Behavioral Science and Conjoint and Price Testing (Part 5 of 6)

Editor's Note: Continuing this series focused on closing the gap between what people say they do and what they actually do, known as the say-do-gap. Each article will look at a traditional research method (e.g., a brand tracker or a concept test) and show how researchers can overlay behavioral science to the method to get a deeper understanding of the why, as well as the what, uncover unconscious drivers and motivations, and close that say-do-gap. Bring on the learning! Meanwhile, in case you missed it, check out Part 4 of this series focused on behavioral science and brand tracking: Behavioral Science and Brand Tracking (Part 4 of 6)

Behavioral Science is often used to answer big complex questions; how do we define value? What role does sustainability play in our purchasing decisions? But to only look at behavioral science through this lens misses the true value of the approach.

Research participants don’t always tell us the truth. That’s not because they’re making an active or conscious decision to withhold, but more likely because we’re terrible at articulating our behavior and motivations.

This creates a gap between reported behavior and actual behavior that can lead to poor outcomes for brands, products, and services. However, there is an answer; behavioral science. In this series, I’ll be sharing how you can apply behavioral science techniques to traditional research methods and close the gap between claimed and actual.

This week we look at conjoint and price testing   

Your R&D team have developed a new product, it’s nearly ready to launch, and it’s time now to work out the features and price points. Choice-based conjoint analysis is the natural tool to use.

You code the product features into a conjoint platform and adds multiple levels, along with key price points and sample definition. Then you run a Van Westendorp pricing test to confirm the optimal price.

Your respondent’s rational brain is at work here to skew your results. Your research participants will often over-rationalise their answers. They put too much weight on functional features and too little on the emotional message – certainly not reflected in real-life shopping choices!

You and your respondents are missing the importance of context and range architecture. There’s no room in your conjoint for the Goldilocks effect, price discounts and promotions, or the “99” effect. There are also significant challenges when it comes to product prices.

Respondents aren’t spending their own money, so they may be tempted to pick the expensive fully-featured option, as this helps them avoid making painful mental trade-offs. On the other hand, they want to be strategic and influence you to sell your product cheaper, so they may claim to buy cheap.

What can you do?

Classic conjoint can lead to a ‘hollowing-out’ where expensive (Gold) and cheap (Bronze) options score well, but the compromise (Silver) product – which will sell most units in the real world – underperforms in the conjoint. Traditional price testing produces over-claim: in one recent pricing study, a client was told they could charge £13-15 per month for their product. The price achieved in the real market? £1.

Conjoint analysis in this context needs a behavioral science redesign so it can provide you with accurate and true predictions of people’s behavior. To do this you can add:

• Time pressure, so that respondents make realistic, intuitive choices instead of rationalized calculations.
• Budget limits, so that respondents are forced to make trade-offs.
• Bonus prize incentives are based on the choices respondents make so that they are incentivised to choose what they want.
• Psychological heuristics, so that you can test the impact of range architecture (Goldilocks effect), promotions (anchoring) and other biases.
• Simulated shopping journey and shelf visuals, so that respondents can get into a real buying mindset when choosing.

A redesigned behavioral conjoint like many behavioral techniques looks to counter natural biases and key into the real mindsets of choice. It will give you the evidence and insight that your stakeholders can believe in. Ultimately being able to close the gap between claimed and actual will maximise your chances of success with new products, get beyond the rational mind to the emotional side, and get your pricing right.