How home appliance companies can still boost margins amidst growing price sensitivity
Consumers become more price sensitive
The landscape of the home appliance industry is facing pricing pressure. Not only do production costs increase and supply chains get disrupted. Given the current economic climate, consumers become increasingly price-conscious. This leaves home appliance companies with one of many challenges: Keeping their products competitively priced without compromising profitability.
Traditional market research methods have often fallen short, providing companies with consumer-stated preferences that often do not translate into action. The result? Misinformed pricing decisions that can lead to lost sales and declining profitability.
Uncovering the highest possible price through behavioural research
Successful home appliance companies avoid wrong pricing decisions by finding the sweet spot between the highest possible price and the highest potential number of units sold.
Finding this equilibrium entails discovering the maximum amount consumers are willing to pay for specific products, without asking them directly about their preference, but unveiling their true purchase intent for distinctly tested price points through behavioural research. For this to succeed, companies can't merely rely on opinions for their pricing strategy. Successful home appliance businesses use a consumer-validated approach before introducing a new price for a product. While in classic market research the lower prices are often chosen from consumer surveys, behavioural research makes it possible to test various price points separately in a realistic environment. In this way, even for higher prices, better conversion rates can be measured without surveying consumers but by measuring their actions.
Learn how Bosch uncovered a 20% price increase opportunity with Horizon
Relying on consumer actions instead of opinions to increase prices
In real-life markets, consumer actions rarely match what they stated previously when they were surveyed during market research. Companies must show consumers what they could use or buy and measure their behaviour to uncover their true intention and achieve more reliable research outcomes.
Introducing consumer-validation with landing pages for innovation, product & consumer insight teams
Horizon allows home appliance companies to uncover true purchase intent based on behavioural and quantitative data by running multivariate landing page tests with consumers from social networks or search.
How Bosch uncovered a 20% price increase opportunity with the help of Horizon
Bosch successfully employed Horizon for a consumer-validation test. They aimed to validate a strategic price decision for an existing product line. Using Horizon's behavioural consumer-validation software, Bosch gathered real-life purchase-intent data at scale for different price points. Based on the insights through Horizon, Bosch was able to uncover a 20% price increase opportunity which would improve their ROI, despite currently challenging market conditions.
In this process, Bosch specifically used Facebook and Instagram ads, driving traffic to three different landing page variants, each showcasing a distinct price point for the product. The data from consumer actions on these landing pages provided the crucial insights Bosch needed.
“Working with Horizon was a remarkable customer experience and enabled Bosch to make an impactful strategic pricing decision.”
E-Lin Tan Global Head Smart Indoor Gardening - BSH Hausgeräte GmbH (Bosch)
Home appliance companies can still boost margins despite consumer price sensitivity through behavioural research
Consumers are becoming increasingly price-conscious, largely due to economic uncertainties and the ease of online price comparisons. This forces home appliance companies to use pricing strategies that go beyond traditional market research methods to stay in control of their operating margin.
Consumer-validation tests based on real-world behavioural data allow for data-driven pricing decisions that align with the actual behaviour and preferences of the price-conscious consumers.
Pricing decisions based on consumer behaviour can put conducting companies such as Bosch into control about their operating margin, allowing them to find the sweet spot between consumer demand and the highest possible price increase.
Horizon's consumer-validation testing OS can be leveraged by home appliance brands to uncover pricing increase opportunities, providing reliable, actionable insights into consumer behaviour and purchase intent and equipping businesses with the data needed to make confident, informed pricing decisions.
Daniel is the Founder & CEO of Horizon. He is driving the strategic development of the organization, establishing a thriving company culture with a team on a mission to help teams build products that customers really want. Daniel has a strong track record in sales, marketing and building startups from zero to one. Before Horizon, he successfully founded and co-founded multiple companies, i.e. Candylabs, BikeBeat and Venture Advisory Partners.