Understanding the pricing landscape

November 12, 2015By Behind the Shelf Blog, Brand Marketing


by Sean Grudzinski, HRG Product Research & Analysis Manager

Before a company enters a new industry, decides to launch a new product, or tries to determine the best address for a new store location, they invest in understanding the existing landscape. It’s easy to see opportunity and potential by taking an objective view of the competition and potential barriers.

This same type of assessment should be utilized when pricing new or existing items within HBW categories. Understanding the pricing landscape will help you best position your product to reinforce your strategy and then align it with the supporting communication.

Researching the competitive nature of a category to understand the variances that exist will identify saturation points as well as the opportunity gaps. Just because a category may be considered competitive overall does not mean there are not opportunities that exist for more premium or higher margin items. For example, within multivitamins bestselling brands like Centrum® are very competitive across all channels from mass to drug. However, that is not to say there isn’t opportunity for more price premium products that can yield higher margins. Targeted multivitamins that are condition-specific, like those for eye health, can achieve much higher margins. The variance in margins for multivitamins can range from 16% - 43% across all channels. Understanding the variances that exist between channels as well as within a particular outlet type is important for building a strategic roadmap.

Take Charge!

Packaging and placement are most obvious when considering your strategy. Ensuring that equal energy is devoted to aligning your pricing strategy is critical. Finding that opportunity gap within competitive categories and then refining your communications to the consumer as well as to the retailer will help ensure you meet your performance goals. Whether you utilize HRG’s retail experience and research capabilities or not, understanding the landscape is the first step.

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