The Price of New

Posted by Oliver Koll on Sep 21, 2015

price_new KopieNew products serve many functions for a brand – to introduce technological/functional changes, to attract non-buyers or to enhance  positioning. They may also translate into higher price points – because of improved (perceived) performance, better ingredients/taste or possibly by boosting the status of the buyer. We compared the prices of new SKUs with “old” SKUs for more than 14,000 brands. Some key findings:

– Only innovations (new brands/sub-brands) reap a price reward (16% premium) whereas renovations (new types,flavours, sizes) do not.

– Leading brands are able to command a higher premium for their innovations than other brands (almost 20% for the top 3 brands in a category).

– Renovations (like new flavors) are often cheaper than existing SKUs (likely because of promotional support).

– Beverage innovations are best able to translate into a higher price: Their innovations are on average 26% more expensive than existing SKUs of the same brand.