Situation: A leading building products company desired to increase its share via a product line extension and establish a product performance level and price point that would allow for significant conversion from the fiber cement and wood market.
Approach: Principia created a solution to determine the price elasticity of demand as well as identify how to best gain traction to serve the market with the client’s developmental product. A price elasticity analysis was conducted with over 1,000 homeowners and installers to quantify product attributes under different pricing scenarios. To determine likely penetration and ramp-up of demand, demand curves were developed within each critical customer segment.
Outcome: The client revised its product and price strategy to provide a range of products along in the premium category to capture share from alternative materials. Further, the new product was positioned to address a portion of the market previously not reachable. Growth projections from the product exceed 10% per year.