Empower your promotional strategy in inflationary times 

In the face of rising prices, consumers become increasingly price sensitive. Among consumers who suffered and continue suffering of financial security, 36% choose the lowest price products and 31% opt for Private Label or store brands. Understanding cross-elasticities and affordability is vital for businesses to cater to the changing preferences and needs of price-conscious consumers. 

Inflationary periods witness a growing attraction towards promotional offers. 47.2% of National brands have had an increase on promo pressure, reflecting more dependence on promotion activities. Moreover, 23.6% of brands have seen a promo pressure increase of more than 10 percentage points. However, it is essential to select the right promotion mechanism rather than solely relying on increasing discounts. 

The keys to success 

1. Understanding cross-elasticities and affordability: In an inflationary environment, consumers compare prices extensively. Businesses need to be cautious and consider both cross-elasticities and affordability factors when setting prices. 

2. Selecting effective promotion mechanisms: Rather than focusing solely on discount percentages, businesses should concentrate on the uplift generated by promotions. This approach ensures promotional strategies that drive volume without compromising profitability. 

3. Optimizing assortment combination: A well-optimized assortment is crucial for securing a strong market position. Identifying the products that bring value to the category and drive incremental growth helps businesses stay competitive and meet consumer demands. 

In this ever-evolving business landscape, the ability to accelerate growth and secure market position is essential. Donatien Hanssens and Jeremy Cleymans’ explored this topic in a presentation at Gondola Day 2023, highlighting effective strategies to combat inflation and optimize business performance. Download the full presentation and contact us to learn more.