So the settled reality is, Egypt has been experiencing a major price increase in energy and electricity, which has reflected on the rise of the economy’s inflation rate reaching almost 12% up to date.
According to the ministry of finance, it’s expected for subsidies to continue being removed in the next 5 years, in addition to applying the value added taxes (VAT).
Well, what does that mean for your brand?
Unfortunately, continuous pressure on cost will become inevitable!
When price increases is forced beyond the long-term strategic plan, it becomes a curse to brands. Managers must choose between one of the following possible scenarios:
1- Reflect cost increase on end-consumers
2- Sacrifice quality using cheaper raw material
3- Reduce pack size
From here it becomes a curse, if you’re not lucky, the increase will eventually fire back, if not short term, then long term. Either profitability drops or consumers switch to substitutes.
This economic evolution gives rise to a critical big dilemma the Egyptian market needs to have an answer for sooner than later:
How to manage prices in an era with increasing costs and stagnated purchase power?
If only we could know beforehand the impact of price increases on purchase behavior.
The good news is, recent research developments in analytics gave rise to new methodologies that allow brand managers to test different pricing scenarios before being introduced to the market; from there we are able to derive strategies for managing prices that maintain/increase profitability, while growing brand performance.
With Smart Pricing we managed to turn price increases from curse to opportunity for our global clients such as P&G, Phillip Morris, RB, and other multinational corporations