Case Study
Optimizing SKUs and Pricing for a Nasal Spray Portfolio
overview
A manufacturer wanted to explore pricing options for a new line of nasal spray products. The insights team contacted C+R looking to identify the optimal price for various pack options to ensure competitive appeal and to deliver the desired profit while reinforcing the value of the brand.
C+R designed price elasticity research to inform the SKU/pricing strategy across key channels of trade, as well as the promotional strategy.
THE PROBLEM
Looking for the Optimal Price
Our client, an over-the-counter pharmaceutical manufacturer, sought to explore pricing options for a new line of nasal spray products. They had evaluated multiple positionings, confirmed positive opportunities, and provided clear direction for brand presentation, and were now looking to identify an optimal price that was competitively appealing and delivered the desired profit while reinforcing the value of the brand.
OUR APPROACH
Discrete Choice to Obtain Price Elasticity
C+R developed a quantitative survey with a discrete choice exercise to research price elasticity and to inform the SKU/pricing strategy across key channels of trade. Our sample included past 12-month users of allergy nasal spray aged 18 and over.
Participants were asked to virtually shop for nasal sprays at a select retailer. They saw a series of screens, each simulating an independent purchase occasion. On each screen, respondents indicated what (if anything) they would purchase.
The result
Informed Pricing Strategies by Channel/Retailer & Competition (store vs. national brand)
The results of the survey revealed a sensitivity of demand to changes in price and isolated optimal price points based on revenue and profit by SKU/COT. There was an isolated impact of the new, smaller pack size on the total brand share of units, revenue, profit, and shelf revenue that informed the go-to-market strategy in various retailers/channels.
The research identified how elastic pricing is for the nasal spray category in various channels. It revealed the danger of being line-priced to competition and the resulting decline in sales that could occur. The research also discerned the ideal gap between national and store brand equivalents and determined how pricing should be adjusted by key channel/retailer, including the optimal combination of pack sizes at the shelf.
Further, the research uncovered the most effective promotional strategy with respect to optimal depth of discount, including nuances by channel, and it supported a compelling sell-in story by demonstrating how the new product(s) will positively impact total shelf revenue and take rate.
We provided our client with an Excel simulator to allow for further exploration. This enabled the client to explore “what if” scenarios and understand potential take rate and revenue depending on the configuration of the brand offering and its associated price.
proven experience
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