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For most multinational
companies, managing
price in different
geographies can be a
sizeable and complex
challenge. ACNielsen
Analytic Consulting’s
Global Normative
Database, piloted in 2005
[covering 10 countries,
three categories and
a selection of brands
and packs] offers a
consistent assessment
of a brand’s pricing
sensitivity, and provides
global brand owners
with benchmarks across
different geographies
and categories.
In 2006, ACNielsen
Analytic Consulting has
been building on this
Normative Database,
adding countries,
categories and brands.
ACNielsen’s Global Normative
Database highlights that consumers
are not the same. Their response
differs for brands within a category,
between categories and between
countries.
For instance, a comparison between
an oral care brand and a soft drink
brand (Figure 1) indicates that
the same brand can have very
different price sensitivity between
countries depending on how a
country’s consumer base reacts.
These sensitivities range from low
medium to high.
In today’s global economy, local
price strategies cannot be managed
independently. Globalisation of
retailers means that most brand
owners operate trade price
corridors, to minimise the risk of
arbitrage. This sets a ‘floor’ for
the consumer pricing strategy:
brand owners need to use their
understanding of consumer price
sensitivities to set a global retail
price corridor within which local
price strategies should operate.
When creating a global pricing
strategy, brand owners need to
consider the following factors, that
vary in their degree of importance.
Consumer price
sensitivity – critical
importance
Local consumers’ ability and
willingness to pay a specific price
in a specific geography.
Considerations: disposable
income; price sensitivity; level
and type of competition.
Retailer pricing strategy
- important
Maturing CPG industry leading to
aggressive pricing strategies by
many retailers.
Considerations: private label;
hard discounter threat; range.
Retailer potential for
arbitrage – increasing
importance
International retailers buying at
the most favourable trade price,
selling at the local retail price.
Considerations: buying power;
import tariffs; logistic expense.
Consumer potential for
arbitrage – category
specific (e.g. tobacco)
Consumers’ ability and willingness
to travel for a better deal.
Considerations: border-crossing;‘duty free’.
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