Sales & Marketing
Business attempts to push up prices are failing
1 min read
16 September 2014
In a world where consumers have become savvy in terms of hunting down the cheapest price, it comes as no surprise that the desire to raise prices is being hampered by customer expectations.
Indeed, a new Simon-Kucher and Partners study has found that only 37 per cent of businesses achieve their increase objective when they push up prices. This is down from 50 per cent in 2012.
Global giants are now feeling the impact downward pressure has had on profit margins and brand equity. And although manufacturers are working with retailers to push value over price, supermarkets are involved in their own price wars. Having responded to the popularity of discounts, the big four have been furiously slashing base prices, making it easier for consumers to buy bargain goods, and by extension expect it to become the norm.
The survey highlights that the cure to business downward price pressure woes is growing value through innovation (77 per cent).
In fact, in October 2013, P&G managing director Irwin Lee claimed that there was one stat that kept him awake at night: “It’s the amount of value given away via ever deepening promotional offers. Promotions win quarters, but true innovation wins decades.
“Yes, the consumer should get better value, but by a combination of benefit performance and price, not price alone.”