Abstract:

In a country of 1.2 billion people, where over 6 million small stores form the key distribution channel, magic price points, coinage, penetration packs and regional tastes determine pricing power. Facing low cost regional and global competitors, and a slowing economy, PepsiCo needed to re-evaluate the equity-to-pricing linkage of its snacks portfolio. This work helped PepsiCo quantify how the equity of its brands translated into pricing power at brand level, SKU level and flavour level, and to identify windows of opportunities for pricing as well as vulnerable areas. It identified early indicators of competitive threats and lent steering control. This research is an analytical innovation, based on Professor Don Sexton's work on CVA®, that translates brands' equity into consumers' willingness to pay.