Novita – price elasticity study

nSight's approach was professional and reliable, both in terms of methodology, expertise and timelines. The study provided us with a lot of valuable information for our pricing strategy and decision making. nSight's team really got to grips with our industry and translated the study's conclusions and recommendations into clear next steps. The cooperation was flexible, friendly and super interesting. Thank you!

Camilla Granberg, Chief sales officer, Novita Oy

Novita Oy is a family-owned company and the largest manufacturer of handicraft yarns in the Nordic countries, founded in 1928. The 7 Veljestä product range is a favourite of the many,  remaining at the top of the sales statistics year after year. Range consists of wool-blend yarns in 30 different colours.

Novita was in the process of renewing 7 Veljestä products by increasing the wool content. The aim was to find out how consumers value the share of wool and other characteristics of the yarns, i.e. how much they are prepared to pay for different characteristics. We carried out a consumer survey, recruiting respondents both, from a popular Facebook-group for knitting enthusiasts, and from a consumer panel. This gave us a comprehensive sample of Finns who knit woollen socks and shop in different retail groups. The data was analysed using the choice based conjoint method. Conjoint analysis is the most reliable way to study the relationship between price and consumer demand. It allows, for example, to determine the price elasticity of demand and consumer price sensitivity, to identify the value of different product attributes and to identify the price point that maximises returns. The analysis also provides a good picture of the cannibalisation of different products at different price points. We also built a simulation tool based on the analysis to predict chain-specific sales volumes and returns at different price points. As the competing products in woollen yarns are mainly private label, both the research and the analysis were carried out on a chain-by-chain basis to ensure that the research setting reflects the actual choice situation as closely as possible.

The study provided Novita with a very deep understanding of the demand dynamics for 7 Veljestä yarns, taking into account the pricing and different product characteristics of own and competing products. In addition to adding value to Novita’s pricing strategy revision, the understanding of consumer behavior was considered very valuable also for the discussions with retailers.