Integrated pricing strategy

Date of publication: November 2, 2020

Company: Diageo

Author: Arvind Sainath

Abstract:

Getting the right pricing strategy is very critical for CPG companies - more so in the alcoholic beverages (AlcoBev) category in India, because AlcoBev is a highly regulated industry subject to high taxes coupled with restrictions on distribution and mass media communications. This renders it very price sensitive and highly competitive. At Diageo India, we have developed an integrated brand pricing framework that encompasses the following dimensions: (i) consumers' current sensitivity to brand price; (ii) behavioural equity measure (total $ value that is the sum of functional and emotional benefits provided to the consumer by the brand, over and above price); and (iii) drivers of equity. This holistic framework enables maneuvering pricing in the market for the short-term while getting the right balance between price and total brand value, as perceived by consumers in the longer run and also driving actionability in terms of building up equity.

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