OBJECTIVE
Analyze people’s purchase
intention at different price points and for alternative products.
DESCRIPTION
In monadic price testing, purchase behavior is
tested for several price points, but each respondent is shown just a single
price. Due to this method, a large base of respondents is necessary. A
variation that needs a smaller sample is sequential monadic testing, in which
the respondents are shown different price points, one at a time (usually no
more than three price points are presented to each respondent). It is important
to bear in mind that sequential monadic testing implies some biases and usually
shows a higher purchase intention at the lower prices than monadic testing.
This is probably the
best method for analyzing purchase behavior at a given price; however, it is
only useful if we have an idea of the appropriate price points for a particular
market. If this is not the case, we would need to obtain this information prior
to the analysis, either through direct or indirect survey methods (see 18.INTRODUCTION).
Figure 20:
Demand Curve Derived from Monadic Price Testing
Once the data have
been collected, we can summarize the purchase behavior for the different price
points (e.g. 11% of the market would purchase the product at €30, €32% at 20,
etc.), and we can estimate a demand curve. The data are usually collected
through surveys but can also be obtained from controlled experiments.
TEMPLATE