Effect of price rise on sales

The majority of FMCG companies have been forced to increase their prices. However, the effects of price increases can only be assessed subsequently. “Does an optimal strategy exist?” and ” What degree of price increase can consumers tolerate?” are the key questions for decision makers. Three pricing strategies have been identified by Nielsen analysts: 1. Cost based pricing, 2. Competition based pricing, 3. Value based pricing. All other strategies can be considered different variants of the above three. According to domestic and international experience, the behaviour of specific products and distribution channels can be predicted reliably when prices change. This allows the effects of different strategies to be compared before an actual decision is taken. In the majority of cases, significant results can be achieved by minor adjustments, like asymmetric price rises. In certain categories, an increase in the frequency of promotions can compensate the effect of higher prices, while in other categories the opposite is possible in order to finance a reduction in price. Forecasts are based on a modelling method used by Nielsen which is based on weekly sales data and is used successfully in more than 100 countries.