{"id":504,"date":"2018-12-19T21:48:13","date_gmt":"2018-12-19T21:48:13","guid":{"rendered":"https:\/\/mattersgraph.com\/?post_type=insight&#038;p=504"},"modified":"2026-04-09T01:29:30","modified_gmt":"2026-04-09T01:29:30","slug":"diligence-methods-to-measure-price-and-price-sensitivity-and-the-opportunity-to-improve-margins","status":"publish","type":"insight","link":"https:\/\/mattersgraph.com\/ja\/insights\/diligence-methods-to-measure-price-and-price-sensitivity-and-the-opportunity-to-improve-margins\/","title":{"rendered":"011: Diligence Methods to Measure Price and Price Sensitivity, and the Opportunity to Improve Margins"},"content":{"rendered":"<div  class=\"theme-block wp-block-group is-style-pull-left is-layout-flow wp-block-group-is-layout-flow\" ><p  class=\"appear-on-scroll is-style-intro wp-block-paragraph\" >Most commercial diligence projects will query the channel and the end-customers to measure price sensitivity. Most CIMs will have a graph indicating the degree to which customers are, or are not, sensitive to price \u2013 and suggesting room for margin enhancement. However, relying on customers\u2019 or the channel\u2019s expression or \u201cvote\u201d on price sensitivity can lead to false commercial diligence conclusions.<\/p><\/div>\n\n<hr  class=\"appear-on-scroll wp-block-separator has-alpha-channel-opacity\" \/>\n\n<p class=\"appear-on-scroll wp-block-paragraph\">The better way to obtain a clear picture of what kind of pricing opportunity exists is to gain a true understanding of three key factors influencing price sensitivity:<\/p>\n\n<ol  class=\"appear-on-scroll-children wp-block-list\" >\n<li><strong>Perceived Differentiation: <\/strong>To what extent do customers believe the Target company\u2019s products and services are differentiated? And, to what extent are customers seeking differentiation? Note: when it comes to pricing, \u201cseeking\u201d can be very different (and more meaningful) than \u201cappreciating\u201d differentiation)<\/li>\n\n\n\n<li><strong>Operational Criticality of the Product or Service:<\/strong> How important is the product or the service (emotional fulfillment can be as, or more, impactful as functional fulfillment)?<\/li>\n\n\n\n<li><strong>Value Relative to Alternative Discretionary Spend Items:<\/strong> The real competition is all the other ways that budget can (and will) be spent. How does this spend category stack up relative to other priorities throughout the household or the organization? How much budget pressure is there for this line item in the next year? In the next 3 years? Why is there not more latitude for this spend item?<\/li>\n<\/ol>\n\n<p class=\"appear-on-scroll wp-block-paragraph\">You need to take a thorough investigative approach, meaning a large enough, representative, sample of the key segments. This is ultimately a subject better explored through careful discussions with customers \u2013 avoiding&nbsp;<a href=\"http:\/\/mattersgraph.com\/ja\/papers\/articles\/leading-the-witness\/\">leading the witness<\/a>&nbsp;\u2013 than it is through a survey that seeks to capture customers\u2019 supposed indifference to price changes.<\/p>\n\n<p class=\"appear-on-scroll wp-block-paragraph\">You will also want to compare results of how the Target\u2019s customers view the issue against how the Target\u2019s competitors\u2019 customers view the issue.<\/p>\n\n<p class=\"appear-on-scroll wp-block-paragraph\">If you understand the above three factors, and when you then incorporate the degree to which the Target company\u2019s brand is performing on various drivers of choice, you will have a good feel for what kind of opportunity there is to move price, and how to exercise that opportunity.<\/p>\n\n<p class=\"appear-on-scroll wp-block-paragraph\">Increasing price and developing a sound segmentation- or channel-based product and pricing strategy are, of course, items that need to be on everyone\u2019s consideration list. There are other things to examine (e.g., ASP history) and there will be more to do post-acquisition (e.g., detailed quant analysis, conjoint, customer segmentation, product positioning, product tiers, etc.) before you can trigger a measured increase on price, but this investigative approach will prove to be a more sound measure than a simple survey that \u201ctests\u201d customers\u2019&nbsp;<em>willingness to pay<\/em>.<\/p>","protected":false},"excerpt":{"rendered":"<p>Most commercial diligence projects will query the channel and the end-customers to measure price sensitivity. Most CIMs will have a graph indicating the degree to which customers are, or are &hellip;<\/p>","protected":false},"author":[39],"featured_media":0,"template":"","meta":{"featured_image_background_position":"","promoted":false,"promoted-priority":0,"footnotes":""},"sector":[],"topic":[80,78,79,81,67],"audience":[],"insight-category":[141],"class_list":["post-504","insight","type-insight","status-publish","hentry","topic-organic-growth-tactics","topic-price","topic-price-sensitivity","topic-pricing-management-strategy","topic-value-development-generation","insight-category-profit-pricing","author-mark-stein"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>011: Diligence Methods to Measure Price and Price Sensitivity, and the Opportunity to Improve Margins - GRAPH Strategy LLC<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mattersgraph.com\/ja\/insights\/diligence-methods-to-measure-price-and-price-sensitivity-and-the-opportunity-to-improve-margins\/\" \/>\n<meta property=\"og:locale\" content=\"ja_JP\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"011: Diligence Methods to Measure Price and Price Sensitivity, and the Opportunity to Improve Margins - GRAPH Strategy LLC\" \/>\n<meta property=\"og:description\" content=\"Most commercial diligence projects will query the channel and the end-customers to measure price sensitivity. 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