Value over Price
As the economy recovers, value means appealing to consumers’ lifestyles, not just their pocketbooks
Undoubtedly, the economic challenges of recent times have changed the face of American consumerism. Shoppers are rethinking their concept of value in all of their purchasing decisions, which has led to price wars, record coupon use and the growth of inexpensive private label brands. But it seems that too often CPG manufacturers and retailers, faced with lagging sales, have focused too narrowly on the price end of the value equation neglecting the opportunity that exists to leverage the value inherent in products that appeal to a shopper’s lifestyle and core personal beliefs, like those offering a functional health benefit or that support a consumer’s move toward a more environmentally friendly or sustainable lifestyle.
Considering all of the current and pre-recession focus on health and personal/environmental sustainability, it may not come as a surprise that, according to The Natural Marketing Institute’s Trends Database report, the functional food and beverage category grew 2% or that the natural and organic food and beverage categories grew 5% over the last year, in spite of a sluggish economy. More telling is the fact that natural and organic general merchandise, including items like pet food, household cleaners and apparel, (items once only found in the aisles of Whole Foods or specialty stores), have experienced double digit growth, mostly due to the proliferation of these products in mainstream shopping channels.
What does it mean when items typically perceived by consumers as expensive and previously relegated to specialty stores go mainstream in spite of a sour economy and declining product assortments? It means that, if properly informed of the product benefits, consumers will make purchase decisions on factors other than price. It means that consumers are willing to spend more for products that fit their lifestyle and specific needs. And, it means that marketers, manufacturers and retailers need to focus on more than price to stay relevant as the economy recovers.
Price is important to many consumers right now. But if low prices are the cornerstone of your sales and marketing strategy, ask yourself, where will your brand be when the economy picks up and price is no longer as important a factor in purchase decisions? Without an educated consumer base who understands the benefits of your brand, who knows how your brand fits their lifestyle, you may find that all you have is the same old brand, now at a higher price.