The ‘art of pricing’ is crucial | The Grocer

Twenty-five years ago, Philip Morris cut the price of Marlboro by 20% to fight back against generics, sending its stock price down a quarter and headlines proclaiming ‘the death of brands’. This conclusion proved premature. Brands have thrived since, with pricing generally robust, but they must remain relevant to justify their price premiums.

Unsurprisingly, in recent years the pricing environment has got tougher. This hasn’t manifested itself in showy price cuts (though P&G’s average 12% reduction on its Mach 3 blades last year was a notable exception), but a war of attrition, with pricing becoming more challenging every year. The glib response is to apportion this dynamic to the commoditisation of the food/HPC industry, which may in part be true, but the reasons are undoubtedly more complex.

Hyperinflation pricing in Latin America had given the illusion of pricing power, but as this has normalised, the reality of anaemic pricing has become clearer. With the exception of some Brexit-related pricing in the UK, pricing in Europe has been deflationary for years. Achieving pricing in the US looks increasingly difficult in the midst of online disruption and the age of price transparency coupled with the Walmart-Amazon battle.

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The ‘art of pricing’ is crucial.