PRICE, PROMOTION & MERCHANDISING: BALANCING THE CALL BETWEEN VALUE AND PRICE RELIEF
January/February 2010
EXECUTIVE OVERVIEW

 
IRI's Times & Trends highlights new developments and critical events across all major CPG categories and channels, providing powerful benchmarking data to help guide your strategic decisions. This issue of Times & Trends explores current and emerging pricing and merchandising trends that define CPG marketer attempts to serve and satisfy consumers in a recessionary market. A free summary is also accessible via the GMA website at www.gmaonline.org.
 


INTRODUCTION

Consumer response to first difficult, then recessionary economic conditions and escalating CPG costs has run broad and deep. At-home meal behavior has increased significantly, self-care health and beauty rituals have become commonplace and a myriad of money-saving strategies have been embraced.

The economy has shown signs of improvement over the past several months. The financial markets have made positive movement, housing and credit markets have improved, and gas prices have moderated. Commodity prices have fallen, but manufacturer list prices remain elevated. Instead, promotional activity intensified.

Consumers are fully entrenched in savings mode. To make things more difficult, analysts expect that the deflationary period is coming to an end.

This year will be fraught with opportunity and risk for CPG marketers. The need for strategies which address conservative spending and consumption patterns is high. CPG marketers that deliver will reap great rewards.

 

KEY FINDINGS

After a surge in 2008, CPG prices went through a deflationary period in 2009; analysts predict that the deflationary period has come to an end, with low-to-moderate price increases expected for 2010.

Quarterly Price Increase:
Total CPG

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Though the recession has eased, consumers remain entrenched in deal-seeking behavior; CPG marketers are scrambling for innovative ways to offer value in a manner that will forge solid and lasting relationships with recession-weary consumers.

Across channels, 54% of categories experienced reduced lift in 2009 versus 2008; drug channel declines were sharper versus grocery, and versus the industry as a whole.
 

Percentage of CPG Categories with Reduced Merchandising Lift
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Merchandising is heavily leveraged to drive purchase behavior across discretionary categories and key meal ingredient /meal component categories.

With a solid reputation for value and quality, store-brands are well-positioned to compete in a recessionary environment; to date, retailers efforts around store brand merchandising fall short of efforts put forth by marketers of national brands
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Source: IRI's Times & Trends Reports
Information Resources, Inc. (IRI) is the world’s leading provider of enterprise market information solutions and services to the consumer packaged goods (CPG), retail, and healthcare industries.