Pricing Optimization using Conjoint Analysis

Enhanced a local caterer’s pricing strategy by conducting detailed conjoint and Van Westendorp analyses, leading to optimized subscription models and menu offerings for increased profitability and customer satisfaction.

Client:

Aunty’s Kitchen, a provider of home-cooked Indian meals for Purdue students and working professionals in West Lafayette, Indiana.

Approach:

I. Current Pricing Strategies Assessment:

Evaluated existing subscription and individual meal pricing models.
Analyzed cost structure including raw materials, packaging, labor, and delivery.

II. Customer Survey:

Conducted surveys to understand customer preferences, willingness to pay, and the importance of various meal attributes (taste, nutrition, quality, variety, price).
Targeted 100 Purdue students to capture detailed insights on dining preferences and price sensitivity.

III. Conjoint Analysis:

Analyzed feature importance and how different combinations of features affect consumer choices.
Determined that taste had the highest utility value followed by variety, nutrition, and quality, with a price point of $16 being preferred over higher price points.

IV. Van Westendorp Price Sensitivity Analysis:

Identified optimal pricing points and price ranges acceptable to customers.

Findings and Recommendations:

Optimized Pricing Models:

Proposed an increase in meal prices by up to $2 due to high perceived value.
Suggested bundling meals and desserts to encourage product trials and increase overall sales.

New Product Introduction:

Recommended introducing popular non-vegetarian options to attract a wider customer base.

Dynamic Pricing Strategy:

Advised implementing a dynamic pricing app to provide personalized discounts and offers, enhancing customer retention and satisfaction.

Conclusion:

The detailed analyses and strategic recommendations provided a robust framework for Aunty’s Kitchen to enhance their pricing strategy, ensuring sustainable growth and improved customer satisfaction.