Amplifying Effect of Packaging Changes: Pricing
In my life as a CPG marketer, I’ve gone through a few packaging changes and a few pricing changes. In my experience, these are not easy initiatives to execute. Particularly, we usually complicate things for ourselves.
See, it’s not easy to sell into the buyer a price increase. So, marketers are charged with justifying the price increase. Usually, the price increase is prompted by some need to raise margin. To raise margin, usually (though not always) the justification is not going to come with a product upgrade. In these cases, sometimes marketers resort to changing the packaging design. The whole selling story would get wrapped up with a brand restage, a premiumization of the brand, enhanced shopper experience to drive impulse, improve differentiation and drive trade up, etc. Whatever the selling story may be, the justification of the price increase rest on a packaging redesign.
Research suggests that this is a very risky move. This is because shoppers typically shop on auto-pilot. She goes to the shelves. She spots the item she was looking for. She picks it up and puts it in her basket. A few second and the whole transaction is wrapped. However, when we change the packaging design, it interrupts this auto-pilot process. She actually has to stop and look for the product she thought she was looking for. Maybe the redesign is spot on, and she has no problem finding her product. But the fact that she needs to take a moment means she’s no longer on auto-pilot. This means she’s engaged in this transaction. This means she’s thinking about this transaction. This could very well mean she’s going to look at the price tag. This could very well mean she’s going to notice the price increase. This in turn could mean she’s going to price compare, which gives your competitors a chance to steal her.
So, a better tactic is to phase in the price increase. Introduce the price increase without interrupting the auto-pilot shopping process. Let her go to the shelves. Let her find her product without issues. Let her pick it up and put it into her basket. Now, I’m not saying that no shoppers will notice any pricing changes. Some shoppers are going to be price sensitive. But it’s our job to create a shopping environment that would minimize this risk. To do so, don’t interrupt her shopping flow.
Photo credit: Brian Talbot