willingness to pay: a practitioner’s perspective
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WILLINGNESS TO PAY: A PRACTITIONER’S PERSPECTIVE
Alex Banful, GSMF International
BACKGROUND
OBJECTIVES FOR USING THE WTP SURVEY The original objective was to use WTP as a pricing mechanism
tool
However, when the study was ready, we used results as a Strategic Marketing Tool not just to increases prices but to;
Balance improved cost recovery vrs Increased CYPs, and
Differentiate between Protector and Panther condoms in the various market segments
Re-position brands for sustainability Move Protector & Panther towards commercial market brands
PRODUCTS
Condoms Champion Panther Protector
Oral Contraceptive Pills Secure
JUSTIFICATION FOR PRICE CHANGE
Inflation was high
Prices had stagnated for a long time
Leakage of low cost condoms (MOH) into
commercial market
Need for increased cost recovery
ACTION TAKEN
WTP conducted for Commercial Market Strategies by Bill Winfrey in 2002
Main Partners Commercial Market Strategies Research International GSMF International Ministry of Health PPAG
SURVEY DETAILS
Client intercept survey 2,670 clients were interviewed 147 outlets were sampled including;
Chemical Shops 105 [1,845 clients] Pharmacies 23 [504 clients] MOH Clinics 15 [260 clients] PPAG Clinics 4 [61 clients]
SURVEY RESULTS
WILLINGNESS TO PAY FOR 50% PRICE INCREASES
Champion - - 83.3%
(90.4% WTP for 25% increase)
Panther - - 79.1%
(49.4% WTP for 100% increase)
Protector - - 73.3%
(40% WTP for 100% increase)
Secure - - 81.6%
If price increases too much..
6.9
28.3 29.6
23.6
11.7
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Stop usingcontraceptives
altogether
Try to find acheaper brand at
establishment
Try to find acheaper source for
the same brand
Swith to differentcontraceptive
method
All otherresponses
IMPLEMENTATION
PRICE CHANGES
PRODUCT Pre-Survey Prices
Post-Survey Prices
Percentage Increase
Champion 100 120 20%
Panther 333 667 100%
Protector 375 1,000 166%
Secure 1,000 1,000 0%
Champion Condom
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
Yr 2000 Yr 2001 Yr 2002 Yr 2003 Yr 2004
Champion - Quantities
Champion Revenue (Divided by ¢100)
PriceIncrement
Panther Condoms
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Yr 2000 Yr 2001 Yr 2002 Yr 2003 Yr 2004
Panther - Quanitities
Panther Revenue (Divided by ¢400)
Price Increment
Protector Condoms
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Yr 2000 Yr 2001 Yr 2002 Yr 2003 Yr 2004
Protector - Quantities
Protector Revenue (Divided by ¢300)
PriceIncrement
LESSONS LEARNT
LESSONS LEARNT
For brands that increased prices within the more acceptable limits (Champion) Sales volumes continued to increase after
prices were increased
For brands that did otherwise (Panther, Protector) Sales volumes dipped after price were
increased
CONCLUSION
By using the WTP report as a strategic marketing tool, GSMF was able to; Balance Improved cost recovery and
Increased CYP Re-position Panther and Protector condoms,
and Differentiate between Panther and Protector
condoms in the various market segments
THANK YOU
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