2023-09-06 21:00:37
Inflation and rising prices are a key concern for brands, shoppers or patients alike. With inflation at record levels and continued shortages of some products, consumers remember that shelves were empty during the start of the pandemic even though we are still experiencing shortages in some categories.
Consumers especially feel the impact of inflation in the supermarket. In the United States, inflation in grocery stores was recently at its highest level since 2008, according to Kantar and government sources. Consumers see rising costs, wherever they go.
Today, if shoppers are lucky enough to find packed shelves for a particular category, they are often surprised to see higher prices on their favorite products than they remember. Unnecessary price increases can frustrate buyers and potentially hurt repeat purchases. A recent analysis of the global Kantar BrandZ report already shows that many brands fail to justify their price; consumers consider them to be worth less than they cost.
Brands are facing a decisive moment, in terms of prices. Ultimately, success will lie in better understanding category buyers and making conscious pricing decisions. Now more than ever, it is crucial to obtain the opinion of consumers, before making any price increase.
When we carry out the analysis of the price increase of products and/or services, it is very important not to lose sight of the following points:
1. Detect the strengths of your consumers and patients: it is important to understand the buyers of your brand. How biased are they compared to other brands in the category? Assessing this dynamic can provide critical direction for pricing.
2. Evaluate price sensitivity: inflation does not affect everyone equally and buyers are more sensitive to cost, in certain categories. If yours is more of a commodity (or lacks brand equity), consumers will be more price sensitive. Also, within a category, price sensitivity can vary by brand.
3. Understand the power of costing: what do consumers value most about your brand and your products or services? Do some research to find out if the value of your brand justifies its price.
4. Assess consumer reactions to prices: Test price changes with a co-research methodology to understand volume impacts as you adjust.
By consciously addressing pricing considerations at the heart of your strategy with patients, you can create additional value from your brand. By doing research on the impact of price increases and getting feedback from consumers and patients, you will be able to weather the new normal of inflation while keeping your business with good profit margins and sustainability over time.
Fuente: Optimising your pricing strategy during inflationary times: how to make mindful pricing decisions. (n.d.).
Alejandro Zayas has a degree in Marketing with more than 15 years in the pharmaceutical industry, Pharma, CHC, Ot’x and Medical Devices.
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