Project Everest

[Jan 19] Price Point testing of the Buka Dragon (Revenue Streams) - Fiji Fuel

Reference the Experiment Design Post: [Experiment Proposal]: Price Point Testing of the Buka 5.1

 

Lean Phase: Revenue Streams, Customer Segmentation (Offer Testing/Currency Testing)

 

Assumption: That the Buka 5.1 can be sold for a value greater than $100 FJD.

 

Results:

 

The Green light success point:

·      70% of offer tests were successful over a price of $100FJD.

·      80% of customers were able to elaborate on why they settled for the agreed price, and why they believe it is not worth more.

 

The green light success point was achieved, with 92.5% of offers over a value of $100FJD., and 84.5% of customers being able to explain why they settled upon their decided value. Furthermore, the mean price offered was $141 FJD, and the median being $150 FJD., with 62% of offer tests being equal to, or greater than $150.

 

Raw Data is given below:

 

https://docs.google.com/spreadsheets/d/100IM8vqmfWDuVR647tVZ6_nHG3cXCK8zy1vjFoOp0Sk/edit#gid=2129463704

   
 

 

 

 

 

 

 

 

Validated Learning

The results retrieved from the experiment validate the hypothesis, that the Buka Dragon can be sold for a value greater than $100FJD., that value being $150FJD. Further, the results validated the condition of a genuine answer, as over 80% of survey participants were able to give a genuine answer as to why they believed the stove to be of said value, and no higher. Some participants were even able to identify particular areas of improvement of the stove. Further, participants were able to identify the positive aspects of the stove, that resulted in their price evaluation, which can be used to build upon the strengths of the stove. Participants were not asked to note down personal details, due to a slight change in experiment build, however, many insisted on follow up contact, and were sent to the Stove’s Facebook page, further solidifying the validity of interest and experiment results.

 

The result produced was well defined as a quantitative metric was used. The mean value of $150FJD clearly suggests a starting point for Buka Dragon pricing, backed up by the fact that 62% of respondents agreed that this value, or higher, was a fair price. Customer feedback was also clear, demonstrated by the several consistent themes emerging from the experiment data, and similarly, the quantitative nature of experiment success.

 

Whilst the data is mostly valid, there are several potential biases that must be taken into consideration. The small population size of responders may have skewed the data, as there were only 26 respondents – however, the randomized nature of the population theoretically mitigates the small sample size. Further, surveyor bias must be taken into account, as at times the surveyor prompted responders towards particular price points, where the responder may have agreed, just to please the surveyor, resulting in a higher price than they would actually pay. This shouldn’t be an issue in the long run, as if sales are slow to start, the price can be gradually worked down to find the optimal asking price. Finally, the minimal population diversity may skew results. 23 of the 26 responses were gathered at Sigatoka Market, on a Friday morning. This demographic shouldn’t skew results greatly, as there is a diverse range of Fijians at the markets, yet should still be considered as a possible source of error.

 

Next Move

Now that an initial price has been set for the Buka Dragon, the next step would be to test if this truly is the optimal asking price. This can be done by putting the Buka Dragon on the market, and testing sales to confirm the price. If sales are struggling, the price should be slowly dropped until sales reach the optimal point. Conversely, if sales are strong, the price should slowly rise until the optimal price is found.

 

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