In Consumer Packaged Goods (CPG), stockpiling and unavailability have forced consumer trial of alternative options. 30 to 40 percent of consumers in the USA and 65 to 75 percent in India and Vietnam have tried different brands or packs during Covid-19. (Source: McKinsey Consumer Pulse Surveys).
The post-crisis recession will have many consumers seeking value for money and more affordable options. Consumer Electronics (CE) is no different. If anything, value for money and affordability are even more important.
Covid-19 is moving fast. The future is fluid and unpredictable. In some places infection rates are falling and in others peaking. Spikes following easing are more frequent and will generate uncertainty for time to come. It’s anyone’s guess what the near future looks like. It’s a moving feast.
The P&L is being battered from all directions. In my earlier post I asserted that Revenue Growth Management (RGM) is a great framework to help you make sense of and navigate your way back to profitable growth in these times. (Click to watch: Revenue Growth Management – are you match fit?)
Sadly there are many over-engineered RGM solutions floating around. Most companies are awash with data resulting in a thirst for facts and even more facts. Business leaders must quickly take a view, set the direction, align the organisation and get on with it. A pragmatic approach is required. Have a go, measure, adjust and have a go again. There is no time to dither!
This is the first in a 3-part series of articles that Quantic will post over the next few weeks. The articles will cover each building block; pricing, portfolio and trade investment.
This article focuses on pricing and we challenge you with this question. Is your brand pricing and pack price architecture right for these times?
Consumers seek authenticity and brands that provide confidence and reassurance. They want to think less and make fewer decisions. When money is tight, they will buy brands they trust. Big brands drive economies and have more chance to get hold of limited marketing funds. Suppliers must invest in these; re-evaluate brand and pack pricing architecture. Consider changing prices of certain SKUs or launch new packs that are more affordable and relevant to in-home occasions. Sub-brands with differentiated propositions, innovation or M&A may also be considered.
In consumer electronics price is often the main navigation point. Motivate shoppers to pay more rather than default to the lowest price on offer.
How confident are you that your bases are covered?
- How clear are you on the current pricing strategy and ability to land it? Will this be valid post Covid-19?
- Do you know the most profitable packs and channels and what are you doing about them?
- Are your pricing actions motivating shoppers to trade-up from entry level to added value products?
- How do you avoid buckling under the pressure of customers demanding blanket discounts to compete with Discounters and Pure-players?
- How are you addressing the dichotomy that Covid-19 brings, where cash poor shoppers seek affordability and others more fortunate look for indulgence to replace going out?
Retailers are at full stretch urgently gearing up their eCommerce offer and their ability to compete with discounters. Last Friday, (The Grocer 26th June 2020) Dave Lewis, CEO Tesco, announced Q1 results and a major price war against discounters in preparation for a coronavirus recession in the UK.
Tesco increased their eCommerce and basket size. Their increase in sales of non-food items such as toys, electricals, stationery and general home goods were particularly impressive. Whereas the initial focus was on own label products, Lewis made it clear that he now expects branded suppliers to also come to the “party.” It will be critical that suppliers are prepared. Clear on the price they wish to set and armed with convincing arguments.
And don’t forget…
Pricing must not be considered in isolation of the other RGM building blocks of portfolio and trade spend. These two articles will follow starting with product and channel portfolio mix next week.
Quantic can help you deliver the best RGM strategy in time for your upcoming needs, now. Contact us to discuss how we can do this for you by submitting your details below: