Statistical techniques to facilitate the launch price of fresh fruit: Bringing science to the art of pricing

Abstract

Purpose

The launch of a new product into the marketplace involves substantial risk and management planning. Information and tools are required to efficiently test‐market the product price, segment‐based price, and competitive price benchmark. The traditional approach to pricing such products has been on a cost‐plus basis with subsequent adjustments as sales develop. This paper aims to look at a more rigorous method using statistical analyses of survey data and is based on a case study of a company which seeks to differentiate itself by providing fresh cut fresh fruit of exceptional quality.

Design/methodology/approach

The empirical research conducted involved surveys of sampling consumers in a regional centre (Rockhampton) and a capital city (Brisbane) in Queensland, Australia. The surveys involved a taste test, feedback on the product, questions on appearance and pricing options, and collection of socio‐economic data. Further statistical tests were conducted to establish the price range for market launch in the two regions.

Findings

The findings identify the key demographics of the sample, the price and the main product offering. The price for the cut fresh fruit should be set in the range $2.50 to $2.95 in order to maximise both volume sales and profitability.

Originality/value

The study makes significant theoretical contributions to the literature and also identifies implications for managers. It provides good information for developing an appropriate marketing plan, identifying key demographics, reducing the risk of product failure and implementing strategies effectively, particularly with reference to the critical decision of a launch price.

Citation

Rolfe, J., Bretherton, P., Hyland, P. and Soosay, C. (2006), "Statistical techniques to facilitate the launch price of fresh fruit: Bringing science to the art of pricing", British Food Journal, Vol. 108 No. 3, pp. 200-212. https://doi.org/10.1108/00070700610651025