In an illuminating revelation from Deloitte’s 2024 consumer products industry outlook, half of the consumer product companies surveyed express a pivot away from relying on price increases as a growth strategy, signaling a paradigm shift in how businesses approach market expansion and consumer engagement. This transition is underscored by a mere 2 percent of respondents citing price hikes as a key strategy for 2024, a clear indication of the changing tides.
Deloitte’s analysis brings to light three core reasons signaling the end of a price-focused era:
- Consumer Resistance: A growing reluctance among consumers to absorb further price increases, reflecting a limit to their willingness and ability to pay.
- Retailer Pushback: Retailers are showing resistance to continuous price hikes, indicating a saturation point in pricing tolerance.
- Emergence of Alternatives: Heightened prices have inadvertently introduced new competition, with consumers exploring substitute products that offer better value or novelty.
As companies recalibrate their strategies away from price adjustments, a significant emphasis is being placed on shifting product mixes toward more profitable items, increasing unit volumes, and bolstering marketing efforts. An interesting forecast from Deloitte suggests a resurgence in advertising and promotional spending, with a strong focus on amplifying core brand values to maintain pricing power and consumer loyalty.
In light of these strategic shifts, it’s pivotal for brands and retailers to explore alternative avenues for growth that transcend traditional pricing mechanisms. Here are several key strategies to consider:
1. Promotions
Promotional activities can significantly influence consumer purchasing decisions. Effective promotions, whether through limited-time offers, bundled deals, or loyalty program benefits, can drive sales without directly altering product prices. The importance of tracking competitors’ promotional and discounting activities in real-time cannot be overstated; staying abreast of market movements is crucial to remain competitive and responsive to consumer expectations.
2. Search Performance
Optimizing for search, both in eCommerce platforms and search engines, is crucial. Retailers’ search algorithms can be notoriously opaque, making it challenging to navigate how to improve search performance. The first step is gaining visibility into where all products are ranked and how often they appear in search results. Additionally, monitoring not just your own keyword performance but also how competitors are performing for search terms across retailers is vital for maintaining a competitive edge in visibility and sales.
3. Product Availability
Ensuring product availability and minimizing stockouts is essential for maintaining consumer trust and loyalty. Many sales and marketing teams lack real-time visibility into out-of-stock challenges, leading to lost sales opportunities. Once a product is marked out-of-stock on a website, it can take up to a week for it to reappear in search results, further emphasizing the need for robust inventory management and predictive analytics.
4. Assortment Changes & New Product Launches
Refreshing product assortments and introducing new products based on consumer trends and market gaps can drive engagement and sales. The importance of category intelligence in shaping these decisions cannot be understated; having visibility into an entire category of products, including their price and search performance, can unveil new sales opportunities and inform strategic product launches.
5. Content Strategy
A compelling content strategy is key to engaging consumers and enhancing brand visibility. However, challenges often arise in ensuring content consistency across retail partners, with discrepancies between headquarters’ expectations and actual retail execution. Brands need mechanisms for tracking content accuracy and performance across their range of retail partners to ensure their messaging is conveyed correctly and effectively.
By embracing these strategic avenues, brands and retailers can navigate the evolving consumer products landscape, finding new ways to engage consumers and drive growth beyond the confines of traditional pricing strategies.
