As inflation reduces the purchasing power of some consumers, Coca-Cola has sharpened its focus on pricing, tiering, and pack size to demonstrate options for value for consumers in more difficult times, even as its prices have increased in some markets.
One consumer behaviour in recession is to try to reduce the dollar outlay of the basket, making the price point even more important than the price per litre. As a result, the company is pursuing a global strategy of having smaller bottles or smaller multipacks. In Japan, for example, it recently launched a 350ml PET bottle to meet changing consumer trends.
CEO and Chairman James Quincey said “It’s about extending the price ladder and, in recessionary times, about making sure the entry price point – whether it would be on the larger packs or on the smaller packs – becomes as low down in the price spectrum for the actual out-of-pocket as possible.”
Brands face ever-increasing channel complexity. No channel is an island and bleed between channels – a price in channel A dramatically impacting the price negotiation in channel B – is a key challenge. The old adage that a strategy should ensure you have the right product, in the right place, targeting the right person at the right price, is a true today as it ever was. This is a great example, magnified by our current recessionary environment. Coca Cola would have had a pricing ladder/strategy in place (if you don’t have one… get one!) but this demonstrates how to use it as a competitive and brand building tool without just reverting to over-promotion to keep hard won shoppers and consumers. All brands, large and small can learn from this.
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