Who repairs the brand damage done by finance?

The consumer price index rose to 7.9% in February, the highest level since January 1982, per CNBC. Prices of apparel were up 6.6% YoY, per the US Bureau of Labor Statistics, while prices of household items increased 15.3%, health and beauty prices grew 11.2%, and grocery prices rose 11.5%, per Numerator. ost brands have chosen a strategy of passing costs onto consumers because marketers have to answer to finance,,, but it’s going to backfire.

Grocery shoppers are rethinking their purchases due to price increases and supply chain shortages, per CivicScience. Nearly two-thirds of consumers are buying at least one type of food item less often; 38% are buying meat, poultry, and fish less often, and 24% are buying snack and dessert foods less often.

More than 80% of US consumers are more likely to wait to make a purchase until there is a sale or coupon, per a February 2022 survey from Shopkick. In addition, 20% have tried new brands after their go-to brands rose in price or were out of stock.

According to an analysis of shoppers done by a primary grocery chain,, shoppers are both cutting back on products and switching brands s one buyer told me,, “it’s like nothing I have ever seen; some of my best-selling brands are barely keeping their heads above water”

So what’s going on?

Those of us who have worked in CPG products know very well. First, product managers have to maintain margins which means costs are being passed onto consumers. Second, too many high-level executives bought into the hype that consumers had a lot of cash and they wanted that extra cash. Finally, CEOs, whose compensation is often tied to profits gave the orders to raise prices. It’s going to cost a lot of brands market share but who is going to be blamed?

While I worked in CPGs we lived and died by the monthly/weekly market share reports. A los of more than a few points often led to a series of meetings to try and stimulate demand. Today the only way to stimulate demand of higher priced items is through coupons.

Brands have to think of the strategic consequences of raising prices such as the loss of substantial market share and sales dollars. It’s going to be very hard for them to get that back without a huge increase in promotional spending.

Some cost increases are justified but when brands report record profits consumers are smart enough to see through the price increase charade. The New Normal is here to stay but brand who haven’t really though through their pricing are going to fall to earth with a huge thud.

About richmeyer

Rich is a passionate marketer who is able to quickly understand what turns a prospect into a customer. He challenges the status quo and always asks "what can we do better"? He knows how to take analytics and turn them into opportunities and he is a great communicator.

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