Pricing and Fuel System Improvements

Pricing and Fuel System Improvement Interviewer

Representative Case Study in VOC Assessments

Benchmarking

Fuel System Improvements

A leading component manufacturing for industrial fuel pumps was looking at a way to develop an aftermarket solution which sought to provide customers a better fuel economy without purchasing a new product. The challenge though was understanding the price elasticity customers were willing to trade for an improved fuel economy and if both the price and interest in the solution would justify launching the product. This study was part of a critical stage-gate for the client’s development plan.

Project Approach

The Challenge

In order to determine the value of the solution, the research project not only had to take into account the price of the system and delivered value, but also the changing nature of fuel pricing. This research study was executed right at the beginning of the downward trend in oil prices on a global scale.

The Solution

Over an 8-week period, the research team spoke with system managers, maintenance support, finance, and senior management to determine what was the ideal price point for the new solution as well as understand the likelihood of purchasing it. The focus started to center around the criteria that potential customers would use to make a decision.

The Approach / Key Actions Implemented

Research successfully identified the target price point and what type of fuel economy the solution would need to deliver. The price point for those criteria was also uncovered.
The research indicated that the leading criteria (oil pricing trends) and the preferred price point did not provide a strong economic or strategic rational to launch the product in the market.
Ultimately the research motivated the client to not progress to the next stage gate and the initiative was tabled. This was before pricing of $50 per barrel of oil.