Exploring the informational requirements of optimal pricing decisions in theory and practice; a case study of the automotive industry

  • Markus Feldmann

    Student thesis: Doctoral Thesis


    This thesis deals with pricing and research approaches to determining profitoptimised prices in order to maximise a company’s profit.

    In literature, several methods to measure willingness to pay have been proposed. However, there is still little knowledge about their reliability in practice and from theory today none of the research approaches appears to show significant advantages. Empirical studies have produced mixed results.

    In this thesis, an empirical comparison of two popular research techniques for gathering pricing information in commercial practise was presented for the first time. The Choice Based Conjoint Measurement, one of the most frequently used research approaches in pricing, was compared with a (so to speak) insider tip, the Extended Price Sensitivity Meter by Miller, Newton and Smith (1993).

    The analysis in this thesis should deliver a first overview concerning the applicability of the simple and cost-effective direct survey approach in comparison to a high sophisticated and complex research method in commercial practise.

    Overall it can be remarked that the discussion of the qualitative hypotheses in this thesis shows that, under certain conditions, the cost effective market research approach the Extended Price Sensitivity Meter could be a usable alternative to more complex methods like the Choice Based Conjoint Measurement. But this method also has limitations. Due to its design, it is not applicable to gathering customer preference with regard to single product features. This should be taken into consideration especially concerning the pricing research in a very early stage of product development.

    The major findings within this thesis are:
    • From the results the theoretical limitation of the direct survey method with too much focus on price (which may lead to lower price statements) cannot be confirmed.
    • The applicability of the Extended Price Sensitivity Meter concerning product innovations should be questionable. In a very early stage of product development where the single technical are not finally defined this method is not applicable. But close to the product launch where the main features are clear it delivers
    useful pricing information.
    • The results show, that the Extended Price Sensitivity Measurement can be applied with customers who are already aware of market prices.
    Date of AwardMay 2014
    Original languageEnglish
    SupervisorDavid Pickernell (Supervisor)

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