“If you have to ask how much it costs, you can’t afford it.” (John Pierpont Morgan)
The customer’s perception of value is the ultimate arbiter of price. It needs to be measured with care. Broadly speaking, managers can do this in surveys or experiments with hypothetical purchase scenarios, or using past or real-time market transactions. All else equal, the manager prefers the latter because the incentives are aligned: customers give up some of their money to obtain products, making it improbable that they “lie” in any consequential way. Reality, however, often forces trade-offs. For example, data can be noisy and incomplete, which complicates the intention of establishing statistically-significant causal relationships. Surveys and experiments, on the other hand, typically yield cleaner results, they allow greater control and they are faster to implement—all at a fraction of the cost of a thorough econometric exercise. The purpose of the session is to provide a comprehensive and critical overview of the manager’s research toolbox, discuss the merits and limitations of the traditional and more modern methods and acknowledge the obstacles that are likely to surface when data are collected and translated into practical insights.