Consumers’ view on pricing has not changed much since the COVID-19 crisis
Are you thinking about changing your pricing strategy in the (post) coronavirus times?
At the beginning of this year, one of our clients, Pernod Ricard, reached out as they needed to define a pricing strategy for one of their brands. We conducted an online survey where we contacted 1500 shoppers in one of the EU countries. Satisfied with the results of the research, we provided some key guidelines for the brand’s pricing and promo strategy.
However, nobody could predict what would happen next. Back in February, when we launched the survey, people still didn’t worry about COVID-19. But in only a few weeks, the virus began to spread worldwide, and the global crisis escalated. As in every crisis, people fixated on primary needs, and they started hoarding things like dry food, tins, and toilet paper. Although this panicky behaviour eased out, the perception of our lives and the world around us changed drastically.
Strategic Pricing Research: Take two
Expectantly, Pernod Ricard had doubts regarding the research we concluded before the crisis. Some of their questions were:
- Where the pricing guidelines we built together still valid?
- Have consumers become more price-sensitive?
- Are promotions recommended in the ( post) corona times?
- What about the equity of their brands?
Against the shared opinion of many consultants – “don’t do strategic research during a crisis” – we decided to repeat the research beginning of May. This time, our objectives were to see whether the guidelines we wrote before were still viable and to detect changes in overall shopping behaviour.
So, did anything change?
The results surprised us, as we didn’t see big changes in price sensitivity before and during coronavirus. Like many, we assumed the crisis would significantly affect the consumers and how they see prices, but that wasn’t the case.
Our main takeaway?
Price sensitivity has NOT drastically changed since COVID-19.
We also came to other interesting conclusions:
- Now is probably not the right time for a price increase: While consumers haven’t suddenly become more price-sensitive (an increase of 12% in price elasticity), we do see that shoppers would be more tempted to change behaviour if prices would go up.
- Offering promotions is as important as before: But there is no need to increase the level of discount.
- Brands should prioritise big-sized packaging: Consumers perceive big packaging as “more value for the money”, and that is what consumers are focused on these days.
- Visibility in-store is key: COVID-19 shopping means buying what is available and what is easily visible (diminished desire to search and compare). The smaller SKUs will need to get sufficient and prominent shelf display to get into the shopping basket.
- Though price and promo do remain important, shoppers will not sacrifice all for a good price/high promo: In line with other recent research, consumers want to enjoy life more. Hence, no surprise that they will still buy their favourite brand, even more than before!
- The crisis had no impact (yet) on the equity of brands, nor on how consumers perceive brands: Most likely we’re in a too early stage to see changes, as this is a longer-term shift.
- Consumers look for retailers who offer home delivery: If not, the store should be enjoyable and offer a broad range of products such that a multi-shop trip is not necessary.
These conclusions are based on our current insights. We will be running this research again in September this year to review the price and promo guidelines.
Want to find out how we can help you optimise the pricing strategy for your business, as we helped Pernod Ricard and many more?
Contact us at info@boobook.world!
