London Business School - IRI Pricing Conference

Trade promotions are the largest marketing spend for most FMCG firms. In the United Kingdom, for example, manufacturers spend in excess of £8 billion annually on trade promotions, even though their effectiveness has been hotly debated. One reason for this ongoing debate is that empirical research is scarce or limited. This presentation presents the findings of probably the first detailed study on how trade promotions are passed through the entire distribution channel (including manufacturers, distributers, and retailers). I will present the results of this study and present strategies that manufacturers can use to improve deal profitability by as much as 80%.

Much research has shown that pricing decisions, albeit critical to the firm’s bottom line, are too often determined by simple rules of thumb and biased processes that ignore the peculiarities of consumer behaviour. The objective of this seminar is to re-examine (and at times challenge) a number of common pricing decisions from the perspective of consumer psychology. Some of the topics we will discuss include product line pricing, promotions, and new product introductions. A behavioural approach provides fresh insights on how managers should think about the way pricing works in the marketplace. The end goal is to raise awareness for basic, yet significant, effects of pricing actions and the corresponding corrective measures that are available.

Consumers enter 2010 with both a fear of our economic reality and a tempered hope that change is already happening. Shoppers have lost confidence and are adapting. They have created specific strategies to survive. They are increasingly using planning behaviour in their shopping patterns and product choices. Consumers are adapting and price is more than ever a key sales driver. The challenge for manufacturers is to create affordable solutions that meet the needs of their consumers while reinforcing and positioning their brands as essential products that deliver a valued product proposition. Retailers have the opportunity to work with manufacturers to assure product offerings meet the range of shopper needs while leveraging their own brand halo to create solutions through private label. I will present the latest insights of the CPG market and how can you maximize your results with this new scenario

The CPG landscape has transformed dramatically in the last 12 months. Retailers and manufacturers are still battling with the challenges of reducing costs, maximizing profitability and meeting heightened customer expectations. But the economic slump has placed more pressure than ever before on all firms to respond more quickly and more effectively to market changes, and customers' rapidly evolving needs in order to gain and retain market share. Consumers are reacting dynamically and radically to changes in price and promotions, and their shopping habits are subjecting the market to more flux and volatility than ever before. I will explain on this presentation the results of several research studies that we have conducted on the latest pricing strategies in the UK and how they have affected sales and consumer behaviour.