The essence of price pack architecture is to provide consumers a viable selection of products that meet their needs at the price points they are willing to pay, driving portfolio growth and enhancing a brand’s overall value proposition in the outlets where they shop for any given purchase occasion. This is no simple task. After all, there are more than 118 million households in the U.S. Each of these households will undertake countless different shopping trip missions during a lifetime, and even for a single shopper, the mindset within each mission will impact everything from product need and pack size selection to channel preference and price sensitivity. For this reason, new product innovation and pricing are inextricably intertwined.
Unfortunately, for many in today’s CPG landscape, pricing and innovation are viewed as completely separate issues. As such, these issues are addressed by different resources with polarized skill sets and disparate approaches.
To maximize price realization in a way that builds true and sustainable bottom-line growth while supporting shopper loyalty and category share, CPG marketers should focus on creating a powerful price pack architecture. Manufacturers that have gotten their price pack architecture right, such as with bundling or alternative pack sizes, have seen profits increase 2-5 percent while also increasing revenues.