PSM for Premium Seafood Restaurant
Escalating Customer Satisfaction and Driving Business Growth in the Chemical Industry for a Chemical Trading Company in East Java
Case Details
Clients: Atlantic Intraco
Tags: Research
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Objective
Our client is a seafood restaurant chain located in Bandung with five branches across Java and Bali. The research aims to understand consumer perceptions of product pricing through the use of the Price Sensitivity Meter. This enable the company to make more strategic pricing decisions backed by insights directly obtained from consumers, while remaining competitive in the Bandung food market
Background & Context
Ensuring that pricing strategies are grounded in robust data and insights is crucial, as it can significantly impact business performance and customer relationships, especially in a highly competitive market where there is a strong preference for affordable food.
This research aimed to address pricing challenges in expanding the market for customers who prefer affordable seafood without compromising on quality. The study used the Price Sensitivity Meter (PSM) method to measure consumer willingness to pay for a particular product, aiming to find a balance between affordability and the restaurant’s positioning as a premium yet accessible option.
Prior market analysis indicated that premium seafood restaurants face unique challenges due to perceived high costs.
Research Methodology
We used an online survey method for data collection. Applying the PSM technique, the survey included open-ended questions, asking respondents to indicate price points they considered “too cheap,” “cheap,” “expensive,” and “too expensive” for premium seafood (large and fresh lobster and crabs) for a family of four, allowing them to fill in the specific amounts themselves.
Sample and Data
The study sampled 100 respondents aged 18-50 who reside or are active in Bandung. The target respondents were upper-income participants, recruited through online panels.
Key Findings
The output from the PSM method includes price ranges, such as the Indifference Price Point, Optimal Price Point, and the Range of Acceptable Prices that align with consumer expectations for value and quality within the Bandung market. These results help in understanding how respondents who reside or are active in Bandung respond to various price points, enabling more targeted pricing strategies.
This supports the hypothesis that mid-range pricing would be effective in capturing the target audience while maintaining a premium feel.
Data Analysis & Interpretation
From the collected data, calculations were performed, and the results were visualized in the form of a graph. This graph illustrates the intersection points that reveal the maximum price, minimum price, indifferent price, and optimum price.
The visual analysis indicates that for premium seafood (large and fresh lobster and crabs) for a family of four, setting the price in the range of Rp.261,000 to Rp.321,000 per dish would maximize customer acceptance.
The analysis also highlighted that special offers or set menus at this price point could attract more foot traffic.
Conclusion
The research concludes that the PSM model is an effective tool for identifying an optimal price range for premium seafood (large and fresh lobster and crabs) for a family of four in Bandung, where price sensitivity is high. The results offer actionable insights into pricing strategies that align with local market expectations while supporting the brand’s premium yet accessible positioning. This research contributes to broader pricing strategy literature by demonstrating how consumer-centric pricing models can be applied in niche culinary markets.
Limitations
The study’s sample size was relatively small, which may limit the generalizability of the results. Additionally, the research focused exclusively on the Bandung market; similar studies in other cities could yield different results due to regional differences in spending behavior. Another limitation was the lack of qualitative feedback, which could have provided deeper insights into customer perceptions and preferences.
Impact
The research provided the restaurant with a clear pricing strategy that aligns with local consumer expectations, allowing for a more targeted market entry. By setting prices within the identified optimal range, the restaurant is positioned to attract and retain customers effectively. The findings also informed the development of promotional strategies, such as special offers and combo meals, to enhance value perception and drive initial foot traffic. Overall, the research helped establish a competitive pricing structure that supports both market penetration and long-term success in Bandung.
Summary
This research utilized the Price Sensitivity Meter (PSM) model to identify the optimal pricing strategy for a new premium seafood restaurant in Bandung. By understanding local consumer price perceptions, the study provides clear guidelines for setting prices that align with market expectations while ensuring profitability and brand differentiation.
