By using the Adaptive Conjoint Analysis method TCW identified the most important tractor features for customers in South America. Asking over 600 farmers for the willingness to pay a specific price for certain feature or add-on the consulting team identified surcharge possibilities for the Original Equipment Manufacturer (OEM) to increase prices.
The output from the conjoint analysis is a simulator reflecting the market situation according to the choices made by the respondents. The simulator provides different outputs depending on the purpose of the analysis and if the main topic is i.e. a new product, several competitive products are defined and simulate how to create your own optimal product / portfolio through different feature alternatives and prices. Every change reflects a new potential market share and price sensitivity which is immediately visible.
The survey consists of three main parts: 1) Introduction, 2) Main Questions and 3) Surcharge Question. In the third part the customer is asked about his willingness to pay a surcharge for an add-on or if he is accepting a reduction in price accepting off-brand features.
In the first place the consultants from TCW did a broad research in order to identify features the customers is ready to pay a surcharge to have it. Therefore, the team visited different agriculture fair audits, spoke to dealers and key customers in a voice of dealer and voice of customer event. Furthermore, experts from the OEM have been consulted to gain their specific input about the collected information. As result for the surcharge topic features like a digital panel, increased hydraulic flow, increased PTO speed, guidance function, radio, speakers and lower fuel consumption have been of special interest. TCW also identified features asking the customer for a price reduction acceptance, if he takes an off-brand instead of a brand feature.
In order to differentiate the results by HP-segment, tractor brand or farm type we asked the customers general questions within the introductory part. Besides the customer loyalty the evaluation of the results showed that customers of high horsepower tractors are more willing to pay a higher price for an add-on or feature.
The evaluated information helped our customer to taylormade products to customer needs and increases sales and profit significantly.