Simply using price as a lever to increase margins (with a price increase) or boost penetration (with a price decrease) often accomplishes one goal at the expense of the other. In other words, margins improve, but sales decline given a higher price point. Or, sales improve, but not enough to cover the reduced margins driven by a price decrease.
Optimizing your current portfolio’s package size in conjunction with price variation is often the best strategy to stay relevant with consumers while better addressing both profitability AND sales. Whether it is ounce-size of an individual package, or quantity of items within, a wide range of pack/price variations are testable.
With Decision Insight’s Price/Size Optimization research, you have the ability to anticipate and test potential changes you and/or your competitors could make in the future. This “what if” scenario testing puts you in the driver’s seat of understanding implications to the business ― and even the category.
Key measures include:
- Penetration (% of shoppers purchasing)
- Unit Volume / Ounce Volume / Dollar Volume
- Value perceptions
Ensuring you are offering the right product, to the right shopper, at the right price is critical.