The purchasing decisions of consumers are influenced by various factors, including price, sustainability, and convenience. However, in times of economic uncertainty, price becomes a major priority. According to KPMG’s Consumer Pulse research, many consumers have shifted their focus to price over other factors in recent years. To succeed in this environment, companies must understand their target audience, including their purchase behaviors, price sensitivities, and shopping channels.
Honza, a Nestle executive, emphasizes the importance of understanding consumer behavior and adapting pricing strategies accordingly. He notes that consumers shop differently depending on the context, such as buying online or in-store, and that companies must offer flexible pricing options to meet their needs. A “pack-and-price architecture” can help brands achieve this by adjusting product volumes and price points to fit different budgets and preferences.
Despite the challenges posed by inflation and the cost-of-living crisis, many consumers remain loyal to certain brands. In fact, KPMG’s research found that 15% of consumers would “trade back up” to premium brands if they could afford to. Honza believes that companies must inspire consumers with superior products and experiences that offer clear benefits, such as quality, taste, convenience, or nutritional value. By doing so, companies can create a “triple win” for themselves, retailers, and consumers.
To achieve this, companies must understand what drives consumer behavior and make adjustments to their pricing strategies. This may involve offering flexible pricing options, such as discounts or promotions, or developing new products that meet evolving consumer needs. By prioritizing consumer needs and preferences, companies can build loyalty and drive growth, even in uncertain economic times. Ultimately, the key to success lies in understanding the complex and dynamic nature of consumer behavior and adapting pricing strategies to meet their changing needs.