As it turns out, belt-tightening consumers aren’t just looking for the cheapest products. When it’s time to save, they seek value—a complex concept that blends brand, quality, price, and promotion. Consumer purchasing behaviors don’t always change rapidly. But when there’s ongoing economic uncertainty, consumer behavior can evolve and change in unexpected ways—sometimes catching brands and retailers without a game plan to adjust.
Data is the key to mastering the art and science of optimizing the right price, pack, and portfolio mix in an ever-changing landscape. Without data, ongoing dynamic economic forces and their effect on consumer buying behavior will make pricing and promotion challenging, if not impossible, to get right.
New game,
new rules
When it comes to pricing and promotion, today’s manufacturers and retailers face an array of challenges, including:
- Inflationary pressure
- Competitive pricing
- Misunderstanding the consumer
- Overpromotion
- Decisions made with poor data
Fueled by big data and the right tools, pricing and promotion strategies can drive incredible value for brands and retailers alike. The solution to these challenges is threefold: big data, a well-executed strategy informed by the most current and best data, and a closer-than-ever relationship between manufacturers and retailers.
Five most common pricing and promotion strategies:
- Cost-based pricing
- Competitive pricing
- Penetration pricing
- Value-based pricing
- Price skimming
The art and science of pricing and promotion
We’re operating in an evolving retail market. For a while, price increases drove revenue, but as inflation cooled, retailers and brands have become more interested in building volume. This means attracting new customers, which pricing and promotion strategies can achieve, if executed with precision.
Now is a good time to evaluate how promotions fit with the essence of a brand. Being able to set accurate prices is the difference between making margin, breaking even, or even losing money for a promoted price group.
Discover how in The Ultimate Guide to Pricing & Promotion.
