The Ultimate Guide to Pricing and Promotion


The Ultimate Guide to Pricing and Promotion

Pricing and promotion are two of the most important marketing levers for CPG brands. They can have a significant impact on sales, profitability, and brand perception.

In today’s competitive marketplace, it is more important than ever for CPG brands to have a strategic approach to pricing and promotion. This means understanding your target customers, the competitive landscape, and the latest trends in the market. Inflation is high, and consumer spending power is weak, so CPG companies and retailers need to lean on promotions to maintain sales.

Or do they?

The data tells a far more complex story about how the pricing and promotion game has changed. Read on to learn more about pricing and promotion best practices in this new era and download our free Ultimate Guide to Pricing & Promotion and start building more effective strategies today.

The Story of Pricing and Promotion

As it turns out, belt-tightening consumers aren’t just looking for the cheapest products. When it’s time to save, they seek value — and value is a complex concept that blends brand, quality, price, and promotion. Further, consumers don’t always react strongly in their purchasing behavior when their net income changes. But when there’s ongoing economic uncertainty – like that inflation has historically produced – changes in behaviors.

Data is the key to mastering the art and science of optimizing the right price, pack, and portfolio mix in an ever-changing landscape. But CPG companies and retailers can’t apply yesterday’s rules to today’s game. COVID-related disruption means historical benchmarks are irrelevant or nearly so. Without data, ongoing dynamic economic forces and their effect on consumer buying behavior will make pricing and promotion challenging, if not impossible, to get right.

Sources: U.S. Bureau of Labor Statistics – Consumer Price Index; NielsenIQ, Total US xAOC, monthly periods ending July, 2023.

Pricing and Promotion Challenges

In this new game, two clear, new rules emerge:

  • The need to link pricing to promotion more closely, and bring the key decision-makers in both retail and CPG more close than ever before, and
  • The need to more deeply understand the five most common types of CPG pricing strategies — what they are and how to identify which one to use at any given time.

Read on for an in-depth examination of pricing and promotion strategies that are effective today, as well as how these strategies have yielded successful outcomes.

Linking Pricing to Promotion

We’re operating in a post-pandemic marketplace where shoppers have seen little promotional activity.

Now is a critical opportunity to reimagine how promotions fit with the essence of a brand, and also link retailers and CPG brands in decisions around pricing and promotion.

Efficient and effective promotions drive incredible value for CPG brands and retailers alike. While the economic fundamentals of pricing and promotion do not change, inflationary forces mean how we approach them must.

Amid changes to consumer behavior, the retail environment, and other factors, an accurate, up-to-date data view of the world is key to making those changes quickly and intentionally.

Download the full guide to get deeper insight into building effective pricing and promotion plans in the post-COVID era.