayed in the simulation chart by default (this can be switched to profitability) and are calculated by assuming 1000 units offered. Profitability is calculated using assumed fixed and variable costs through the formulas:
Revenue = price * share * 1000;
Profit = (price-$1) * share * 1000. Adjustments are also available by replacing market size with assumed 1000 units.
Van Westendorp results will show us a psychologically acceptable range of price for our NPDs. It can be used as a diagnostic to validate the recommended price from the main conjoint exercise.
Raw data is available as an Excel output — confidence intervals are provided wherever possible, and all reports are segmentable by respondent characteristics such as information provided from panel profiling, respondents' answers to panel responses to additional questions, screening questions, and your uploaded variables.
These results will help us to answer the following (and similar) questions:
The survey flow consists of four separate exercises, with the purpose of introducing both our existing SKUs and competitor SKUs before introducing respondents to our NPDs;
Using our example study for Conjoint.ly soft drinks, we explain how to set up your own BPTO study, step-by-step.
We are preparing to release a new product: a fruity soft drink can. The product will come in a 375mL can and we aim to price it higher than our 200mL can offering. However, the price is not set and needs to be assessed through pre-launch research.
To understand the pricing opportunities available, we'll the following research questions:
To begin, several inputs are required to provide sufficient information for your study;
This should be a clear category, such as “Soft Drink Can (fruit-flavoured)”.
Each of your existing SKU/s require:
Your study will need at least four current SKUs (including your SKUs and competitor SKUs) — you should ideally select SKUs that cover at least 80% of the market by volume. Also, you may want to include highly salient SKUs (emerging brands that you want to compete against). If there are currently more than 20 SKUs in your market, please consider limiting the SKU count to 20 to optimise the study's sample size.
Price points should be on a consistent scale (for example, “$XX.99 per 800g” should not be mixed with “£XX.50 per 1 litre”.
Packshot images need to be of consistent quality and size.
We recommend providing 5 to 10 potential price points for each SKU (including current your SKUs, current competitor, and the NPD). For example, if you provide 5 price points, you can insert:
SKU names and prices can be supplied in a table format, for example:
Competitor SKU 1 $20 per 1kg $22 per 1kg $25 per 1kg $27 per 1kg $30 per 1kg $32 per 1kg $35 per 1kg Competitor SKU 2 $20 per 1kg $22 per 1kg $25 per 1kg $27 per 1kg $30 per 1kg $32 per 1kg $35 per 1kg Our SKU 1 $20 per 1kg $22 per 1kg $25 per 1kg $27 per 1kg $30 per 1kg $32 per 1kg $35 per 1kg Our SKU 2 $22 per 1kg $25 per 1kg $27 per 1kg $30 per 1kg $32 per 1kg $35 per 1kg Our SKU 3 $27 per 1kg $30 per 1kg $32 per 1kg $35 per 1kg $37 per 1kg $40 per 1kg Our SKU 4 $30 per 1kg $32 per 1kg $35 per 1kg $37 per 1kg $40 per 1kg $42 per 1kg $45 per 1kg Our NPD 1 $30 per 1kg $32 per 1kg $35 per 1kg $37 per 1kg $40 per 1kg $42 per 1kg $45 per 1kg Our NPD 2 $30 per 1kg $32 per 1kg $35 per 1kg $37 per 1kg $40 per 1kg $42 per 1kg $45 per 1kg
Step 2: Import SKUs and prices
Copy and paste the SKUs and prices from Excel (as in above example). If you don't have them available in the format, skip to Step 3.
List all the SKUs for the test, including:
Insert visual stimuli: Click on the highlighted icon.
Insert your NPD adcept/s. Adcepts bring your proposition to life — they can be either a picture board or a video that shows the product, with a short story, including benefits and reasons to believe. You can choose how long your respondents must view your adcept before continuing the survey.
Note that the greater the number of SKUs and price points you test, the higher the required sample size. A recommended sample size will be automatically calculated;
There are three ways to choose respondents, dependent on targeting.