STEP Pricing Research

• The competitive set to be tested is defined.
• Respondents are recruited from the target market.
• The sample of respondents is divided into equivalent groups.
• Each group will be exposed to the identical aspects of the test, except the price presented for a specific product or the group of products will be different in each group.
• Respondents are presented with a brand concept, image or the actual product.
• Respondents are then asked to allocate 10 stickers across the various product offerings.
• The respondent can allocate their stickers in any manner that best represents their likelihood to purchase the available products.
• The share of stickers given to a brand is calculated for each respondent group.

Strengths

• This method has been proven to be very predictive of future demand.
• It is applicable to new product pricing research.
• It works equally well with big ticket items worth hundreds of thousands of dollars to relatively low priced items under a dollar.

Weaknesses

• Similar to monadic testing, each respondent group needs to be controlled to minimize sample variations.
• A relatively large respondent sample is required.
• Limited ability to dynamically model the competitive set and simulate competitive price changes.

Our Assessment

• A discrete choice methodology is usually preferable because it is generally more cost effective and provides powerful competitive insight.
• However, we would strongly recommend using STEP tests under the following specific conditions;
• When the product attributes are fixed.
• When an understanding of the likelihood of repeat purchasing is desired.