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BACKGROUND

CHALLENGE

IMPACT

A dominant market-leading Client was challenged to identify an optimal pricing strategy for a new product launch in an increasingly competitive market. Recognizing that the new launch would cannibalize existing product sales, elicit substantial competitive responses, and create an opportunity for customer brand-switching, the Client sought to identify profit-maximizing price and pricing models. Nearly $1B in business was at stake.

Critical to the identification of optimal pricing was understanding the customer purchase decision process and the relative influence of key stakeholders, including outside influenc-ers like GPOs. Additionally, non-product pricing attributes such as lease-vs.-buy and maintenance plans would change the involvement of different decision-makers. There was also internal debate about the objectivity of the Client’s own sales force perspective.

SOLUTIONThe MarkeTech Group (TMTG) recommended a combination qualitative and quantitative study. TMTG completed 23 qualitative interviews which provided objective assessment of buying decision factors. A quantitative survey was designed and fielded with 442 decision-making respondents, including clinical, economic, and operational stakeholders. Data was used to collaboratively develop a market simulator to represent real-world market movements..

Results were used by the Client to identify a preferred combination of profitability and market share. TMTG’s simPRO™ preference share model, Reactor™ market share model, and strate-gic analysis demonstrated: • Brand equity and switching costs are worth a 4% price premium to Client • Client did not need to price-match or discount to retain and gain business • Attribute importance was different than anticipated, prompting change to product

messaging • An ideal mix of service and support options would incentivize upgrades and reduce Client

cost-of-sales • An optimal portfolio of a single legacy product and the new product allowed segment-

specific offerings and premium pricing of the new product • Optimized pricing of product and service plan were presented

Overall, the models provided optimized pricing for either profit or for market share, but not both. For example, a profit-maximizing price would reduce market share by 6%, while a market share-maximizing price reduced profitability by $51M.

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Tel: +33 (0)2 72 01 00 80www.themarketechgroup.com

MARKET

METHODOLOGY MIX

South AmericaEurope

Qualitative ResearchStrategic Consulting

Quantitative

Asia

PROFILECLIENT TYPE

PROJECT CATEGORY

PRODUCT CREATION

LAUNCH PREPARATION

Medical DeviceMedical Imaging

Medical DiagnosticsMedical IT/eHealth

BiotechnologiesPharmaceuticals

Technology AssessmentOpportunity Analysis

Customer and Product RequirementsProduct Concept Testing

Segmentation AnalysisBrand Positioning

Packaging and Materials Testing

Go to Market PlanningPricing

PRODUCT MONITORINGCustomer Satisfaction and Loyalty

Post Launch Acceptance

MARKET AND BUSINESS PLANNINGPricing Optimization

Business Model

Optimizing Pricing Strategy from a Market-Leadership Position

TECHNOLOGY GO / NO GO

North America