Case Study

Analyzing the Power of Price Sensitivity to Build Market Share

Issue:

A large electric utility needed to determine key customer segments among commercial and industrial buyers in the deregulated and competitive electricity market

  • The utility also sought to determine the difference in relative needs and buying behaviors among the two groups including:
    • The threshold at which price becomes a critical buying factor;
    • Contract flexibility; and
    • Supplier reputation.

Approach:

Blackstone Group developed a Hierarchical Bayesian based Choice Based Conjoint (Discrete Choice) study task design to estimate model parameters/utilities at the individual respondent level.

  • Included in the research design was a sophisticated price sensitivity analysis.

Results:

The Blackstone Group pinpointed the combination of features that electricity buyers found more attractive, and provided the electric utility with market share simulation based on price elasticities.