Ensuring the
price is right Many customers don't know the price of a pint, even after they've purchased it! Research also showed consumers are more interested in the quality of the drinking experience than the prices. In the latest in the Morning Advertiser/Interbrew UK Category Management series, we consider how you can promote effectively without getting drawn into a costly discount price spiral Drinks pricing is of fundamental importance because it has such a major impact on the performance of the business and its profitability. So says Allan Tudor, on-trade sales director of Interbrew UK. He explains: "Retailers are best placed to decide the pricing policy because they know their customers best and the type of drinking occasion they are serving. That's why it's so important to establish the right price for the right outlet for the right occasion. "However, the fact is that price awareness among consumers is actually quite low, on average. Consumers are willing to pay for the quality of the experience and are less concerned with, or aware of, the price they pay." Tudor points to Interbrew UK research that shows:
72% of consumers don't know the price before purchasing
21% still don't know the price after purchasing
44% are willing to pay more for a consistently good pint
37% are willing to pay more for a product in a branded glass. Tudor continues: "We recognise that price sensitivity is more important in some outlets than others. For example, consumers using local community pubs tend to be more price-sensitive. "However, retailers should remember that customers have already made the decision to spend money when they enter an outlet. The fact is that customers, expecting a quality product, expect to pay a premium for it while customers wanting to spend less realise their choice will be limited to the lower end of the product range." This provides an opportunity for retailers to maximise customer spend by maximising prices on premium products. Tudor adds: "Quality is everything it is not just about the beer but the occasion and outlet as well. Premiumising' the mix is not just about maximising the price of the more profitable brands it is about demonstrating to the consumer that the experience is worth paying more for." Retailers need to focus on key aspects of category management, notably distribution of the key brands and visibility of the more premium products along with a focus on consistent quality to drive rate-of-sale. Once these issues have been tackled, it is time to think about another aspect of category management promotions. Making the most of promotions Research proves that consumers are more interested in sampling than money-off deals, and also that they have a keener interest in new products and multi-buys than money-off. Remember, the first rule of effective promotions is that they must attract new customers or encourage regulars to come more often. Often, promotional funds are wasted on customers who would have been in the outletanyway. The second rule is to focus on giving your customers more not the same for less. The harsh factof life is that price-cutting and BOGOFs (buy one, get one free) can seriously hit your bottom line. Such tactics can also have a long-term impact on consumer expectations. They very quickly become established and consumers expect to have the deal all the time. The end of the promotion can cause a consumer backlash leading to a discount pricingspiral. Promotions should be based on added value giving the consumer more. Collector tokens, a free quiz night, sports team events, or "meal deals" give customers the feeling they are getting extra. The costs of these are offset by the increased spend. Sampling is a great way of making your customers feel valued as well as a proven way of steering them towards products with a high gross profit.
