Traditionally, chief marketing officers have oversight over promotions to get products out, but not much influence on initial pricing as products come in. Should that change, especially in inflationary times?
“Pricing decisions in organizations seldom receive input from those who design and implement interactions with customers (through advertising, websites, etc.),” wrote Marco Bertini, a marketing professor at Barcelona’s Esade–Universitat Ramon Llull, in a recent column for Harvard Business Review.
The professor cited findings from 2021’s “The CMO Survey” from Deloitte, Duke’s Fuqua School of Business and the American Marketing Association that found 78 percent of U.S. marketers at for-profit companies were responsible for promotion versus a quarter indicating marketing was responsible for pricing.
The professor argued that even if firms are more tempted to downplay pricing in inflationary times, consumers are seeking transparency and price messaging can be incorporated into brand values.
Prof. Bertini wrote, “Integrating price setting with price communication requires that organizations treat the two as interrelated outcomes of the same decision process.”
A Gartner survey of 270 U.S. consumers conducted in March found nearly 40 percent citing vendors and retailers’ focus on boosting their profits as one of the drivers behind inflationary pressures, up from 30 percent in a survey taken in November 2021.
In a column, Katya Skogen, director, research in the Gartner for Marketing Leaders practice, said that while marketing may not lead pricing strategy, chief marketing officers “must manage the brand-related fallout” from decisions to push through higher prices to customers over absorbing escalating costs.
She said, “Given the signs of increasing consumer skepticism toward brands’ justification of price increases, the way companies frame pricing may backfire if not approached carefully.”
Ms. Skogen also noted that recently quarterly analyst calls show firms embracing a “cavalier approach” in citing finding success by passing through pricing actions with comments often picked up by media outlets.
Reports on potential inflation profiteering have included comments from quarterly calls from Kroger, Tyson Foods, Dollar General, Procter & Gamble and Constellation Brands.
Talking to Your Customers About Prices – Harvard Business Review
The CMO Survey Topline Report August 2021 – The CMO Survey
How Marketers Can Address Consumer Inflation Concerns – Gartner
Corp. profiteering driving inflation, threatening most vulnerable – Louisiana Weekly
Giant food producers are profiteering off inflation — and bragging about it too – Salon
Major retailers accused of profiteering from rising inflation – CBS News
The Real Inflation Problem: Corporateprofiteering – Groundwork
Profiteering Watch: Dollar Tree and Dollar General Trumpet Huge Profits After Price Hikes – Accountable U.S.
Profiteering Watch: General Mills’ Profits Explode By 97 Percent After Five Price Hikes – Accountable U.S.
Profiteering Watch: Procter & Gamble Boasts “Biggest Annual Sales Increase In 16 Years” After Excessive Price Hikes – Accountable U.S.
Par: Tom Ryan (09/08/2022)