Whether you’re a baby boomer, generation x or a millennial, there are so many influencers weighing upon a shopper. Pricing is a huge influencer, especially on the millennial shopper ($200 billion + in sales), who is an especially price sensitive, tech-savvy and “smart” shopper. Baby Boomers ($230 billion + in sales), are known to have strong brand loyalty- but will they continue to buy their favorite brand if the price gap between brands becomes too large?
Finding the Perfect Price
It has always been the marketing department’s job to reinforce and maintain the brands image. However, increasingly, pricing strategists and marketing are collaborating, to ensure that the price of a brand reflects brand image. Set a price point too high, a customer may perceive the product as overpriced, and brand loyal consumers may stray, to try a new brand. But, if you set prices too low, the customer may perceive poor quality, and be swayed to try a brand that they see as a better value.
And its not just CPG companies who need to be cautious to align pricing and brand image. The customer’s perception of the retailer too, has influence on their purchasing decisions. If they think of a retailer as being high or low end, the way they view prices and quality will be skewed- especially when it comes to key items and promotions.
According to RIS News’ Pricing Intelligence Goes to War, an increasing number of retailers, currently 27% and rising, are getting their marketing departments involved in pricing decisions, aligning their responsibilities with merchandising teams.
Today, 23% of retailers are already using pricing intelligence tools and that is expected to rise to about 59% in the next year. Competitive pricing data enables retailers to gather that data they need to use pricing to reinforce brand image. It’s hard for a retailer that claims “Everyday Low Prices,” to stay true to their promise, without knowing the lowest price.
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