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P&G, Nestlé bet on brand equity amid rising prices
Major global firms – among them FMCG titans like Procter & Gamble, Unilever, or Nestlé – are betting that consumers will put up with rising prices and stick with named brands, in what will be a significant test of their marketing power.
The story, per the WSJ, is that rightly or wrongly firms are not yet seeing impact of higher prices on consumer preferences, and are therefore telling investors that they expect sales and profitability to continue growing.
Key to this is Procter & Gamble’s announcement last week that it would raise prices – an important moment in which the firm will show if its brand can maintain market share.
Inflation is on the rise across many of the world’s advanced economies, with supply-side constraints causing prices to spike for consumers and costs to rise for companies.
FMCGs are likely in a strong position, however, as even with economies re-opening, people continue to spend more time at home than they did pre-pandemic.
At home, Nestlé observed as it raised guidance, people are drinking more of the firm’s coffee at home and they’re drinking better coffee. I.e. They’re spending more.
The trouble with pricing
Pricing should be of profound interest to marketers, given its position among the four key pillars (the 4 Ps) of the marketing discipline as proposed by Kotler and McCarthy. Effectively, brands will have trouble getting people to pay more than their perceived value – marketing activity and understanding is critical here.
Inflation may be rising now, but many people haven’t yet felt it in their pockets. As price pressure grows, many people will trade down to private label or cheaper brands.
It does all come down to brands, however, with larger, more established names – often considered a safe bet – will have more success in protecting their margins than smaller brands or brands whose competitive pricing sets them apart.
Price rises can be tricky business, and often relies on elements outside the company’s control, not least the behaviour of competitors. Others, meanwhile, may opt for a quieter defence of margins through the suite of product adaptations that some have called ‘shadow inflation’, and selling a little less product for the same price.
多样性、公平性和包容性需要发挥作用。在客户和机构层面，这一领域仍然存在挑战，机构继续缺乏内部多样性，而客户则在努力实现 DEI 议程。
来自伟门汤普森中国的 Joyce Ling、Leo Burnett Chicago 的 Aki Spicer、MediaCom 的 Anush Prabhu、We Are Social 的 James Honda-Pinder、22feet Tribal Worldwide 的 Mehak Jaini、The Secret Little Agency 的 Eunice Tan 等领先战略家的专家评论和 OLIVER Agency 的 Nick Myers，可以在这里阅读。