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MT, which is also referred to as non-comparative scaling method, is the single best method for determining the demand function and hence the price elasticity of demand for a particular product or service. MT splits the overall survey sample into several isolated partial samples. Each partial sample is then presented with a description (price is only one element of the description) of a particular product/service, placed in the context of a full set of competitors, and then is asked “Would you buy this?” If the response is no, the respondent is then asked “Would you recommend someone like yourself, who is interested in [PRODUCT CATEGORY], to buy this?”
Since price is the only aspect of the description that varies from one partial sample to the other, the survey very brilliantly reveals the rate at which demand changes in response to a change in price. This method is widely recognized to engender the least price related biases, and, since no respondent ever knows that different prices are being presented to other portions of the sample, is the most accurate way of calculating a product or service’s demand function and price elasticity of demand.
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