PriceGain made the profit increase for a player in the FMCG industry.
Situation: Prices based on cost and perceptions of the customers’ willingness to pay
Our client faced tough competition and when prices were set they were based on cost and perceptions regarding what our client thought their customer would pay for the products. Our client wanted to improve their margins but was afraid to lose customers or ruin their price image.
Solution: Prices adjusted according to the customers’ willingness to pay.
Through a survey PriceGain established the relationship between price and demand. Based on the survey the products in the two categories could be priced in a way so the total profit on each category was optimized.
Result: Profit margin increased with 4-5 percentage points on ROS for each product category.
The result could be found on the bottom row immediately after implementing the new prices. Implementation of the suggested prices gave an improved profit margin of 4-5 percentage points on ROS in each category. The follow up clearly showed positive effects in customer buying patterns and the price image was not ruined.