A leading U.S. candy manufacturer needed insight into how changes to pricing structure and packaging would impact market performance of its top products.
Preference for their candy brands varied significantly by geographical location, which required detailed regional analyses. To understand the implications of increasing prices and introducing resealable packing, the manufacturer needed to take key competitors and relative share positions into account for different locations.
The manufacturer asked IRI to help identify:
- Optimal price points for each best-selling SKU
- Consumer reactions to changing price points
- Different consumer groups characterized by price sensitivity and product profitability
DCM models helped identify optimal pricing, packaging and messaging regionally.
IRI combined its National Household Panel data with discrete choice methodology (DCM) to offer recommendations. After identifying 1,800 households of actual category purchasers, IRI utilized AttitudeLink™ to develop survey choice sets for five regions to learn how buyers value different product features, such as brand name and package type and size, by geography.
Each choice set contained five to seven similar brand and competitor products from which respondents indicated what they would buy at a certain price point. To gain further insight about how they made purchase decisions, respondents were next asked diagnostic questions about purchase influencers, attitudes, and brand preferences.
Responses were classified and weighted based on actual purchase level of the product to provide an accurate view of different segments. Information was then fed through an Excel-based simulator to determine optimal pricing levels for each size product.
The simulator produced optimal price points for each size product to maximize profit and optimize share in different regions.
Price point recommendations were higher in the brand’s best-selling region, but outside, they were greatly impacted by competitor prices. Results also generated a price point to reflect consumers’ willingness to pay more for a resealable bag.
Measured consumer attitudes led to specific recommendations for brand loyal and competitive buyers, respectively. To foster growth among existing purchasers of the brand, front-of-package messaging should focus on high quality, fresh taste and natural ingredients. To capture new sales from competitive buyers in other regions, package features would be key. Easy to open, resealable packaging perceived as a value would help expand the buyer base.
IRI helped the candy brand find actual category purchasers and analyze their attitudes and preferences by differing regions. Accurate data allowed for specific price point recommendations designed to optimize profit.
IRI’s methodology provided the candy manufacturer with fact-based actionable recommendations around new packaging sizes and types not yet available on the market.