Research Proposal: Consumer Premium Pricing for Well-Known Brands

This business research project proposal investigates consumer willingness to pay premium prices for well-known brands. It begins with an introduction covering the background, problem statement, rationale, aim, objectives, and research questions. The literature review explores the concept of branding, premium pricing strategies, factors favoring premium pricing, and consumer willingness to pay premium prices, identifying a research gap concerning the disadvantages of premium pricing and consumer behavior towards different pricing strategies based on product utility. The methodology section details the research philosophy (positivism), design (explanatory), and approach (deductive), along with data collection methods (primary research involving interviews and surveys) and sampling techniques (simple random sampling). Ethical considerations, including adherence to the Data Protection Act, are outlined. Finally, a timeline for research activities is provided. The research aims to understand premium pricing strategies and measure consumer willingness to pay premium prices for well-known brands.

BUSINESS RESEARCH PROJECT PROPOSAL- "HOW MUCH
OF A PREMIUM ARE CONSUMERS WILLING TO PAY
WELL-KNOWN BRANDS?”
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Table of Contents
1. Introduction..................................................................................................................................3
1.0 Introduction............................................................................................................................3
1.1 Background of the study........................................................................................................3
1.2 Problem Statement.................................................................................................................3
1.3 Rationale of the study............................................................................................................3
1.4 Research Aim.........................................................................................................................4
1.5 Research Objective................................................................................................................4
1.6 Research Question.................................................................................................................4
2. Literature review..........................................................................................................................5
2.1 Concept of branding..............................................................................................................5
2.2 Concept of Premium pricing strategy....................................................................................5
2.3 Factors favouring premium pricing.......................................................................................5
2.4 Willingness of Consumer’s to pay premium prices...............................................................6
2.5 Research gap..........................................................................................................................6
3. Methodology................................................................................................................................7
3.1 Research philosophy..............................................................................................................7
3.2 Research Design....................................................................................................................7
3.3 Research Approach....................................................................................................................7
3.3 Data collection and data analysis...........................................................................................7
3.3.1 Primary Research................................................................................................................8
3.4 Sampling method...................................................................................................................8
3.5 Ethical consideration.............................................................................................................8
4. Timeline of research activities...................................................................................................10
Reference List................................................................................................................................12
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1. Introduction
1.0 Introduction
In this chapter of the research project, the researcher will be offering a brief background on the
topic to give the reader knowledge of the topic. In addition, the chapter will also provide
justification for conducting the research. The aims, objective and questions of the research will
be presented in the chapter after identifying the problem statement.
1.1 Background of the study
While taking decisions on areas like deciding the commodity and service to be offered, the target
market, the pricing of the goods and services, the business takes into consideration the buying
behaviour of their consumers. The views of the customer towards the commodity and service
offered, its priority and requirement for them, are factors that decide their willingness regarding
the price to be paid for acquisition of the product. In order to market a product appropriately, the
element of pricing plays a vital role as the sales figures are directly influenced from it. The
pricing strategy to be implemented is based on factors like target market, desired profit margin,
growth and development strategy. By adopting a premium pricing strategy for its product, a
brand sets higher rates in comparison to the price of alternative products and closely-related
products. Also known as “skim pricing”, the strategy helps business companies and brands for
maximizing their profits in markets where there absence of substitute goods and consumers gave
agreed to pay premium prices (Annie Jin, 2012).
1.2 Problem Statement
The problem statement of the research topic is to identify the factors that encourage customers to
pay premium prices for the goods and services offered by well-known brands and the extent to
which they have shown approval towards the approach of premium pricing.
1.3 Rationale of the study
The study will be focusing on the issue of “premium pricing”, which is currently prevailing in
the retail market due to the perception of consumers that higher the price of the product, higher is
its value. Premium pricing is generally available in situations where there are restrictions on the
entry of new firms or when the companies are not being able to save their expenses during large
scale production. Despite the fact that it dissuades a category of buyers from purchasing the
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product, the strategy has proved to be effective and has helped in generating more revenue for
the company. The main area of discussion is to analyse the factors that have persuaded
consumers in paying premium prices thereby resulting in increase in competition due to this
pricing strategy.
1.4 Research Aim
The research will be conducted with the aim to attain an understanding of premium pricing
strategy and measure the level of willingness of the consumers towards the prevailing premium
prices in the market for well-known brands.
1.5 Research Objective
By performing this research activity, the following objectives will be achieved:
 To develop awareness of the branding concept
 To develop awareness about well-known brands
 To acquire detailed understanding of the concept of premium pricing
 To study consumer behaviour towards premium pricing
 To assess the level of consumer willingness in paying premium rates
1.6 Research Question
The research will offer answers for the following questions related to the topic:
 What is a brand?
 What is a well-known brand?
 What premium pricing strategies have been implemented by well-known brands?
 How do customers respond towards premium prices?
 Do consumers willingly pay premium rates for purchasing goods offered by well-known
brands?
 What are the factors inducing a consumer to pay premium prices?
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2. Literature review
In the given chapter, the previous studies relating to the research topic will be gathered to gain an
understanding of the research topic and the various theories related to it.
2.1 Concept of branding
According to Ingenbleek and Van der Lans, (2013), “branding” is the concept of distinguishing
various goods and services belonging to a well-known brand from other brands. With the help of
branding, the organisation acquires recognition of its product and services in the target market.
The branded good is a physical representation of the company image. In addition to this,
Anselmsson et al., (2014) says have introduced the concept of “well-known brands” referring to
brands that have attained high commendation and recognition among the consumers and are
highly demanded.
2.2 Concept of Premium pricing strategy
As mentioned by Annie Jin, (2012), “premium pricing” or “image pricing” is the pricing
strategy where rates of the goods and services are kept higher for attracting customers who judge
the value of the product based on its price. Janssen and Hamm, (2012) have pointed out that
companies implement this strategy for exploitation of a specific group of buyers who have an
assumption that ownership of premium priced goods offer outstanding quality as well as status in
the society.
2.3 Factors favouring premium pricing
Large-scale companies and well known brands have started implementing the approach of
premium pricing due to the benefits offered by this approach. As identified by Albert and
Merunka, (2013), effective implementation of pricing strategy offers the brands competitive edge
in the market. The investment of funds and efforts in advertisement of goods offered by premium
brands helps the operating companies restrict entry of new firms with the same amount of
investment, thereby helps in retaining their market share. Further, Kristensen et al., (2012) say
that a hike in price of goods also increases the brand awareness level. As per their study, an
increase in the ice of the product encourages the consumers to consider the products as more
valuable and advantageous; as they believe it that the quality has improved. In addition to this, it
also increases the popularity of the product as people discuss more about the brand and its goods.
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Okonkwo, (2016) has pointed out that premium pricing of the goods helps in amplifying
company profits but also makes it necessary that the extra costs incurred in the process are
covered through increase in price per unit or increase in number of customer base.
2.4 Willingness of Consumer’s to pay premium prices
Seeing the increase in use of premium pr8iicng strategies by well-known brands, Wheeler,
(2017) identified the factors that motivate the consumers to pay high prices. Consumers show
willingness towards premium pricing when the product is easily and quickly accessible, as it
saves them from incurring extra efforts in acquiring the product. In support of this, Albert and
Merunka, (2013) add that a specific feature of the commodity or adding value to reputation of
the buyer is an important factor that persuades the customer to pay more as it gives them feeling
of being wealthy. Low cost of ownership and friendly customer service are factors convincing
consumers to pay hiked price rates as they offer long term benefits. A slight difference in the
price does not affect the decision of the consumer if they are receiving superior quality goods or
have personal preference for the brand.
2.5 Research gap
The literature study has not focused on certain areas of study like different pricing strategies, the
disadvantages of premium pricing strategy and behaviour of consumers towards different pricing
strategies with respect to the utility of the product.
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3. Methodology
3.1 Research philosophy
“Research philosophy” refers to the principle that forms the basis for collection, analysis and
use of data needed for performing a specific research. The researcher has the choice of realism,
positivism, interpretivism and pragmatism, as the approach for the research. The positivism
approach of research philosophy is based on application of necessary statistical data and
quantitative and qualitative information for execution of research (Taylor et al., 2015). On the
other hand, the realism approach involves use of scientific techniques for deriving the required
information and knowledge. The interpretivism approach involves application of qualitative
information for conducting the research related to the topic. Further, the pragmatism approach is
a combination of different approaches comprising of quantitative and qualitative information
helping derive the necessary data needed for the research. For the given research, the approach of
positivism has been taken.
3.2 Research Design
The strategy chosen by the researcher for conducting the research by combining various
elements of the research in logical manner to address the problem of the research refers to
“research design”. The three types of research design are exploratory, explanatory and
descriptive research designs. For the given project, the researcher will be selecting explanatory
research design as this approach involves combination of various ideas for recognizing the
“cause and effect” relationship. It will help the researcher to refer to empirical data, thereby
derive to relevant and appropriate conclusions.
3.3 Research Approach
Primarily, there are two types of research approaches, namely “deductive research approach”
and “inductive research approach”. Among these, the researcher has decided to select
“deductive research approach” for the research as it involves application of existing studies,
theories and models for deriving the deriving the desired results.
3.3 Data collection and data analysis
The term “data collection” refers to the procedure of collecting and assessing data related to a
specific area of interest in a methodological manner for attaining answers for test hypothesis,
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research questions and evaluation of results. On the other hand “data analysis” refers to the
procedure of methodological application of logical and statistical techniques for illustration and
evaluation of collected data. The researcher has decided to select “primary data collection” for
collecting the genuine information needed for the research topic. Accordingly, primary tools of
data analysis will be used for analysing the data for the research. With the help of primary data,
the researcher will be able to meet the aims and objectives of the research. Moreover, the answer
to the problem statement, to measure the willingness of the consumers towards premium prices
will be perceived.
3.3.1 Primary Research
The researcher will gather both quantitative and qualitative data for acquiring necessary
information on the topic. The qualitative data will be collected by conducting an interview with
the managers of different companies and collect their reviews on how premium pricing has
affected their business and the response received from the consumers. The quantitative data
would be gathered through a survey process where 100 consumers would be asked to answer
questions to share their views on premium pricing, factors encouraging them to pay premium
prices and their willingness level towards high prices. The survey will conducted through online
platforms and the collected data will be recorded in Ms Excel sheets for further analysis.
3.4 Sampling method
The “sampling method” involves selection of sample members from a specific population for
eradicating biasness during data collection process. There are three types of sampling techniques,
namely simple random sampling, cluster sampling and stratified sampling process (Flick,
2015). For the given research, simple random sampling technique will be used.
3.5 Ethical consideration
The ethical rules and regulations for conducting an effective research will be followed. The
researcher will abide by the laws of “Data Protection Act, 1988”, which means that personal
information about the respondents of the survey will be kept confidential. The researcher will
adapt legal and honest means while conducting the research. Additionally, the respondents will
be treated with respect and no external force would be acting upon them.
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4. Timeline of research activities
The research activity will be conducted within a span of two months in systematic and planned
manner. All the research activities like topic selection, identifying problem statement,
development of objectives and research questions, study of literature, conducting primary
research for data collection, analysis of collected data, forming conclusions and
recommendations, would be performed within these two months. A timeline for the same has
been provided below:
Activities 1st week 2nd week 3rd week 4th+5th
week
6th week 7th week 8th week
Selection of
research topic
Identification of
problem statement
Development of
aims, objectives
and research
questions
Study of literature
Designing of
questionnaire for
survey and
interview
Gathering
quantitative and
qualitative data
Assessment of the
gathered data
Discussion of the
findings
Formation of
conclusions and
recommendation
s
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Submission of
research
Table 1: Timeline of the research
(Source: Created by the learner)
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Reference List
Albert, N. and Merunka, D., 2013. The role of brand love in consumer-brand
relationships. Journal of Consumer Marketing, 30(3), pp.258-266.
Annie Jin, S.A., 2012. The potential of social media for luxury brand management. Marketing
Intelligence & Planning, 30(7), pp.687-699.
Anselmsson, J., Vestman Bondesson, N. and Johansson, U., 2014. Brand image and customers'
willingness to pay a price premium for food brands. Journal of Product & Brand
Management, 23(2), pp.90-102.
Flick, U., 2015. Introducing research methodology: A beginner's guide to doing a research
project. Sage.
Ingenbleek, P.T. and Van der Lans, I.A., 2013. Relating price strategies and price-setting
practices. European Journal of Marketing, 47(1/2), pp.27-48.
Janssen, M. and Hamm, U., 2012. Product labelling in the market for organic food: Consumer
preferences and willingness-to-pay for different organic certification logos. Food quality and
preference, 25(1), pp.9-22.
Kristensen, T., Gabrielsen, G. and Zaichkowsky, J.L., 2012. How valuable is a well‐crafted
design and name brand?: Recognition and willingness to pay. Journal of Consumer
Behaviour, 11(1), pp.44-55.
Okonkwo, U., 2016. Luxury fashion branding: trends, tactics, techniques. Springer.
Taylor, S.J., Bogdan, R. and DeVault, M., 2015. Introduction to qualitative research methods: A
guidebook and resource. John Wiley & Sons.
Wheeler, A., 2017. Designing brand identity: An essential guide for the whole branding team.
John Wiley & Sons.
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