Concept Testing: Does Menu Pricing Matter?
3 Min Read By Andrew Grenville
Whether to include the price in early stage concept testing is an important question. Some people argue that price needs to be presented, so that people can make an informed decision. Others say that price can’t accurately be known at the time of early stage concept testing, and that putting a “fake” price on the concept could result in misleading feedback. To find out what the effect might be, we ran a test, using concepts for potential menu items for a globally prominent quick service restaurant (QSR).
One arm of the test saw descriptions of potential mains, with a price. The other arm saw them without a price, but they were told “assuming the price is reasonable to you.” Ten concepts were tested, with seven measures, including purchase intent. A 95 percent confidence interval was used to test for differences.
A Mixed Bag
There were very few differences between the priced and unpriced arms. And the variations that exist do not tell a clear story. Out of 70 comparisons, there were seven statistically significant differences. For three of these, price appeared to increase regard for the concept. In the other four, price appeared to decrease regard. Further, these discrepancies were found across five different concepts.
One of the concepts was a lower cost breakfast item. Showing its price increased regard for it significantly on two measures, and it showed a positive directional impact on the other measures as well. In this case, the price may have been useful additional information, because people noticed the lower price.
A second concept showed price having a negative impact on two measures, but that impact did not show up consistently across all the other measures for that concept. That offer had an average price. It may be that these differences, and the other more random ones, were just noise. We would expect to see, based on chance, three or four differences in a test like this.
“So What, What’s Next?”
I interviewed Sydney-based strategist Michael Haynes the other day, for a book I am writing. His bottom line for research is “So what? What’s next?” That’s a very concise way to cut to the chase. These findings don’t tell us a clear story.
So what? That means we have choices. We can include price. Or not include it.
In the case of the lower cost breakfast item, including price had a positive effect on interest. This suggests that mentioning cost, as a matter of routine, could be beneficial in some circumstances. In the case of the other offers, including price made no clear difference—positive or negative.
Price is what you pay. Value is what you get. – Warren Buffet
It should be noted, however, that this is a market and a brand with a relatively tight price band for their menu. There are no expensive luxury offers, and no bargain basement ones either. Most of the food this brand sells is available within a relatively narrow price range—and consumers know it.
What’s next? In a market where there are large and important differences in price—like automobiles—including cues like price is essential in concept testing. Likewise, in testing early stage ideas for innovative technology, where price is generally unknown, the price is important.
In the QSR world, however—especially with a well-known brand, with a well understood price range—it may not matter. But the example of the lower cost breakfast item suggests that including it can be helpful at times.
Our recommendation? First, be consistent. Don’t mix concepts with price, and concepts without. That will draw attention to price, and it won’t be helpful. Secondly, we recommend including price because it can help people make a more informed choice—especially in edge cases. These data, however, suggest that in this well-understood and tightly price banded market, you can go either way—just be consistent.
Our research on idea screening has shown that our Idea Filter approach can succinctly test ideas in less than a minute—making it three times faster than traditional methods. And it is more sensitive to differences between concepts.
To learn more about Idea Filter and our QSR offer, check out our e-book Tumultuous Times: A Quick Service Restaurants Guide to Thriving and Surviving.
“Price is what you pay. Value is what you get,” said Warren Buffet. In this case, the value is in the eating.