Pricing learnings for profitable growth: Ranjana Gupta, Kantar IMRB
Guest Column: Gupta, Executive Vice President, Kantar IMRB says a winning pricing strategy is both an art and a science, rooted in consumer behaviour
In the FMCG sector:
Fuzziness on price awareness gives pricing leeway but the advantage of price change is possible only if communicated.
Magic price points cut both ways.
This allows for the building of SKU salience but also anchors the price firmly, making it hard to shift in the future. A winning pricing strategy is both an art and a science, rooted in consumer behaviour. There is no magic!
Market leaders are less sensitive to price vs smaller brands.
Intuitively right? But there are exceptions - brands which are sharply targeted, with a loyal base. Penetration is key; depth & sharp targeting is equally important. Pricing power is linked to a brand’s dominance in the market. Ensure that you are leveraging your brand’s equity.
Larger the price differential in the category, the more chance of a brand switch.
What helps, however, is establishing a value hierarchy. Understanding brand switches could be complicated. Pricing strategies which are based on rich data both historical and primary, robust modelling and in sync with consumer realities can help. Make informed moves to ensure that you’ve got it right!
Larger outlay implies higher sensitivity.
Large packs are in general more sensitive than smaller ones. You are much more vulnerable to competitive discounting on larger packs.
Services & Durables:
Know the three stages of the consumer journey:
a. Investigation: know the options and the budget
b. Shortlist: the most relevant products
c. Accessorize: choose value added features
The budget is flexible:
Consumers are willing to stretch their budget for big-ticket items and for the right value-added features.
For a value-added feature in household durables, consumers may pay up to 10% of the base product price. For cars, it is 2% of the base price. In vehicles core specifications such as fuel type, cc, power, mileage, etc. play a bigger role.
If you are a market leader or among the top players, consumers are willing to pay a premium for the value they see in your product.
It’s the ‘middle’ categories that are most price sensitive:
Fewer consumers will switch brands due to price in either high-end categories like SUVs or lower outlay small durables like hair dryers. It is the ‘middle’ that is most sensitive.
Watch out for the Budget Day!
Consumers hold off big purchases until after budget presentation in parliament, hoping for better deals through taxation changes.
Kantar IMRB knows what consumers think, issues influencing their purchase decision, their willingness to pay for features and overall decision-making parameters. We can help you in developing a profitable pricing strategy for your brands.
(The author, Ranjana Gupta is Executive Vice President, Kantar IMRB)
Disclaimer: The views expressed here are solely those of the author and do not in any way represent the views of exchange4media.com.
