Tea Brand Price Point Evaluation – RedRoute International

We evaluated the risk of departing from established fixed price points and recommended an effective pricing strategy to a leading tea brand.

Client was a leading company in the business of manufacturing, distribution, marketing and selling of tea in Pakistan
Client’s significant small unit sku portfolio was locked into 10 and 20 currency-based price points for many years, hence restricting value creation
Each COGS increase was addressed with reduced quantity rather than unit price increase
The unit price increase risk had been fed back by historic inertia and trade feedback
Since price increase had not been taken in past, client was unable to evaluate its impact
Since these skus represented a significant volume of the total portfolio for client it was considered high risk to increase unit prices

Used a Risk Evaluation Framework (REF) methodology customized to evaluate the challenge in the local operating context
The REF consisted of parameters and their assigned weights of significance, developed on basis of international price management experience combined with local environment relevance
The parameters set comprised of brand, market, and macro-economic metrics, each of which were rated for risk through extensive quantitative and qualitative research methods and analysis

The overall risk rating for the proposition was low to medium. The parameters related to macro-economic conditions and brand’s own evaluation suggested a low risk in departing from fixed price points, however, metrics of the competitive landscape indicated a higher risk
The consultant added international benchmarks and expert judgement to the REF findings to present strategic options, each with execution outlines and competition reaction scenarios

The recommended dynamic solution, backed with thorough analytics, gave client’s senior management confidence to act decisively, creating brand value while keeping the competition in check

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