(Source: https://pltfrm.com.cn)
Introduction
Brands that test and adapt pricing based on true consumer price sensitivity unlock tremendous growth potential in China. Conducting price elasticity experiments systematically enables smarter marketing, better product positioning, and stronger long-term profitability.
1. Understanding Elasticity in China’s Context
1.1 Category-Specific Elasticity
- Insight: Elasticity varies drastically across categories — tech gadgets may behave differently from luxury skincare.
- Action: Test elasticity per product category rather than generalizing across the brand.
1.2 Seasonal Elasticity Trends
- Insight: Price sensitivity fluctuates during major events like 6.18 and Double 11.
- Action: Plan elasticity tests during off-peak periods for cleaner data.
2. Best Practices for Price Testing
2.1 Transparent Communication
- Tactic: When raising prices during testing, communicate added value (e.g., upgraded service, limited editions).
- Result: Reduces negative consumer reaction.
2.2 Limited Exposure Testing
- Plan: Expose only a small percentage of users to price variations initially.
- Benefit: Minimizes reputational risk.
3. Tools and Platforms for Elasticity Testing
3.1 Platform Analytics
- Tool: Use Tmall Business Advisor and JD.com Analytics for granular pricing data.
- Benefit: Real-time data simplifies elasticity tracking.
3.2 A/B Testing Software
- Tool: Platforms like Optimizely or in-house solutions enable sophisticated price tests.
- Impact: Brings scientific rigor to pricing decisions.
4. Applying Elasticity Insights Long-Term
4.1 Optimizing Promotional Calendars
- Strategy: Reserve aggressive promotions for highly elastic products and protect premium SKUs.
- Benefit: Balances profitability with traffic generation.
4.2 Creating Smart Loyalty Offers
- Tactic: Offer customized loyalty discounts based on price sensitivity profiles.
- Result: Strengthens customer retention while preserving margins.
Case Study: A U.S. Footwear Brand’s Price Adaptation Strategy
A U.S. lifestyle footwear brand discovered through elasticity testing that mid-range shoes were highly elastic while their premium lines were resistant to discounting. Adjusting prices accordingly, they boosted total category revenue by 31% during their first full year on Tmall.
PLTFRM is an international brand consulting agency that works with companies such as Red, TikTok, Tmall, Baidu, and other well-known Chinese internet e-commerce platforms. We have been working with Chile Cherries for many years, reaching Chinese consumers in depth through different platforms and realizing that Chile Cherries’ exports in China account for 97% of the total exports in Asia. Contact us, and we will help you find the best China e-commerce platform for you. Search PLTFRM for a free consultation!
