Identifying the optimal price gap to drive incremental volume

Challenge & Objectives

A manufacturer of pantry staples wanted to understand how it could increase brand penetration and drive profitability by optimizing its price gap relative to competitors. 

Key questions

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What is the brand’s current pricing power within the category and how does it compare versus competitive benchmarks?   

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What are the optimal price gaps versus major competitors based on shoppers' preferences and competitive pricing?

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How can a price change drive volume and profitability to make the brand even more competitive?

How we did it

Astrea deployed its PPO Market Sales Estimator, a simulation-based tool designed to forecast sales across a range of prices as the brand and competitive context change. Consumer choice data revealed appeal for each of the brand’s segments relative to substitutes so that we could advise the client on how to update price to grow volume and profit. We also simulated competitive price changes to help the client understand how to respond if a major competitor took a price increase. 

A graphic displaying a custom analysis that shows opportunity to change pricing relative to competitors in order to improve profitability and sales performance.

Learnings & Outcome

The exercise revealed opportunities to right-size price gaps to better compete with major competitors based on shopper behaivor, value perceptions, and relative pricing. The recommendations varied by segment. 


The client expected competitors to increase prices in the near future. So, Astrea’s simulation tool can be used to model the impact of multiple price responses to multiple levels of competitive price increases to plan for future profitability.