Setting product prices is a conundrum that affects all manufacturers. You think you know how to weigh your production costs against projected sales in order to settle on a price that will make your business profitable, but it’s never that simple. You must consider all the different markets and conditions in which your products will be sold every time you tailor a plan for pricing.
One of the biggest challenges for small and medium-sized businesses when it comes to price is that no single pricing strategy will generate a profit in all situations. Being profitable requires multiple strategies for every product, product size, pack size, elasticity, competitor pricing, and more, which is an approach that takes time and money to properly execute.
Right price, right time
Smaller brands need unbiased market data to inform their decisions and back up their strategies, particularly with pricing and promotion. Manufacturers currently have unprecedented access to a variety of consumer data that can make pricing easier. However, when you’re faced with piles of spreadsheets and a never-ending stream of numbers, how do you make sense of it all?
Is your brand spending too much time poring over the data looking for the perfect solution, spreading your employees too thin?
It’s a tricky dance to set the right price for the right product at the right time, all of which can have a significant impact on your bottom line. Today’s customers have more options than ever before, with the ability to easily compare prices at brick-and-mortar retailers to those online for the best deal. Financial impacts from the COVID-19 pandemic have also forced many shoppers to be more frugal and mindful of their spending.
NielsenIQ analysis has shown that 46% of all consumers now say they buy products based solely on promotion, irrespective of brand, while 42% reported that they are driven by the lowest price. Additionally, since the pandemic began, 40% of all CPG items have experienced significant variation in price sensitivity.
Consider the whole pricing package
Pricing and promotion are naturally entwined in CPG, but manufacturers have less control over in-store promotions and sales that are run by the retailer. This is why consistently and accurately pricing products is such an important skill for smaller brands to learn. Price too low, and you might not turn a profit. But if you price too high, shoppers may look elsewhere for a better deal.
Pricing involves not only setting an everyday price, but also preparing for the timing of promotions at each retail partner, deciding on limits for future discounts, and hitting the right promoted price thresholds for the category. Keeping track of market conditions, growing trends, and what your competitors are up to also plays a major role in your overall pricing strategy.
This is a lot to manage for each version of every product a brand manufactures, so it eases the burden on small and medium-sized businesses when they turn to experts for help. By analyzing both current and historical price changes, brands can find the best everyday and promotional price that attracts consumers and offers a path to profitability. With the right data insights, manufacturers can take actions that set them up for success.
How NielsenIQ Brand Score identifies your top pricing needs
NielsenIQ Brand Score evaluates if you are following the optimal pricing strategy based on category pricing dynamics and your pricing elasticity or sensitivity. Perfecting this strategy brings you a step closer to winning more market share. It is designed for manufacturers that don’t have the budget or manpower to decode all the data – it boils down the numbers and gives your brand easily digestible scores that show how your products are performing and how they rank compared to the rest of category.
Having up-to-date knowledge of market conditions where your product is sold is crucial to success. NielsenIQ Brand Scores turn accurate consumer data into behavioral insights and actionable recommendations. Your pricing and promotion scores show you in an instant how effective your organization’s pricing and promotion strategies are, and more importantly, what to do to address new opportunities.