Market Analysis: Projecting Future Trends & Pricing Strategies
Market Analysis & Future Projections
Past Information
- It will help us to project the future based on past experience.
- Curves and functions.
Situational Analysis (SWOT-PORTER)
- A critical analysis of internal and external factors will help us to know future behaviors within the stakeholders surrounding the product or service.
- Information from Specialists and Competitors
- There are companies specialized in projecting and estimating demands and behaviors within the tourism market and information about the competition.
Ascending/Descending (% Variation)
This type of curve indicates a clear trend, so we will calculate past growth rates and project them into the future.
Variable (Average)
This type of curve is associated with greater variability, so we can estimate the average of the past in the future.
Unstable (Variation + Average)
Curves with no clear trend, major variations should be identified and explained, adjustments can be made and/or “strange” data can be deleted and a combination of the average and the variation rate can be used.
Global GDP growth +
National GDP growth +
Unemployment rate –
Inflation –
Exchange Rate +
Number of Airlines (New Routes) +
National events +
Foreign Investment +
Social Stability +
Political Stability +
Investment in International Promotion and Advertising +
- CORPORATE / BUSINESS
- REST / LEISURE
- FAMILY
- INDIVIDUAL
- GROUPS
- COUPLES
- SPECIAL INTERESTS
Market-based pricing: Investigate the price levels of the various players and direct competitors (substitutes) involved in the business, in order to establish a similar, cheaper or more expensive price. One strategy is to base the price on the price of the main reference or leader.
Cost-based pricing: This strategy involves calculating the direct unit cost associated with the production of the good or service offered and calculating a percentage or amount of profit on this (Mark Up), thus ensuring that we cover our direct costs and generate profits.
Demand-based pricing: This strategy is associated with variations in demand and its elasticity. Its main objective obeys the simple equation in which the higher the demand, the higher the price will necessarily be, as is the case, for example, with Metro fares. But we must also be able to incorporate into this strategy the willingness to pay that our clients have, the higher the income level, the higher the amount charged should be, this strategy involves knowing the budget that our segment has to consume.
Attribute-based pricing: This involves including in our price the different attributes associated with the various services provided (Economy Class versus Business Class, for example), but also the brand image (Brand Identity) that we want to deliver with our price level. In general, more exclusive brands tend to offer higher prices because their image is associated with different and unique products such as Starbucks or Apple. Whose price is not associated with cost but rather to image.
Cost-based pricing: This innovative strategy is associated with offering a “more efficient” price, i.e. incorporating operational efficiency in order to lower costs as to offer a price level that allows more clients to have access to the product or service. In general, companies work under this premise, if we think that 20 years ago a laptop cost much more than it does today. The explanation to this “contradiction” is that as more clients have access to acquire the product, the marginal cost is reduced through a higher volume and therefore the production of the product becomes cheaper. A clear example is the airline industry, which has steadily reduced the price of tickets over the years.