Consumers shop for the same products in different ways on different shopping occasions based on their needs. For example, for a particular product, in terms of pack size selection, channel preference and price sensitivity, a monthly stock-up purchase would be quite different from a purchase for immediate consumption or a purchase to use during travel. Price Pack Architecture (PPA) is an analytical technique or methodology that allows companies and brands to ensure that they provide consumers an appropriate selection of products that meet all their needs at the price points they are willing to pay. It leverages consumers’ willingness to pay for certain features and benefits to drive innovation.
Some of the questions that brands need to answer in order to determine the optimal price pack architecture are:
- What are consumers willing to pay for existing product features?
- For what product features or benefits are consumers willing to pay a significant premium?
- Will consumers pay a high-enough premium for convenience offered by smaller pack sizes?
- Which segment or profile of my consumers find new products most appealing?
- How should I price new products to maximize my overall brand portfolio sales?
- How will my new products compete with my existing product range?
- How much will new products cannibalize my current portfolio sales?
Analytic Edge’s Price Pack Architecture solution uses a Discrete Choice Modeling approach or a Dynamic Competitive Modeling approach to help brands determine the right price pack architecture to drive portfolio growth and enhance their overall value proposition to consumers.
Key Features & Benefits
Focus on Strategic Price Pack Innovation:
With the insights from PPA analysis, brands can tweak key attributes within existing product lines rather than rely only on build-from-scratch innovations, which are time and resource intensive. This results in higher margins and cost-effective quick wins.
Identify Optimal Pricing Across Channels:
Companies can leverage PPA to identify optimal pricing across channels for different product configurations, which are ideal for different types of consumers and different purchase occasions. Product enhancements can also be used to attract new consumers who have remained outside the customer base.
Confidently Make SKU Continuance / Discontinuance / Alteration Decisions:
PPA allows companies to decide with greater confidence which SKUs they should continue or discontinue, and where there are opportunities to introduce alterations that will improve margins, attract new customers and grow the category.