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Applications for Pricing Decisions

In: Applied Conjoint Analysis

Author

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  • Vithala R. Rao

    (Cornell University)

Abstract

One significant application of conjoint analysis is in helping the manager with pricing decisions. Determination of optimal price for a new product (or brand) is a typical application. One way to determine the best price is to estimate the market obtainable from the new product at different feasible prices for the new product profile. We described the use of conjoint simulators in Chap. 3 . Additional information on cost functions can be integrated into the estimates of market share to yield estimates of profit from the new product at various prices. The price at which the computed profit is highest can be deemed to be the best price for the new product. This approach can also yield a generic estimate of price elasticity for the product category as a whole.

Suggested Citation

  • Vithala R. Rao, 2014. "Applications for Pricing Decisions," Springer Books, in: Applied Conjoint Analysis, edition 127, chapter 0, pages 291-316, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-87753-0_8
    DOI: 10.1007/978-3-540-87753-0_8
    as

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