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Measuring Consumers’ Willingness to Pay. Which Method Fits Best?

Author

Listed:
  • Miller Klaus M.
  • Krohmer Harley

    (Institute of Marketing and Management, University of Bern, Switzerland)

  • Hofstetter Reto

    (Center for Customer Insight, University of St. Gallen, Switzerland)

  • Zhang Z. John

    (Wharton School, University of Pennsylvania, USA)

Abstract

Gauging the maximum willingness to pay (WTP) of a product accurately is a critical success factor that determines not only market performance but also financial results. A number of approaches have therefore been developed to accurately estimate consumers’ willingness to pay. Here, four commonly used measurement approaches are compared using real purchase data as a benchmark. The relative strengths of each method are analyzed on the basis of statistical criteria and, more importantly, on their potential to predict managerially relevant criteria such as optimal price, quantity and profit. The results show a slight advantage of incentive-aligned approaches though the market settings need to be considered to choose the best-fitting procedure

Suggested Citation

  • Miller Klaus M. & Krohmer Harley & Hofstetter Reto & Zhang Z. John, 2012. "Measuring Consumers’ Willingness to Pay. Which Method Fits Best?," GfK Marketing Intelligence Review, Sciendo, vol. 4(1), pages 42-49, May.
    • Handle: RePEc:vrs:gfkmir:v:4:y:2012:i:1:p:42-49:n:5
    DOI: 10.2478/gfkmir-2014-0040
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    1. Mohammad Rashid & Debapratim Pandit, 2019. "Analysis of service quality of household toilets expected by households practicing open defecation: a study in rural settlements of Bihar, India," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 21(5), pages 2487-2506, October.

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