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Pricing and proposition testing in subscription economies
As the subscription model continues to grow in popularity across diverse markets, this paper addresses three important issues in understanding the so-called subscription economy: (1) its prevalence; (2) the price sensitivity of different subscription types; and (3) whether promotional tactics can drive customer acquisition and retention. In addressing market prevalence, this paper reveals that 83 per cent of UK adults hold at least one type of subscription, with the most popular categories being service (71 per cent) and content (62 per cent), and the least popular being product subscriptions (30 per cent). Using the Behaviourlab platform, this paper finds all subscription industries are heavily price-driven; music and gym subscriptions are most price elastic of those tested, with price changes having double the impact on customer acquisition compared with other industries. The results from this study provide clear direction for future proposition design and the marketing of subscriptions.
The full article is available to subscribers to the journal.
Natasha Fosker is a senior associate at Decision Technology, where she conducts research on the impact of propositions, advertising and branding on consumer behaviour, perceptions and decision-making. Natasha has an MSc in behavioural and economic science, and her experience also includes the use of applied behavioural science principles in commercial research and advertising.
Benny Cheung His areas of commercial expertise include retail, energy, financial services, advertising and telecommunications. He also heads the firm’s brand practice and oversees all related client accounts and internal research and development initiatives. Benny completed his PhD and a two-year research fellowship in behavioural science at the University of Cambridge.
CitationFosker, Natasha and Cheung, Benny (2021, January 1). Pricing and proposition testing in subscription economies. In the Applied Marketing Analytics: The Peer-Reviewed Journal, Volume 6, Issue 3.