In-Market Price Tests
In-Market research is widely used to test and validate optimal price levels for both new and mature products. It can quantify the effect of a significant price change or price promotion on; total actual consumer demand (i.e. category, brand or SKU level), product line cannibalization, consumer pantry loading, etc. In-market research methodology has been used informally by retailers since retailing originated. Now with the relatively recent developments in data capture and analysis technology such as; POS scanners, corporately networked store level cash registers, large and manageable sales databases and analytical software, this form of market research is now more accurate and feasible than ever before.
In-market research is described in many published journal papers and books such as Power Pricing & Why We Buy. In-market research takes on two general forms observational and actual sales volume analysis. Underhill (1999) in Why We Buy employs observational in-market research. This form of observational research yields findings such as; 86% of women look at price tags when they shop while only 72% of men do. This review is focusing on in-market research that employs the analysis of retail sales data. In-Market research also takes place in other industries such as; the airlines, direct marketing, internet services, financial services (B2B) etc.
Description of How it Works
Measures of Predictive Validity
1. Dolan, R.J. & H. Simon. (1996). Power Pricing: How Managing Price Transforms the Bottom Line. The Free Press: Simon & Schuster. New York.
2. Underhill, P. (1999). Why We Buy: The Science of Shopping. The Free Press: Simon & Schuster. New York.
3. Mohn, N.C., Coca-Cola Research Institute – Marketing Division. (1998). Pricing Research for Decision Making. Marketing Research Vol 7(1) pp. 11.