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Recently we have received a number of questions about pricing.
So the first 2 topics this and next week look at Price Thresholds and some important academic insights on how these can influence pricing strategies. Linking with this, we look at the latest share trends for Discounters in the big Western European countries.
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When do price thresholds matter and how do they work?
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Across categories and brands the relationship between sales and price varies. But even for a brand, the relationship can be complex: constant for all prices or for specific price ranges up to certain thresholds where the relationship changes – at higher prices, lower prices or both.
How does your brand work?
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Source: Pauwels, Srinivasan, Franses, “When do price thresholds matter in retail categories?” - Marketing Science
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Price thresholds are important for three out of four brands
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Whilst 24% of cases show a constant relationship between sales and price, 76% have thresholds. These can be driven by different mechanisms – consumers benchmarking against historic prices or against competitive prices or both.
Which scenario is the driver for your brand and at what point do thresholds occur?
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Source: Pauwels, Srinivasan, Franses, “When do price thresholds matter in retail categories?” - Marketing Science
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Discounter shares remain stable on average in Western Europe
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The pandemic significantly impacted shopping behaviour and store choice with much more online, lower frequency and larger basket sizes. So far in 2021, Discounter shares remain stable on average in the big countries in Western Europe despite some increases in Italy.
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Source: Europanel FMCG Barometer – France, Germany, Italy, NL, Spain, UK
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Please feel free to share
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What is BG20?
BG20 is a global project, looking at the drivers of long-term brand growth. If you would like to learn more about this topic please contact understand@europanel.com
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