Beyond Price-Only Merchandising, Part 2

Three words sum up last year's overall merchandising strategy for the grocery, drug and mass channels: price, price and price. But despite the consumer obsession to save money -- and the willingness of marketers to shift tactics to feed that need -- average merchandising lift remained relatively unchanged. In 2010, according to SymphonyIRI, categories receiving merchandising support experienced average lift of 88 percent in 2010. That was only a slight increase versus the 85 percent lift achieved the prior year.

However, much can be learned from studying the effectiveness of individual and combined merchandising tactics.

In 2010, 85 percent of CPG categories saw lift of more than 100 percent when they used a display backed by feature support. Sounds like a good plan, and yet use remained fairly low. Only 7 percent achieved greater than 10 percent of volume sales with this tactic in 2010.

Nevertheless, feature ad support, with or without display actions, has clearly proven popular with consumers over the past year. With coupon clipping and pre-planning on the rise, circulars are helping consumers to make more informed decisions about what to buy and where to buy it. On the other side of the coin are price-only strategies. Despite the fact that lift from price-only actions is relatively ineffective, 85 percent of CPG categories got at least 10 percent of their volume with price-only merchandising support in 2010.

There's little doubt that price will continue to be the most significant influence for consumers in 2011 and the foreseeable future. This, of course, is not lost on any CPG marketer today, so it becomes less and less likely that broad-targeted tactics will entice shoppers to buy at one store vs. another. Rather, marketers must fine-tune their pricing strategies to particular consumer attitudes and behaviors if they want to win against the competition.

According to SymphonyIRI, CPG marketers should study the price elasticity of demand across key categories and brands. They should use that knowledge not only in the development of promotional strategies, but also when creating their everyday pricing strategies -- and, they must do so at a micro-level. Consumer-centric target pricing, whether everyday or promotional, is much more likely to deliver winning results in the post-recession environment versus a mass-market approach.

LEARN MUCH MORE about current MERCHANDISING TRENDS in the recently released SymphonyIRI Times & Trends report...

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