Situation
Client was a large Food Manufacturer who did not have a consistent pricing strategy. Their current pricing strategy was tactical and reactive to the marketplace. They had a “one-size-fits-all” strategy where highly seasonal products were treated the same as non-seasonal products. Prices were largely determined by a negotiation of individual deals with the retailer.
Approach
- Examined existing pricing by channel and retailer to understand current dynamics and identify opportunities for pricing realignment
- Conducted detailed modeling to estimate own and competitive price elasticities for non-seasonal and seasonal products
- Assessed and interpreted the results to develop pricing tiers within the portfolio
- Simulated price points to understand the impact of price changes on own and competitive volume
- Developed optimal pricing within the portfolio
Results/Value Created
- Manage price-differences across channels to ensure that consumers are not driven from higher margin channels to lower priced/margin channels
- Be surgical in managing pricing within portfolio – staples and non-seasonal products are more sensitive to pricing compared to seasonal products
- Manage own price before reacting to competitive pricing
- Focus on brand equity building for seasonal products rather than aggressively pricing them