Küchenhelfer GmbH, a manufacturer of kitchen appliances, has set itself the goal of investing in digitization. The management wants to fight against the increasing competitive pressure and re-establish itself as a major market leader. Although the company has already taken the first steps towards digitization, such as its own website and internal digital processes, the management would like to change its business model and enter the market with a highly digitized food processor.
This food processor can automatically download cooking recipes from an online platform operated by Küchenhelfer GmbH. You can also upload recipes you have created to the online platform. With the help of sensors, the machine is also intended to revolutionize the “smart home” concept as an extension. The food processor connects to the refrigerator via WiFi and checks whether the fresh ingredients required for the recipes are available. If any are missing, they can be conveniently ordered and delivered online via an online grocery shop. Integration with intelligent storage cupboards and an interface to intelligent kitchen stoves are also planned.
Since go-to-market comes with the introduction of a new business model, marketing has to deal with pricing strategy for the time being. The machine is rented for a comparatively low monthly fee. However, the customer pays additional fees for using the online services (sharing recipes, networking with refrigerators, etc.). A new price model is also to be used for this, which contains both a variant based on the benefit intensity and a “flat rate” variant.
However, the management is now faced with the question of whether this food processor and the associated business model have any chance on the market at all. In addition to other issues, the management is particularly interested in how high the individual willingness to pay of customers will be in relation to the use of online services.
Table of Contents
1 Introduction
1.1. Problem statement
1.2. Objective and demarcation
1.3. Course of work
2 Theoretical part
2.1 Online Services & Online Platforms
2.1.1 Characteristics of digital Goods & Platforms
2.1.2 Development of online services in relation to pricing
2.1.3 Cost‐oriented pricing model vs. benefit‐based pricing model
2.2 (Customer) benefit‐based willingness to pay
2.2.1 Definition of willingness to pay
2.2.2 Customer Value Drivers: determinants of customer benefits
2.2.3 Procedure for determining willingness to pay
2.3 Clarification: Derivation of the research question
3 Methodological part
3.1. Data collection method
3.2. Operationalization
3.3. Conception questionnaire
4 Discussion
5 Conclusion & Outlook
6 Appendix:
Research Objectives and Topics
The primary objective of this paper is to develop a scientifically sound research design and questionnaire to determine the customer benefit-based willingness to pay for online services associated with a new, digitized food processor from Küchenhelfer GmbH. The paper aims to provide the company with actionable insights to inform its future pricing strategy through an empirical quantitative customer survey.
- Theoretical foundations of digital goods, online platforms, and pricing strategies.
- Comprehensive analysis of the customer-benefit-based pricing model and its determinants (value drivers).
- Methodological development for quantitative data collection via online surveys.
- Operationalization of the construct "willingness to pay" into measurable indicators.
- Critical discussion of quality criteria in social science research and survey methodology.
Excerpt from the Book
Characteristics of digital Goods & Platforms
"Digital goods are intangible means of satisfying needs that consist of binary data and can be developed, distributed or applied with the help of information systems." (Clement & Schreiber, 2013, p. 43).
Apart from immateriality, digital goods have other peculiarities that clearly distinguish them from physical goods. An important feature is that they are easily reproducible and therefore have no capacity limits. Reproducibility is made possible by the fact that the digital goods consist of bits and bytes. So if they are passed on, then they are not diminished, but doubled. Since there is no loss of value due to use, they are also indestructible. Another crucial feature is that they are easier to change, right up to and including personalization. With little effort, the products can be expanded or varied. However, this presupposes that various complementary goods are available. As positive as the characteristics of digital goods seem to be, they still have certain risks. One problem is the issue of data protection and IT security. Providers must also be aware of the risk of endangering the integrity of software products, e.g. by computer viruses, and plan precautions accordingly (Clement & Schreiber, 2013, pp. 48–49; Krcmar, 2015, p. 16).
Summary of Chapters
1 Introduction: This chapter outlines the problem of digitizing a food processor and defines the research objective: determining customer willingness to pay for new online services.
2 Theoretical part: This section provides the scientific basis, covering digital goods, modern pricing models (specifically benefit-based), and the definition of customer value drivers.
3 Methodological part: This chapter details the research design, including the data collection method, the operationalization of the willingness-to-pay construct, and the questionnaire development.
4 Discussion: This part critically reflects on the research methodology, addressing potential biases, quality criteria like objectivity and validity, and the practical challenges of survey research.
5 Conclusion & Outlook: This final chapter synthesizes findings to recommend strategic pricing directions and emphasizes the importance of customer relationship management for future success.
Keywords
Digitization, Pricing Strategy, Willingness to Pay, Customer Benefit, Online Platforms, Food Processor, Quantitative Research, Survey Design, Operationalization, Data Collection, Customer Value Drivers, Benefit-based Pricing, Market Research, Digital Goods, IT Services.
Frequently Asked Questions
What is the core focus of this research?
The paper focuses on determining the customer benefit-based willingness to pay for online services linked to a new digitized kitchen appliance, specifically for the company Küchenhelfer GmbH.
Which central topics are addressed?
The core topics include the characteristics of digital goods, the transition from cost-oriented to benefit-oriented pricing models, and the methodologies involved in quantitative customer surveys.
What is the primary research goal?
The goal is to design a robust empirical research study and a questionnaire that can identify customer segments based on their perceived benefits and their maximum willingness to pay.
Which scientific method is utilized?
The research utilizes a quantitative approach through an online survey, involving a structured questionnaire developed after an extensive literature review and operationalization of key constructs.
What is covered in the main part of the paper?
The main part covers the theoretical conceptualization of pricing in the digital economy, followed by the methodological creation of a research design for an empirical survey to test specific hypotheses.
Which keywords characterize this paper?
Key terms include Pricing Strategy, Willingness to Pay, Customer Benefit, Online Platforms, Digitization, and Quantitative Market Research.
Why is a benefit-based pricing model preferred over a cost-based one here?
Cost-based pricing is considered unsuitable due to the low variable costs of digital goods and services, which would not maximize the potential value derived by customers.
What role do "Customer Value Drivers" play?
They serve as the theoretical framework for analyzing the dimensions of customer benefit, such as functional, relationship, brand, and economic benefits, which drive the willingness to pay.
How is the validity of the survey results addressed?
The paper critically discusses the challenges of measuring willingness to pay, noting potential hypothetical biases and the cognitive demands placed on participants during such surveys.
- Quote paper
- Nancy Wießner (Author), 2018, Determination of (customer) benefit-based willingness to pay, Munich, GRIN Verlag, https://www.grin.com/document/1195846
