There is an advertisement from Coca-Cola Enterprises in the last issue of Retail Newsagent of 2010 that says: “71 per cent of customers are more likely to buy a product with a price-marked pack.” The research by Him! that supports this view is not particularly new but the execution of the advertisement by CCE is very impactful.
It is illustrated with an array of 10 strong CCE brands in price-marked packs. The message underpins a huge change in what independent retailers are prepared to stock. When Mars, armed with similar insight, tried in the 1990s to champion price-marked products, the retail trade refused to stock its products. Today, shopkeepers understand the power of price-marking in generating sales and often seek out the price-marked option.
However, with a fixed price comes a fixed margin. In making this trade off, retailers need to be clear about the overall impact on their sales and to get the mix of price-marked and higher margin products in the right balance.
So in the case of price-marked big brands what is going on? The shopper clearly values the brand but wants to be reassured they are paying a fair price for it. Some shoppers may choose between brands based on the price that is printed on brands of equal relevance. Most shoppers will assume that a local retailer is more expensive than a supermarket. By using price marked big brands the local retailer helps reassure the shopper that they are not being overcharged for their business.
But remember that Him! research is about the attitude of shoppers. It does not measure their behaviour. What people say and what they do are different things. Most shoppers would say that they are reassured by price-marking. But this alone may not drive their shopping decisions. Price-marking is a tool that you need to use to grow your profitability so in using price-marked products you need to keep careful records of what the impact is on your sales and profits.
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