While quite a large number of consumers are looking for lower prices and are relying heavily on promotions as well as private label products, this does not necessarily mean that manufacturers should start focusing purely on lower-priced products in their portfolio. There is clear evidence of strong consumer loyalty among brands, particularly for shoppers who are not planning on changing their habits.
For example, half of the MEA and European shoppers stick to their brand preferences. At the same time half of the consumers in Europe claim that if they are choosing a lower priced product, they would only choose within their preferred repertoire/selection of products. The number for the MEA region is a little bit higher – 61%. The key for brands is to identify and refine their shopper segmentation, as changes in consumer habits continue to evolve.
What is happening with own and cross elasticities? Regular price elasticity consists of two components: own elasticity is used if all products change price together, and cross elasticity is used if the competition is changing price and you are not.
The second myth suggests that due to economic hardship, these cross elasticities would increase a lot, as shoppers jump to price comparison more often. The fact is that cross elasticities around the world remained very similar, bringing us to the conclusion that consumers are still primarily driven by the price of products.
Thus, we have busted the second myth as well.