Measuring Consumers’ Willingness to Pay. Which Method Fits Best?

Klaus Miller (), Hofstetter Reto (), Krohmer Harley () and Zhang Z. John ()
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Hofstetter Reto: Center for Customer Insight, University of St. Gallen, Switzerland
Krohmer Harley: Institute of Marketing and Management, University of Bern, Switzerland
Zhang Z. John: Wharton School, University of Pennsylvania, USA

NIM Marketing Intelligence Review, 2012, vol. 4, issue 1, 42-49

Abstract: Gauging the maximum willingness to pay (WTP) of a product accurately is a critical success factor that determines not only market performance but also financial results. A number of approaches have therefore been developed to accurately estimate consumers’ willingness to pay. Here, four commonly used measurement approaches are compared using real purchase data as a benchmark. The relative strengths of each method are analyzed on the basis of statistical criteria and, more importantly, on their potential to predict managerially relevant criteria such as optimal price, quantity and profit. The results show a slight advantage of incentive-aligned approaches though the market settings need to be considered to choose the best-fitting procedure

Keywords: Market Research; Pricing; Demand Estimation; Willingness to Pay; Hypothetical Bias (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:gfkmir:v:4:y:2012:i:1:p:42-49:n:5

DOI: 10.2478/gfkmir-2014-0040

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