The value of price-marked packs

Jennifer Pratt gives an exclusive insight from research consultants him! on price-marked packaging.

Jennifer Pratt
Jennifer Pratt, Shopper insight manager, him!

Price-marked packs have been gaining ground with symbol and independent retailers for some time now.Soft drinks, tobacco and biscuits are the categories where retailers tell us they sell most PMP, although we know that price-marked packs are popular across a number of other categories from milk to teabags.

According to our research, retailers stock price-marked packs because of the perceived higher rates of sale, and crucially, because of the customer trust that they believe it wins. This customer trust is a key factor of influence. According to symbols and independent retailers, shoppers have a tendency to trust suppliers over retailers when it comes to price. Price marking overcomes that barrier to trust and assures the customer that they are not being overcharged.

Therefore for wholesalers, stocking of a wide range of PMP is essential. It is a major influencer for retailer choice of wholesaler. 37% of retailers said that the availability of price-marked packs had a strong influence over their choice of wholesaler – in other words, stocking price-marked options can attract two in five retailers who do not currently use the wholesaler. PMP also influences the propensity for retailers to buy and stock new products, not before sold in their shops; with 63% saying they would be more likely to stock a new product if it released a PMP as well as a plain pack. Note that PMP alone is not enough for securing new product sales; additional promotional activity and relevant point of sale must surround the launch too. 

For suppliers, the challenge lies in reassuring retailers that the incremental volume sold will make up for the tighter margins that price marking allows. These volume uplifts are more pronounced when premium brands price mark, as was the case for Red Bull when they launched their price-marked can last year.

Price marking allows for the gap between premium and entry level pricing to shrink, therefore encouraging trade up. Suppliers must be clear in communicating this message to retailers.

Elit Rowland speaks to the suppliers who are driving the price-marked innovation

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