Implementing sustainable practices often increases production costs. Companies are then challenged to decide whether their market will bear a higher price for a sustainably produced product. Investments in technology can lead to more efficient production but come with significant upfront costs.

Recovering these costs through pricing without discouraging consumers is a critical challenge. International tariffs and trade agreements can have significant impacts on costs and, thus, on pricing strategy. Companies must continually adapt their pricing strategies in response to the dynamic global trade environment.

In the event of a product recall or another crisis, companies not only face direct costs but may need to lower prices to win back consumer trust. This can have a prolonged impact on profitability.

These challenges underline the intricate balance that food manufacturing companies must strike between internal and external factors. Successful navigation through these challenges necessitates a nuanced, dynamic, and data-driven approach to pricing strategy, which is fundamental to maintaining profitability in a complex and competitive industry.

Below is a list of sources of value that are unique to the food manufacturing industry, along with explanations of how they can be tied into pricing strategies, specifically value-based pricing:. A strong and trusted brand can command higher prices due to perceived value.

Unique attributes, such as organic, non-GMO, or allergen-free, can be highly valued by certain consumer segments. Ethical and sustainable sourcing is increasingly important to consumers. Companies can use value-based pricing to set higher prices for sustainably sourced products, capitalising on consumer willingness to pay a premium for ethical choices.

Easy-to-use or ready-to-eat products and innovative or eco-friendly packaging can add significant value for consumers. With value-based pricing, these convenience factors can be quantified and incorporated into the price. Products that offer superior nutrition or health benefits can command higher prices.

Value-based pricing allows manufacturers to set prices reflecting the health and wellness value these products provide consumers. Exceptional taste and quality can be a strong differentiator.

Value-based pricing allows for setting prices that align with the premium sensory experience delivered to the consumer. Scarcity and exclusivity can increase perceived value. Value-based pricing strategies can capitalise on this by setting higher prices for products marketed as limited or exclusive.

An increasing number of consumers value knowing where their food comes from and how it is produced. Companies with transparent supply chains can use value-based pricing to set higher prices, reflecting the added value this transparency provides to consumers. Offering exceptional customer support, such as recipes, meal planning apps, or direct consumer engagement, can add value beyond the product.

This added service value can be considered when setting prices using a value-based model. The ability to quickly adapt products to changing consumer needs or to offer personalised products can be a strong source of value.

Value-based pricing allows companies to charge a premium for products that more closely meet specific consumer preferences or needs. In the context of value-based pricing, these sources of value unique to the food manufacturing industry are crucial.

Instead of setting prices based solely on cost-plus or competitor-based models, value-based pricing strategies enable companies to set prices that reflect the actual and perceived value these unique aspects bring to the consumer.

This approach aligns prices more closely with consumer willingness to pay and thus can enhance profitability while reinforcing the brand value and customer loyalty. Nestlé, a Swiss multinational food and beverage company, is known for its vast range of products, from baby food to coffee. Like any global corporation, Nestlé has had to continuously adapt its pricing strategy to account for fluctuating commodity prices, changing consumer preferences, and various regional economic conditions.

This case study explores some of the obstacles Nestlé has faced regarding its pricing strategy, the actions it took, and the outcomes it achieved. In a crowded marketplace with intense competition, Nestlé often found itself in situations where competitors were slashing prices, making it hard for Nestlé to maintain its price points without losing market share.

Nestlé employed a flexible pricing strategy, where it adjusted its product prices based on the fluctuation of commodity costs. This involved passing some increases onto the consumer and aggressively managing internal costs to avoid dramatic price hikes. By close monitoring and swiftly adapting to changes in commodity costs, Nestlé balanced maintaining profitability and keeping its products affordable and competitively priced.

In emerging markets, where consumers tend to be highly price-sensitive, Nestlé faced the challenge of pricing its products in a way that would be both affordable for consumers and profitable for the company. To address this, Nestlé adopted a tiered pricing strategy, introducing a range of products at various price points to cater to different consumer segments.

This included introducing smaller, more affordable package sizes and lower-cost alternatives in some regions. This approach allowed Nestlé to gain significant market share in emerging economies by offering products tailored to different income levels, making its products accessible to a broader customer base.

Nestlé invested in local manufacturing and sourcing strategies, which reduced its reliance on imported goods and allowed it to mitigate the impact of these regulatory and trade-related cost fluctuations. By localising some of its production and sourcing, Nestlé managed to maintain more stable and competitive pricing in various markets, regardless of external trade pressures.

By refusing to engage in destructive price wars, closely managing the relationship between commodity costs and product prices, tailoring its approach in emerging markets, and localising production to mitigate regulatory impacts, Nestlé has navigated numerous challenges to maintain a robust and competitive position in the global market.

Coca-Cola, a globally renowned beverage company, is recognised for its iconic soft drinks. However, the company has also had to navigate various pricing challenges arising from fluctuating market conditions, changing consumer behaviours, and global economic shifts.

This case study explores some of the obstacles Coca-Cola has faced in relation to its pricing strategy, the actions it took, and the outcomes it achieved. With a growing consumer focus on health and wellness, Coca-Cola, known for its sugary drinks, faced declining demand for some of its core products, impacting its pricing power.

Coca-Cola diversified its product portfolio to include healthier options such as bottled water, teas, and low-calorie beverages. This strategy helped Coca-Cola maintain its revenue streams and improve its brand image, showing an alignment with evolving consumer preferences while securing higher margins on new product lines.

In a saturated beverage market with many competitors, Coca-Cola often faced price wars that threatened its market share and profit margins.

Coca-Cola invested heavily in brand building and marketing initiatives to reinforce its premium brand status. This allowed the company to maintain slightly higher prices than competitors by leveraging its strong brand equity.

By emphasising its brand and quality, Coca-Cola retained consumer loyalty and maintained a pricing strategy that protected its margins, despite aggressive pricing from competitors.

This adaptive approach enabled Coca-Cola to sustain its market presence and profitability across diverse economic environments without alienating price-sensitive consumers.

Increasing government regulations, such as sugar taxes in various countries, directly impacted the cost structure for Coca-Cola, challenging its pricing strategy.

In response to such regulatory pressures, Coca-Cola accelerated its innovation to develop and promote low-sugar or sugar-free variants of its products. Additionally, the company actively advocates and partners with regulatory bodies to work toward solutions aligned with public health goals and business sustainability.

The company also positioned itself as a more responsible and adaptive industry leader, committed to aligning with public health priorities. Coca-Cola has exhibited remarkable resilience and adaptability by diversifying its product offerings and pricing them at a premium, leveraging its substantial brand equity to maintain pricing power, adopting a flexible and region-specific pricing strategy, and proactively responding to regulatory pressures.

These strategies have allowed it to maintain a robust competitive position amidst numerous challenges in the global beverage market. Action: Understand what aspects of your products are most valued by consumers, what differentiates your brand, and how pricing changes might impact demand.

Expected Outcome: Informed and data-driven pricing strategies that align with consumer preferences and willingness to pay. Action: Transition from cost-plus or competition-based pricing strategies to value-based pricing that reflects the actual and perceived value your products offer consumers.

Expected Outcome: Higher profit margins due to prices that are in sync with the value customers perceive, fostering loyalty and potentially attracting a higher-value customer base. Action: Embed sustainability into your core business strategy to allow for a pricing premium rather than using it as merely a marketing point.

Expected Outcome: The ability to command higher prices due to consumer willingness to pay for sustainable products enhances brand image and customer loyalty. Action: Collaborate with suppliers and distributors to identify and implement cost-saving efficiencies that preserve or enhance product quality.

Expected Outcome: Reduced operational costs that can stabilise or improve profit margins without necessitating price increases. Action: The market is dynamic; regularly analyse market and cost data to ensure your pricing strategy remains aligned with market conditions and business goals.

Expected Outcome: A responsive pricing strategy that allows the company to stay competitive and profitable despite market fluctuations. Action: Consider employing dynamic pricing strategies based on real-time market data, seasonality, and consumer demand patterns.

Expected Outcome: Maximising revenue through responsive pricing based on real-time market conditions. Action: Invest in pricing optimisation software and analytics tools to provide insights into pricing elasticity, consumer behaviour, and optimal price points.

Expected Outcome: Accurate, data-backed insights leading to more effective and strategic pricing decisions. Action: Regularly test different pricing strategies on a smaller scale before full implementation to measure their actual impact on sales and profitability.

Expected Outcome: Risk mitigation by identifying the most effective pricing strategies before full-scale implementation. Image Credit: Taco Bel. Value-oriented Food Offerings - Businesses can attract value-oriented consumers by offering affordable and high-quality food products amidst rising inflation.

Limited-time and Specialty Menu Items - Offering limited-time and specialty menu items can attract customers and drive sales for fast-food and quick-service restaurants. Customizable Menu Options - Fast food restaurants can provide customizable menu options to cater to customers' preferences and build brand loyalty.

Fast-food Restaurants - Fast-food restaurants can utilize affordable and high-quality food offerings to attract value-oriented customers and drive sales amidst inflation. Quick-service Restaurants - Quick-service restaurants can introduce limited-time and specialty menu items to attract customers and increase revenue.

Missing Amid rising inflation, Taco Bell is hoping to attract value-oriented consumers with its new $2 Cheesy Double Beef Burrito A value proposition in fast food is a promise made by a chain restaurant to provide customers with high-quality, tasty food at an affordable price

Video

Value-driven dishes - 5 Food Brands That Are Owning Values-Based Marketing · Annie's · Starbucks · Pillsbury · Grounds & Hounds · Whole Foods · Subscribe · The Missing Amid rising inflation, Taco Bell is hoping to attract value-oriented consumers with its new $2 Cheesy Double Beef Burrito A value proposition in fast food is a promise made by a chain restaurant to provide customers with high-quality, tasty food at an affordable price

Action: Transition from cost-plus or competition-based pricing strategies to value-based pricing that reflects the actual and perceived value your products offer consumers.

Expected Outcome: Higher profit margins due to prices that are in sync with the value customers perceive, fostering loyalty and potentially attracting a higher-value customer base. Action: Embed sustainability into your core business strategy to allow for a pricing premium rather than using it as merely a marketing point.

Expected Outcome: The ability to command higher prices due to consumer willingness to pay for sustainable products enhances brand image and customer loyalty.

Action: Collaborate with suppliers and distributors to identify and implement cost-saving efficiencies that preserve or enhance product quality. Expected Outcome: Reduced operational costs that can stabilise or improve profit margins without necessitating price increases.

Action: The market is dynamic; regularly analyse market and cost data to ensure your pricing strategy remains aligned with market conditions and business goals. Expected Outcome: A responsive pricing strategy that allows the company to stay competitive and profitable despite market fluctuations.

Action: Consider employing dynamic pricing strategies based on real-time market data, seasonality, and consumer demand patterns. Expected Outcome: Maximising revenue through responsive pricing based on real-time market conditions. Action: Invest in pricing optimisation software and analytics tools to provide insights into pricing elasticity, consumer behaviour, and optimal price points.

Expected Outcome: Accurate, data-backed insights leading to more effective and strategic pricing decisions. Action: Regularly test different pricing strategies on a smaller scale before full implementation to measure their actual impact on sales and profitability.

Expected Outcome: Risk mitigation by identifying the most effective pricing strategies before full-scale implementation. Action: Ensure that your sales and marketing teams understand the pricing strategy, its basis, and its benefits, so they can effectively communicate this to customers.

Expected Outcome: A cohesive and convincing customer-facing approach to pricing can lead to increased sales and customer acceptance of price points.

Action: Engage a consultancy like Pricing Insight to leverage external expertise, industry benchmarks, and best practices. Expected Outcome: A comprehensive, expertly crafted, and competitive pricing strategy based on industry best practices, leading to increased profitability and market competitiveness.

These action items and expected outcomes offer a roadmap for food manufacturing businesses. Maintaining profitability is a perpetual challenge in an industry as complex and competitive as food manufacturing.

Value-based pricing strategies offer a potent solution, which involves setting prices based on the perceived value to the customer rather than the cost of production plus a markup.

By focusing on the unique value, they provide and effectively communicating this to consumers, food manufacturing companies can set prices that are not only competitive but also profitable.

Are you in the food manufacturing industry and striving for sustainable profitability? It is not just about cost-cutting but about understanding and leveraging your unique value. Contact Pricing Insight to assist with developing a pricing strategy that is robust, data-driven, and tailored to your unique strengths and challenges.

Reach out to us to learn how we can transform your pricing strategy into your most powerful tool to drive margin expansion and earnings growth.

Coined as a term by venture capitalist Aileen Lee. I started analysing the prices of products like Tim Tams back in the mids, when I was the first dedicated pricing manager for Arnotts biscuits—and.

White papers. Taste the Profits: How Value-Based Pricing Transforms Food Industry Profitability. Published On August 23, Written By. Ron Wood.

Industry Challenges Faced by Food Manufacturers The challenges below are faced by the food manufacturing industry, specifically focusing on aspects related to pricing strategy and profitability: 1. Regulatory Compliance and Pricing: Regulatory changes can directly impact the cost structure of a product, forcing companies to reassess and potentially alter their pricing strategies.

Supply Chain Costs: Fluctuations and complexities in supply chain costs directly affect the profitability of products. Raw Material Price Volatility: Rapid fluctuations in raw material prices can destabilise cost predictions.

Adapting to Consumer Price Sensitivity: Consumer demand can be highly sensitive to price changes. Sustainable Practices and Price Premiums: Implementing sustainable practices often increases production costs.

Technology Investment Impact on Price: Investments in technology can lead to more efficient production but come with significant upfront costs. Global Trade and Pricing Strategy: International tariffs and trade agreements can have significant impacts on costs and, thus, on pricing strategy.

Crisis Management and Profit Protection: In the event of a product recall or another crisis, companies not only face direct costs but may need to lower prices to win back consumer trust. Sources of Value Unique to the Food Manufacturing Industry Below is a list of sources of value that are unique to the food manufacturing industry, along with explanations of how they can be tied into pricing strategies, specifically value-based pricing: 1.

Brand Equity: A strong and trusted brand can command higher prices due to perceived value. Unique Product Features: Unique attributes, such as organic, non-GMO, or allergen-free, can be highly valued by certain consumer segments.

Sourcing and Sustainability: Ethical and sustainable sourcing is increasingly important to consumers. Convenience and Packaging: Easy-to-use or ready-to-eat products and innovative or eco-friendly packaging can add significant value for consumers.

Nutritional Value: Products that offer superior nutrition or health benefits can command higher prices. Taste and Sensory Experience: Exceptional taste and quality can be a strong differentiator. Limited Edition or Exclusive Products: Scarcity and exclusivity can increase perceived value.

Supply Chain Transparency: An increasing number of consumers value knowing where their food comes from and how it is produced. Customer Support and Services: Offering exceptional customer support, such as recipes, meal planning apps, or direct consumer engagement, can add value beyond the product.

Adaptability and Customisation: The ability to quickly adapt products to changing consumer needs or to offer personalised products can be a strong source of value. Each bite delivers premium shrimp, clams, crab, octopus and squid in a rich sauce made with Parmesan, Cheddar and cream cheeses.

Tender penne pasta and a blend of seafood seasoning, paprika, onion and garlic add hearty flavor for a creamy, cheesy dish that is comfort food at its finest.

About Phillips Phillips Foods is a family-owned business founded in and recognized as a leading importer and distributor of crab meat in the United States.

Best known for their premium-quality blue swimming crab meat and famous Maryland-style crab cakes, Phillips Foods also produces a full line of seafood appetizers, seafood cakes, soups and entrées for retail and foodservice.

CRAB or visit www. For Immediate Release For more information, contact Phillips at smc phillipsfoods. Subscribe to the Phillips Seafood E-Club. Be the first to receive details on recipes, cooking tips and our newest grocery product info.

Bringing the culinary traditions and welcoming hospitality of Maryland's Eastern Shore. Retail products in your local grocer. All rights reserved.

Privacy Policy. This website uses cookies to ensure you have the best user experience. It works because customers perceive a deal, and ordering is made simple. Many full service, delivery, and fine dining restaurants offer their version of a value meal.

When you design your value meal, work within your existing menu to keep your inventory simple. If you do pizza delivery, an offering of a 2-liter soda and a side salad or breadsticks with a large pizza makes more sense than fries and a fountain drink. Consider your market, and create a value meal that will appeal.

For instance, if you have a lot of lunch business, consider a lunchtime special to speed order entry and drive add-on sales. Choose menu items that are high margin. While it may be effective to offer a combo with your most popular item to increase check sizes, take the time to consider which menu items would offer the highest returns.

If your restaurant brand is high-end, be careful with how you name your packaged offers. Full service and fine dining restaurants often feature meals and pairings throughout their menus.

Include a popular menu item, with high margin sides.

Value-driven dishes - 5 Food Brands That Are Owning Values-Based Marketing · Annie's · Starbucks · Pillsbury · Grounds & Hounds · Whole Foods · Subscribe · The Missing Amid rising inflation, Taco Bell is hoping to attract value-oriented consumers with its new $2 Cheesy Double Beef Burrito A value proposition in fast food is a promise made by a chain restaurant to provide customers with high-quality, tasty food at an affordable price

How Charleston's Husk restaurant stays relevant in a competitive dining city. How Nekter Juice Bar is breaking away from the pack in a crowded segment. How BurgerFi and Anthony's Coal Fired Pizza are generating menu buzz. The Latest. Consumer Trends A list of the highest rated independent restaurants in America reveals some surprises.

Leadership Shake Shack, Whataburger, Pincho add new execs in busy week for job changes. Operations Starbucks plans to make its coffee shops more accessible. Listen to your daily news: RB Podcasts New episodes weekdays. RB Daily. A Deeper Dive. Menu Feed. Restaurant Rewind.

Working Lunch. Consumer Trends Why Reddit couldn't stop talking about Taco Bell last year. Consumer Trends Couples tend to splurge on Valentine's Day, spreading love to high-end restaurants.

Consumer Trends Value-driven combo meals more popular outside the U. Consumer Trends Americans are eating their fast food later in the day. This included introducing smaller, more affordable package sizes and lower-cost alternatives in some regions. This approach allowed Nestlé to gain significant market share in emerging economies by offering products tailored to different income levels, making its products accessible to a broader customer base.

Nestlé invested in local manufacturing and sourcing strategies, which reduced its reliance on imported goods and allowed it to mitigate the impact of these regulatory and trade-related cost fluctuations.

By localising some of its production and sourcing, Nestlé managed to maintain more stable and competitive pricing in various markets, regardless of external trade pressures. By refusing to engage in destructive price wars, closely managing the relationship between commodity costs and product prices, tailoring its approach in emerging markets, and localising production to mitigate regulatory impacts, Nestlé has navigated numerous challenges to maintain a robust and competitive position in the global market.

Coca-Cola, a globally renowned beverage company, is recognised for its iconic soft drinks. However, the company has also had to navigate various pricing challenges arising from fluctuating market conditions, changing consumer behaviours, and global economic shifts.

This case study explores some of the obstacles Coca-Cola has faced in relation to its pricing strategy, the actions it took, and the outcomes it achieved.

With a growing consumer focus on health and wellness, Coca-Cola, known for its sugary drinks, faced declining demand for some of its core products, impacting its pricing power.

Coca-Cola diversified its product portfolio to include healthier options such as bottled water, teas, and low-calorie beverages. This strategy helped Coca-Cola maintain its revenue streams and improve its brand image, showing an alignment with evolving consumer preferences while securing higher margins on new product lines.

In a saturated beverage market with many competitors, Coca-Cola often faced price wars that threatened its market share and profit margins. Coca-Cola invested heavily in brand building and marketing initiatives to reinforce its premium brand status. This allowed the company to maintain slightly higher prices than competitors by leveraging its strong brand equity.

By emphasising its brand and quality, Coca-Cola retained consumer loyalty and maintained a pricing strategy that protected its margins, despite aggressive pricing from competitors. This adaptive approach enabled Coca-Cola to sustain its market presence and profitability across diverse economic environments without alienating price-sensitive consumers.

Increasing government regulations, such as sugar taxes in various countries, directly impacted the cost structure for Coca-Cola, challenging its pricing strategy.

In response to such regulatory pressures, Coca-Cola accelerated its innovation to develop and promote low-sugar or sugar-free variants of its products. Additionally, the company actively advocates and partners with regulatory bodies to work toward solutions aligned with public health goals and business sustainability.

The company also positioned itself as a more responsible and adaptive industry leader, committed to aligning with public health priorities. Coca-Cola has exhibited remarkable resilience and adaptability by diversifying its product offerings and pricing them at a premium, leveraging its substantial brand equity to maintain pricing power, adopting a flexible and region-specific pricing strategy, and proactively responding to regulatory pressures.

These strategies have allowed it to maintain a robust competitive position amidst numerous challenges in the global beverage market. Action: Understand what aspects of your products are most valued by consumers, what differentiates your brand, and how pricing changes might impact demand. Expected Outcome: Informed and data-driven pricing strategies that align with consumer preferences and willingness to pay.

Action: Transition from cost-plus or competition-based pricing strategies to value-based pricing that reflects the actual and perceived value your products offer consumers. Expected Outcome: Higher profit margins due to prices that are in sync with the value customers perceive, fostering loyalty and potentially attracting a higher-value customer base.

Action: Embed sustainability into your core business strategy to allow for a pricing premium rather than using it as merely a marketing point.

Expected Outcome: The ability to command higher prices due to consumer willingness to pay for sustainable products enhances brand image and customer loyalty. Action: Collaborate with suppliers and distributors to identify and implement cost-saving efficiencies that preserve or enhance product quality.

Expected Outcome: Reduced operational costs that can stabilise or improve profit margins without necessitating price increases. Action: The market is dynamic; regularly analyse market and cost data to ensure your pricing strategy remains aligned with market conditions and business goals.

Expected Outcome: A responsive pricing strategy that allows the company to stay competitive and profitable despite market fluctuations. Action: Consider employing dynamic pricing strategies based on real-time market data, seasonality, and consumer demand patterns. Expected Outcome: Maximising revenue through responsive pricing based on real-time market conditions.

Action: Invest in pricing optimisation software and analytics tools to provide insights into pricing elasticity, consumer behaviour, and optimal price points. Expected Outcome: Accurate, data-backed insights leading to more effective and strategic pricing decisions.

Action: Regularly test different pricing strategies on a smaller scale before full implementation to measure their actual impact on sales and profitability. Expected Outcome: Risk mitigation by identifying the most effective pricing strategies before full-scale implementation.

Action: Ensure that your sales and marketing teams understand the pricing strategy, its basis, and its benefits, so they can effectively communicate this to customers. Expected Outcome: A cohesive and convincing customer-facing approach to pricing can lead to increased sales and customer acceptance of price points.

Action: Engage a consultancy like Pricing Insight to leverage external expertise, industry benchmarks, and best practices. Expected Outcome: A comprehensive, expertly crafted, and competitive pricing strategy based on industry best practices, leading to increased profitability and market competitiveness.

These action items and expected outcomes offer a roadmap for food manufacturing businesses. Maintaining profitability is a perpetual challenge in an industry as complex and competitive as food manufacturing. Value-based pricing strategies offer a potent solution, which involves setting prices based on the perceived value to the customer rather than the cost of production plus a markup.

By focusing on the unique value, they provide and effectively communicating this to consumers, food manufacturing companies can set prices that are not only competitive but also profitable. Are you in the food manufacturing industry and striving for sustainable profitability?

It is not just about cost-cutting but about understanding and leveraging your unique value. Contact Pricing Insight to assist with developing a pricing strategy that is robust, data-driven, and tailored to your unique strengths and challenges.

Reach out to us to learn how we can transform your pricing strategy into your most powerful tool to drive margin expansion and earnings growth. Coined as a term by venture capitalist Aileen Lee.

I started analysing the prices of products like Tim Tams back in the mids, when I was the first dedicated pricing manager for Arnotts biscuits—and. White papers. Our team of VDS experts can get you on track for big gains and on-going improvement.

In addition to the regular Operational Excellence OpEx issues that all manufacturers face, the food and beverage industry faces even greater challenges as the environment you operate in is complex and ever-changing.

Your products are under extreme scrutiny and have a direct impact on the health and safety of the consumers. That's where VDS comes in. We apply the Value Driven Approach® to your business to make sure it's running optimally and efficiently, with end-to-end continuous improvement.

Our methodology has been proven to work in a variety of industries, and we're confident that it can help your food and beverage business satisfy its appetite for growth. What's the secret ingredient to our success? Our team of Everything OpEx® experts have a wealth of experience in Food and Beverage manufacturing.

We understand the challenges you face on a daily basis and we're ready to help you overcome them.