Pricing is a crucial aspect of any business strategy, but determining the right price point can be challenging. Prof. Kai-Markus Mueller, the inventor of neural pricing, offers valuable insights into how neuroscience can help businesses price their products optimally.
Measuring Perceived Value
One of the key principles of neural pricing is measuring perceived value. Mueller explains how he translated this measure into pricing by using a cup of coffee at Starbucks as an example. He found that the perceived value of a Starbucks coffee was 2.4 Euros, which was 33% more than the retail price of 1.8 Euros. The Starbucks chain could boost their profitability significantly by increasing the price.
Predicting Market Changes
Neural pricing not only measures perceived value but also predicts how the market will change. Mueller shares a case study with Pepsi, where they measured 40 Frito Lays potato chips eaters in Istanbul, Turkey. They modeled the price based on what people explicitly said and what their brain scan said. Even in this case the perceived value was 33% higher than the estimated price. Besides the neural pricing EEG prediction was they're going to lose nine percent, and they actually lost seven percent, which was close to what the brain scan predicted.
In summary neural pricing is a game-changer for businesses. It offers a more accurate and scientific approach to pricing, reducing the need for trial and error in the market. By measuring perceived value and predicting market changes, businesses can set the right price point to maximize profits.
To listen to full conversation between Prof. Mueller & Jasravee Kaur Chandra on “ Using Neuroscience : To Optimize Pricing Strategies & Win Deals” Please visit our Youtube Channel
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Professor Dr. Kai-Markus Mueller is the mastermind behind NeuroPricing™ and the Professor of Consumer Behavior at HFU Business School, Furtwangen University.
Kai is a scientist, coach, keynote speaker, and an author. With a PhD in Neural & Behavioral Sciences, Kai is also the director of Pricing Research at Neurensics, a member of several influential boards, and the founder of a startup.
Jagged with Jasravee is facilitated by Jasravee Kaur Chandra, Director- Brand Building, Research & Innovation at Master Sun, Consulting Brand of Adiva L Pvt. Ltd. Jasravee has over 20 years experience as a Strategic Brand Builder,Communications Leader and Entrepreneur.
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