Question

The world’s biggest consumer-products makers are struggling to raise prices, as fierce competition keeps a lid on sales growth.

Procter & Gamble said prices fell by 2%. for the first three months of 2018. Prices fell across P&G’s businesses. Unilever, which sells Dove soap and Ben & Jerry’s ice cream, said it was able to raise prices just 0.1% in the first quarter, while Nestlé SA reported price growth of 0.2%. The consumer-products industry has long relied on selling new or improved versions of products at higher prices to boost growth. That practice is now challenged by weak inflation, Amazon.com Inc.’s rising prowess in selling more household staples, and a decline in brand loyalty as consumers use the internet to shop around. A shift to discount retailers, from dollar stores to Germany’s Aldi, are further pushing down prices.

What strategies would you recommend to management to get prices up?

Answer 1

Answer

Consumers goods sector is always considered to be fastest growing and high revenue generating. But, with increased competition, e-commerce, and consumers awareness and access to huge information slowed down the sales and growth of firms. People can easily switch from one brand to brand, without any hiring switching cost and get better products with relatively lesser prices. Brand loyalty is declining sharply and there is no single firm without any rivals, that deals with more innovative offerings. Discount retailers are making great returns and are boosting sales with tactics and strategies, that make the consumer feel that they are provided with high quality products at a low or discounted price. This led to the decreased growth of manufacturers and wholesalers.

To overcome these growth issues and boost the sales by increasing the product price, firms' management needs to consider following recommendations:

* take advantage of e commerce platcorms. Tie up with giant retailers like Amazon, flipkart, etc for selling the products and getting certain percentage as profits.

* use own websites and applications to engage with customers and offer them products with discounts and initial offers for gaining good markets and then raise the prices slowly.

* it is important to follow the trends and implement what is working in the industry. Offer customised products and focus on each segment of target markets.

* email marketing, digital marketing, influencer and affiliate programs can really boost the sales and helps to enhance the prices.

* customers relations should be managed effectively, by engaging them with the brands and staying connected with them through websites and applications. For this, online contests, giveaways, membership and discounts for frequent users can really help to boost sales.