Pricing puts me in a perfect storm
Pricing is just one of the famed Ps of marketing, yet it seems to represent an unfair share of my time these days. On one side of the equation, my brands are facing record input costs and a further weakening of sterling. On the other, I am struggling as supermarket buyers fend off requests for price increases, preferring instead to beat each other up with unprecedented promotional offers.
I find myself in the middle of a perfect storm. Last week, I was summoned to a meeting with a long-standing customer. He is not our biggest buyer, but he is a loyal and important customer of many years. After more than 25 years building up a regional wholesaling business supplying independent retailers, he’s at the end of his tether.
“I am reminded by the buyer that it is illegal to discuss retail selling prices”
He demands that I explain why it is that consumers can now buy my brand cheaper in Tesco than he can buy it in full pallet quantities at wholesale trade prices. He is close to tears as he then goes on to explain that earlier this week he had to make a third of his warehouse staff redundant. This is no longer a presentation of our brand plans and new products, but the most difficult business meeting I have ever attended.
So just how did we get in this mess? We routinely agree promotional plans with major customers. Nothing unusual there. Well, that is until one of the supermarkets decides that our agreed activity is no longer strong enough. They ask us to fund a greater discount. We refuse.
They decide to take our original funding and upgrade the offer to a better-than-half-price deal.
Within a day, the other supermarkets follow suit and start advertising this unbeatable “loss leader” deal in their TV and print campaigns. We try to regain control and arrange emergency meetings with the key buyers at each retailer. Within minutes of arriving at the first of these meetings, I am reminded by the buyer that it is illegal to discuss retail selling prices and if I even mention “pricing”, she will end the meeting and escort me from their offices.
She goes on to say that we must be delighted that we are shifting so much more than our original volume forecast and that we are very lucky to be her chosen featured offer. She has absolutely no idea just how much being “lucky” is costing me.
