Pricing & claims strategy

The Challenge

As the market leader, our client challenged us to identify a strategy to ward off an attack to its base business and to improve gross profits.

The key objectives for this study were:

• Understanding the impact of the potential competitive low-cost attack.
• Identifying the combination of price reduction and claims that would provide the best defense.
• Determining the price and claims strategies that would drive purchase up the line to the client’s more profitable suite of advanced products.

Our approach

Savanta conducted 325 online interviews among Economic Decision Makers and several Surgical Specialties (General, Urologist, Gyn/Oncology Gyn, Cardiovascular, and Neurological) in the U.S.

Our primary analytic approach for this effort utilised Discrete Choice Modelling, a powerful trade-off technique, where respondents were presented with several choice sets and asked to choose between our client’s products and several competitive products in the market. Each choice set had a different set of claims and prices associated with our client’s products.

The outcome

While our client was ultimately not presented with the low-cost competitive threat, our research armed them the level of pricing discount required and specific set of claims that would minimise defection.

Our research also revealed that while it would be difficult to drive upgrade to more advanced products, there was room to take a modest price increase on many of the products in our client’s line-up resulting in a potential increase in profits of up to 5%.