Customer Centric Pricing Strategy for Private Brand Products Using Van Westendorp Price Sensitivity Meter

Abstract

This study examines how price sensitivity influences consumer purchase decisions toward private brand food products at Supermarket ABC and how customer-based pricing can improve its competitive position. A quantitative approach was used by collecting data through a structured survey of 377 respondents. The data were processed using the Van Westendorp Price Sensitivity Meter to identify consumer-acceptable price ranges for 21 high-turnover food SKUs through PMC, OPP, IPP, and PME. The findings show that Supermarket ABC private brands products face a strong pricing issue, as 63.9% of consumers have switched to competitors and 56.8% perceive Supermarket ABC private brands prices as higher than competing private brand from competitors. The PSM results further reveal that 12 out of 21 SKUs are priced above the consumer’s maximum acceptable price, indicating that overpricing is a major driver of switching behaviour. This study highlights the importance of consumer-based price sensitivity in shaping effective pricing strategies for private brand products. These findings are framed by Price Sensitivity Theory, Perceived Value Theory, Customer Switching Behaviour Theory, and Reference Group Theory and translates them into customer-centric pricing strategy to identify and correct price misalignment. The strategy classifies SKUs into three actions: base-price correction for severely overpriced SKUs, High-Low promotional pricing for moderately overpriced SKUs, and Everyday Low-Price maintenance for SKUs already within the acceptable consumer price range.