What is Gabor-Granger Market Research?

Pricing Market Research

The Gabor-Granger Method determines the best price of a product or service.

To clarify, “best” means the price that will bring the most revenue. It uses a survey with 5 to 10 price points to collect data on demand at each price. Afterward, respondents answer if they would be willing to buy the product at that price. The options given for each price are usually a YES or a NO.

For instance, there is a commodity that a business is trying to sell. That business proceeds to set up a survey with ten participants. Also, the price points were $10, $20, $30, $40, $50, $60, $70, $80, $90, $100. During the survey, each respondent answers if they would buy the product at a certain price point. If they answered YES, they have to answer the same question at a random higher price. But, if they answered NO, they have to answer it at a random lower price.

For instance:

1. The initial price is $50, the respondent answers, “YES.”

2. The new price is $70; the respondent marks “NO.”

3. The new price is $60; the respondent marks “YES.”

Thus, $60 is the highest the respondent is willing to pay.

Vice versa,

1. The initial price is $50; the respondent answers “NO

2. The new price is $30, respondent answers, “YES.”

3. The new price is $40, respondent answers “NO.”

Thus, $30 is the highest the respondent is willing to pay

Why is Gabor-Granger Market Research important?

This method is essential because it finds the best price to get the most revenue:

  1. The Gabor-Granger method does this by using the data from surveys and tests. The analyst plots a demand and revenue curve to find the best possible price.
  2. It helps measure Price Elasticity, i.e., how price changes affect demand. In other words, it helps when finding out if a price increase would affect sales.
  3. This method can also determine at what price does demand starts to plummet.

Key Job Titles

Market research analysts help companies to understand the products and services people want. Additionally, they figure out what people are willing to pay for them. In other words, they help businesses to understand their industries and audiences. We do Market research to ensure that the company works with the market and not against it. Market research analysts also make predictions for the market using current trends. Plus, they use data to forecast how market changes will affect demand.

Additionally, price research analysts are a subset of market research analysts. They’re concerned with understanding the effect price has on demand. They use many different techniques to determine the best price. The most common ones are the Gabor Granger and Van Westernport methods.

Why Businesses Need Gabor Granger Market Research?

Gabor Granger is useful when a business has an established product and needs to find the best price. Additionally, they may be trying to update an existing product. Thus, they want to find a reasonable price for the improved product.

Key Success Factors

The Gabor-Granger method is an invaluable tool for price testing. The data gained from seeing how the price of a commodity affects its demand is priceless. A business’s success may depend on its ability to maximize its profit to fuel its growth.

About Gabor Granger Market Research

Market researchers use many methods. Some types of tests may include Qualitative, Quantitative, and Strategy Research. Price testing may involve Focus Groups, Interviews, and Surveys. In the case of Gabor Granger research, price research analysts would then interpret the data and offer advice. SIS International Research offers Gabor Granger and many other types of research.