Australian FMCG brands face a hard choice in price and promotion. Raise prices to protect margin, or slash them to defend share. Both feel risky. Yet, when cost foundations are shaky and your view of customer value is fuzzy, neither works. The real issue is not inflation alone. It is discipline. Without discipline, price reviews become margin gambles. Instead, value-based pricing and smarter promotions win shoppers and protect profit.
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Why the FMCG Cost-Plus Mentality No Longer Works
Too many FMCG teams still use cost-plus pricing. Often, they rely on poor cost data and hurried spreadsheets. As a result, FMCG price decisions vary by accident. Some customers pay too much, others pay too little. More importantly, the brand loses credibility. In short, sloppy pricing damages trust more than inflation does.
Therefore, you must stop treating product price and promotion simply as a markup exercise. Instead, treat it as a signal of value. When you set a price by perceived value, you strengthen price and revenue management and align earnings to customer outcomes. This approach is cleaner. It reduces arbitrary increases and prevents overcharging loyal shoppers or undercutting premium positioning.
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Product Promotions: The Comfort Blanket That Weakens Pricing Power
Price and promotion strategies feel safe. They lift volume fast. Yet frequent discounts train shoppers to wait for sales. Over time, full prices lose meaning. Promotions become the default price, not a temporary incentive. Consequently, brands erode pricing power and margin. So, FMCG promotions should be purposeful.
Use them to introduce new packs or reward loyalty—not to hide cost failures. In practice, this means planning product price and promotion programs that support value tiers. Also, measure post-promotion retention. If buyers disappear after the discount, the promotion failed. It delivered short-term volume but no long-term value.
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Discipline Matters More Than Inflation for Price and Promotion Success
Price and promotion discipline start with targeted moves. Price rises must be surgical, not sweeping. Promotions must be strategic, not reactive. Both require confidence in data, cost models, and the brand’s value story.
First, segment your customers by value sensitivity. Second, map price elasticity by pack size and channel. Third, test small, then scale. With disciplined price and revenue management, you raise prices where customers will accept them and run FMCG promotions where they add value. This protects both margin and brand equity.
Shifting Focus to Value Accuracy in Price and Promotion Decisions
Shift the team’s focus from cost accuracy to value accuracy. Value accuracy means knowing what customers truly value. Is it convenience, taste, size, sustainability, or price? Use shopper research, elasticity testing, and point-of-sale data to strengthen your price and promotion strategy. For example, a snack brand may find that health-conscious buyers pay a premium for smaller, premium packs. So, the brand can price those packs higher and promote standard packs differently.
In another case, private-label gains show shoppers trade down for perceived value. Over 40 per cent now choose private labels for affordability and value. That trend tells you customers buy on perceived benefit versus label. Therefore, price to those benefits. Finally, link product price and promotion tiers to clear product promises. When you do this, FMCG promotions reinforce value rather than erode it.
Step-by-Step Price and Promotion Guide for FMCG Pricing Teams
1. Audit your cost data and pricing logic. Identify where outdated cost-plus formulas or inconsistent markups distort price and promotion outcomes. Replace them with models grounded in perceived customer value.
2. Map your value drivers. Use shopper insights, elasticity analysis, and basket behaviour to understand what customers truly pay for—quality, convenience, sustainability, or pack size. This forms the base of effective price and revenue management.
3. Segment your portfolio. Define clear value tiers across SKUs and channels. This allows targeted FMCG price adjustments and more consistent FMCG promotions.
4. Refine your promotion mechanics. Track redemption rates and post-promo retention. Eliminate discounts that spike short-term volume but destroy margin.
5. Integrate data systems. Link cost, sales, and shopper analytics into one platform so product price and promotion decisions are fast, informed, and aligned.
6. Govern with cross-functional discipline. Align marketing, sales, and finance around shared KPIs—value growth, not volume churn.
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Sponsoring a True Price and Promotion Capability Across FMCG
Executives must stop protecting legacy cost-based systems because they are comfortable. Sponsor a price and promotion capability that connects pricing to customer outcomes. That means cross-functional governance, investment in integrated data—costs, shopper insights, and competitor moves—and upskilling teams to talk about value, not spreadsheets.
Also, set a clear mandate: product price and promotion decisions must show customer impact. If you want discipline, make pricing a KPI. Reward teams for margin and retention, not just volume spikes. In short, leaders must choose change, fund it, and hold the organisation to account through strong price and revenue management.
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Winning Trust Through Strategic Price, Promotion, and Revenue Management
Trust drives price and promotion outcomes more than inflation. When FMCG brands price with discipline, they stop reacting and start leading. The goal is to make price rises precise and value-based, and make FMCG promotions strategic and loyalty-building. Build capability that measures perceived value, not just costs. Shoppers don’t dislike higher prices—they dislike prices that feel unfair. So, price fairly, communicate clearly, and use product price and promotion to strengthen trust.
FMCG leaders should sponsor a value-based pricing program now. Invest in data, governance, and capability to make pricing a strategic advantage, not an accounting task. Pricing teams should shift focus from cost accuracy to value accuracy. Use shopper insights and elasticity testing to design FMCG price and promotions that build loyalty and protect margin.
With the right structure, data, and value story, price and promotion becomes your edge. Let’s build that together. Reach out today—we’ll help you align pricing, promotions, and teams around what truly drives value and long-term customer trust.
For a comprehensive view of maximising growth in your company, Download a complimentary whitepaper on How FMCG Can Generate Profitable Growth Faster.
Are you a business in need of help aligning your pricing strategy, people and operations to deliver an immediate impact on profit?
If so, please call (+61) 2 9000 1115.
You can also email us at team@taylorwells.com.au if you have any further questions.
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