Price Versus Value
One of the hottest topics today is what to do in an era of greater price transparency? While initial retailer and supplier reactions seemed to lean toward lower prices at the beginning of the recession, today the trend lends itself to determining what consumers “value” and providing that perceived value for them.
A recent article in CPG Matters entitled, “Focus on Value Proposition, Not Price, to Win Shoppers” offers interesting insights into the value versus price debate, as well as a summary of the recent SymphonyIRI Group report, “Merchandising Trends: Driving Consumption Through Shopper Marketing.”
Following are key points from the CPG Matters article:
The report defines merchandising as displays, feature ads, feature and display together, or price reduction only, and urges these actions by CPG to maximize promotional lift opportunities:
A recent article in CPG Matters entitled, “Focus on Value Proposition, Not Price, to Win Shoppers” offers interesting insights into the value versus price debate, as well as a summary of the recent SymphonyIRI Group report, “Merchandising Trends: Driving Consumption Through Shopper Marketing.”
Following are key points from the CPG Matters article:
The report defines merchandising as displays, feature ads, feature and display together, or price reduction only, and urges these actions by CPG to maximize promotional lift opportunities:
- Identify new growth opportunities and threats. Understand price elasticity of demand. Evaluate merchandising activity and lift across brands. Monitor consumer shifts to build trial and repeat purchase through cross-merchandising activities. Collaborate with key retail partners to identify and test new tactics inside and outside stores, and across traditional and new media—to be sure they conform to the goals of the manufacturer and retailers.
- Develop key account strategies that address market- and store-level shopping patterns and needs. Continually re-evaluate pricing and merchandising to be sure they reinforce brand equity and convey the brand’s value proposition.
- Measure and monitor pricing and merchandising execution and impact.
Further, the report detailed that:
- Merchandising support rose sharply in 2009, and continues to grow, though at a decelerating rate in 47% of categories across CPG channels in 2011. Rising fastest: price-only tactics, which became more prevalent in 55% of CPG categories.
- Since 50% of consumers use the store circular to make their shopping lists, 42% use coupons, and 8% use the Internet to do so, CPG should market to consumers across multiple platforms with consistent messaging.
- The Top 10 categories at food, drug and mass (FDM) stores (excluding Walmart) for any kind of merchandising activity relate to home-based food and health care rituals, including: carbonated beverages, chocolate candy, sports drinks, salty snacks, batteries, crackers, bottled water, vitamins, frozen pizza and ice cream/sherbet.
- Since 39% of consumers practice more self-care in an effort to contain medical expenses, health care categories are becoming merchandising hotspots. In the grocery channel, 30% of healthcare categories had promotional support; in the drug channel, 34%. The CPG categories posting the largest gains in merchandising support in FDM (except Walmart) in 2011 were: first aid accessories, frozen breakfast foods, energy drinks, internal analgesics, tomato products, gastrointestinal tablets, vitamins, cold/allergy/sinus tablets, gum and deodorant.
- Across FDM channels, 53% of categories experienced sales lift from merchandising in 2011, up from the 46% level in 2010. The Top CPG lifters in FDM (excluding Walmart) in 2011 were: paper towels, 237%; toilet tissuse, 217%; shelf-stable seafood, 200%%; frankfurters, 169%; breakfast meats, 166%; shortening and oil, 164% cold cereal, 159%; laundry detergent, 155%; spaghetti/Italian sauce, 154%; and chocolate candy, 150%. In common is their suitability to major stock-up trips.
