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Price Analysis and Price Scattering: Understand What’s Happening in Stores
By Marie Moriceau, Account Manager, Beauty
The fragrance category in France remains stable in value, but it is decreasing in units. New product launches are generally the only brands that are growing; most established brands are declining. Manufacturers try to make these established brands look better to consumers by invigorating them through marketing efforts: TV ads, print media ads, in-store promotions, and launches of new products within the brand, such as new concentrations and new formats.
Brand A, which has been on the market for more than 10 years, launched a limited-edition, special sized product in 2005: a 15 ml version of the fragrance for 29 €, when the 25 ml version cost 53.8 €. The goal of the new size was to create some “buzz” around this brand to renew consumer interest and boost sales. In 2006, sales of the brand decreased for the first nine months of the year; the manufacturer decided to reintroduce the smaller version to get the buzz going again, but with a lower price this time: 25 €. Marketers behind the brand hoped to refresh its image and attract new consumers with this special pricing.
| Price Point (€) | Number of Stores Selling | Unit Sales | Unit Sales per Stores |
|---|---|---|---|
| More than 30 | 44 | 111 | 2.5 |
| 27 to 29.99 | 54 | 213 | 3.9 |
| 25 to 26.99 | 121 | 384 | 3.2 |
| 23 to 24.99 | 413 | 2507 | 6.1 |
| 21 to 22.99 | 232 | 1260 | 5.4 |
| TOTAL | 864 | 4475 | 5.2 |
The first time the company tried the smaller bottle proved successful: 26,000 units were sold between October and December 2005, representing 6 percent of the brand’s unit sales. The brand’s sales slowdown decreased. For the latest attempt to boost sales, the manufacturer asked NPD this question: At which price shall we sell this product, 25 € or 29 €?
NPD used its retail census to create store groups that included French chains and all department store doors, and analyzed the prices at which this product was sold. Different price points were developed and analyzed. The result? Sales of the product were significantly higher when the price was equal to or lower than 25€. The unit sales were 1.8 more when the price was between 21 and 25 €, and these additional sales more than offset the lower margins.
After NPD shared these results with the manufacturer, the company decided to keep the price at 25 € for its promotion in January 2007. In February, Brand A reached its best market volume share since March 2006.
For more information about how NPD BeautyTrends can help businesses in France, contact Martine Ringwald at +0033-1-55-78-25-28 or Martine_Ringwald@npd.com.Back to Top