Nailing the pricing of a product or service is not easy.
Therefore, when businesses use market research, asking how to best price their product or service is always a common request.
Feedback on pricing through market research can help a business feel more confident that they are providing an optimal price point for their customers.
Unfortunately, there is no easy way to tackle price in a survey.
A pricing market research project will present several sophisticated models and approaches to tackling price, including conjoint choice-based models.
Other pricing approaches include the van Westendorp model and the Gabor Granger model. If you’re curious about other approaches like the van Westendorp, check out our post How Does the van Westendorp Pricing Model Work?
This article discusses a theoretical case study for a major university sports program that used Drive Research and a conjoint analysis formula to determine the optimal price points for season tickets for its basketball and football programs.
It’s also a good example of the importance and benefits of using a third-party market research firm.
The Challenge: Pricing Tickets for Sporting Events
With fluctuating attendance and commitments to season ticket packages, the university never truly understood if the variety of pricing tiers for its season tickets were accurate.
It’s important to note that the school was undergoing major renovations inside its dome stadium, home to the college basketball and football games.
With the revamp of the stadium seating, the athletics department wanted to commit to a research project that could identify the ideal price for season tickets for both programs.
The university had never commissioned a formal market research company to analyze the pricing of single-game or season ticket packages.
Although optimal pricing must consider many other factors (competitive pricing, macroeconomics, operational costs, etc.), a big part is obtaining feedback from current and potential season ticket holders to understand the valuation.
The conjoint pricing study would help identify price elasticity for ticket sales by implementing new seating options.
Approach: Using a Conjoint Choice-Based Model
What is conjoint analysis?
Conjoint is a market research approach that simulates real-world customer decisions and is used to determine how customers value various features that make up an individual seat price. One of the many benefits of using a third-party market research firm is having access to advanced tools such as this to gather detailed insight.
Drive Research designed 6 targeted audiences for the research to properly analyze all stakeholder audiences and receive 360 degrees of feedback.
The critical audiences for the seat pricing study, which leveraged quantitative research, were:
- Football season ticket holders
- Men’s Basketball Season Ticket Holders
- Football Individual Game Buyers
- Men’s Basketball Individual Game Buyers
- Lapsed Season Ticket and Individual Game Buyers
- The general community audience/fan (non-buyers but potentially interested in buying)
The designed conjoint choice modeling approach leveraged an online survey delivered through a ticket buyer audience as well as panels.
Separate questions and logic were structured for each tier of seating (with visual images of the dome to help recreate the experience and view from each seat). Additionally, upgraded seating was also addressed.
The respondent email list of buyers also included accounts lost to attrition for each sport as part of a lapsed ticket buyer segment.
Both audiences, 5 and 6, were critical to the research to understand if the pricing structure or seating used previously by the universities were drivers of canceling tickets or preventing new buyers from coming to the games.
Our market research team recommended using a conjoint (choice-based) model based on the athletics department's needs and the pricing study's objectives.
The respondent was presented with packages at different price points and chose which one they would purchase.
Drive Research utilized seating maps and other relevant material provided by the university to help participants visualize their seats and interpret price/value.
The importance of features and willingness to pay was mathematically deduced from the trade-offs when selecting one (or none) of the available choices.
Using advanced statistical analysis
In addition to conjoint pricing analysis, we also used advanced statistical analysis to obtain a part-worth utility for each attribute.
Our statistician used JMP software which is a SAS-based tool.
JMP links statistical data to graphics representing them, so users can drill down or up to explore the data and various visual representations of it. Its primary applications are for designing experiments and analyzing statistical data through advanced approaches.
Through the analysis, identified optimal price points for football and men’s basketball season tickets and individual game tickets for specific dome sections.
Drive Research collected over 6,000 responses across the channels of audiences. It allowed the team to run a complete analysis with confidence in breaks for optimal price points by segment, demographics, and seating areas.
Results of Using Conjoint Analysis to Determine Product Cost
A full PowerPoint report was prepared and presented to the client.
Optimal price points determined by our choice modeling research were provided for various single and season ticket packages for multiple tiers of seating within the dome for the 2 sports.
The updated pricing structure was leveraged to accomplish the following goals:
- New single-game and season ticket buyers (from the community)
- Upgraded season ticket packages among loyal fans
- Increased single-game ticket sales
- Shuffling of buyer tiers to increase revenues and better monetize renovations to the dome
The report included a full breakdown of the methodology and advanced data analytics. Giving our clients an outside perspective on the details gleaned from a study is a core value of Drive Research.
Also included in the report was an executive summary of themes with recommendations, an infographic, and a full appendix of data tabulations cut by audience segments for the survey.
Our research team debriefed with the broader client and smaller task-based groups involved in ticket sales.
Conjoint choice-based models are a great option for companies who want to obtain more information about pricing strategy. Our client benefited from this process and could make clear decisions about their season ticket package cost.
Drive Research is a national market research company based in New York. Our team has years of combined experience working with brands across a broad range of industries.
If you’d like to learn more about our market research services, get in touch with us through any of the methods listed below.
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George is the Owner & President of Drive Research. He has consulted for hundreds of regional, national, and global organizations over the past 15 years. He is a CX-certified VoC professional with a focus on innovation and new product management.
Learn more about George, here.