Decoding Pricing Complexity for Business Growth
Here is my latest article from the #TalkingwithIndustryExperts series. The guest is Alex Paul Suciu , the Global Vice President of Strategic Revenue Management at MARS WRIGLEY.
In the ever-evolving FMCG landscape, pricing is more than just setting numbers—it's about balancing value creation, consumer perception, and profitability. Alex Paul Suciu, Global VP at Mars Inc., simplifies the complexity of pricing strategies into actionable insights that drive growth and innovation in competitive markets.
Key Concepts in FMCG Pricing
Pricing Power: The Key to Success: Warren Buffett’s words are very relevant: “The most important decision in evaluating a business is its pricing power.” Businesses must aim for the sweet spot—where price adjustments don’t lose customers but enhance brand value. This underscores the importance of building a strong brand identity and strategic pricing architecture.
Consumer-driven value Creation Pricing isn’t just a mathematical exercise; it’s deeply tied to consumer perception. Pack size, quality, shelf positioning, and promotional frequency influence how consumers perceive value on the shelf. To maintain relevance and loyalty, brands must innovate in pricing, packaging and promotion strategies.
The Role of Data and AI in Pricing: Advanced analytics and AI have revolutionized pricing strategies. Tools like price elasticity models, promotional simulations, and predictive KPIs empower brands to optimize pricing decisions accurately. By analyzing factors like competitor actions, retailer margins, and market conditions, businesses can make better-informed choices that align with their long-term goals.
Adapting to Market Types: Markets vary widely—from fragmented traditional trade setups to concentrated markets dominated by a few retailers. Each scenario requires a tailored pricing strategy. For example, in concentrated markets, the focus shifts to protecting market share and enhancing profitability through strategic partnerships and targeted promotions.
Simplifying Complexity: Complexity in pricing often arises from internal inefficiencies and lack of alignment. Simplification begins with setting clear priorities: aligning trade investment, ensuring pricing reflects real consumer value, and creating win-win situations for both retailers and brands.
Trends Shaping the Future of FMCG Pricing
Dynamic Promotions: Retailers and consumers increasingly rely on promotions, making their intensity a growing trend. Brands must manage promotional frequency to ensure profitability.
Omnichannel Strategy: With the rise of e-commerce and hybrid markets, pricing strategies must be consistent yet adaptable across online and offline channels.
Sustainability and Premium Innovation: Consumers are drawn to premium and sustainable products, presenting opportunities to innovate in these segments while justifying higher price points.
Takeaways for Businesses
Build a data-driven pricing ecosystem incorporating AI and predictive tools to effectively adapt to market changes.
Focus on consumer-centric value creation through thoughtful packaging, promotion, and innovation.
Tailor strategies to market dynamics, ensuring long-term profitability while retaining pricing flexibility.
Pricing may be a science and an art, but above all, it is a strategic tool for driving growth, building consumer trust, and maintaining a competitive edge. By simplifying pricing complexities, businesses can achieve consistent, profitable growth in even the most competitive environments.
What strategies have worked for your business in tackling pricing challenges? Share your thoughts below!
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