This year has seen almost everything get more expensive: across the shelf, between categories, and independently of brand positioning.
Hindsight tells us that when this happens, brands mostly reach for the same irresistible lever, irresistible for its simplicity: raise prices, hope nobody will notice, and carry on as if there were no tomorrow.
But hindsight also tells us that there is a big difference between increasing prices and becoming something that’s worth more to the customer. The former means changing a number on a label, while the latter means changing the judgement that has to take place inside a customer’s head every day.
We’re all too aware of the current situation: the Strait of Hormuz remains closed (for now). Brent is reaching dizzying heights of 126 dollars per barrel. Inflation in Spain reached 3.3% in March. Shoppers, for their part, are reacting by buying less, trading down, and forgoing little luxuries like eating out.
When everyone raises prices, few turn it into an advantage
We’re talking about a situation where every competitor is making roughly the same decisions every morning. They raise their prices by similar amounts, out of fear, not because more value is added.
In the shoppers eyes, the shock is felt across the entire category, all at once. No price rise is different from the other: it's a world of uniform increases.
Brands that increase prices to defend their margin leave their brand positioning behind. Their message to the consumer? “Forget about everything else, the variable worth tracking is that number, printed on the label.”
This is the beginning of commodisation. Donde todo cuesta más y nada parece tener más valor.
Volume has stopped pulling its weight
In mature European markets, volume growth has been slowing for years. Demographics remain stagnant, categories stay saturated, private label and Asian alternatives continue to absorb the bottom end of almost every category.
But here’s what really remains: value. The distance between what a product costs to make and what a customer is willing to pay for the experience it gives them.
In this territory, sustained growth lives on. It’s the only one protected from challenges from low-cost competitors because it is built on variables like perception, meaning and experience.
The companies that hold their ground in this cycle will be the ones climbing the value ladder while their category commoditises underneath them.
Price is a number. Value is a judgment, a thought, and a promise kept.
Subir el precio le pide al cliente que pague más, porque sí.
Construir premium es ganarse que el cliente acepte que ese más es justo y merece la pena.
Una posición premium es el derecho a cobrar más y a que te crean. Se apoya en una razón visible en cada punto de la experiencia: en el producto, en el packaging, en el espacio, en el lenguaje, en el acto de comprar y de usar.
Raising prices means asking the customer to pay more, just because.
Building premium shapes a new, fair agreement with the customer that tells them that it’s worth it.
A premium position means earning the right to charge more and to be believed. It rests on visible reasoning at every point of the customer experience: in the product, in the packaging, in the space in which it is discovered, in its language, or in the very act of buying and using.
Our moment: the demands of today
There are three decisions to make while the competition is busy with spreadsheets and price multipliers.
Make value visible: while others cut quality to improve margins, turn a quality or feature that was previously taken for granted into a quality that is demonstrated, explained and illustrated.
Build experience: with renewed attention to detail at every touchpoint so your brand’s promise holds strong across communications, channels, stores and spaces.
Hold your nerve on positioning: avoid chasing the customer who is trading down into a price war that will prove all-consuming and near-impossible to win.
A war moves a price for a season.
A premium positioning, built with patience, data and clear thinking, drives a business for a decade