RedRoute have extensive experience of brand management in the drinks industry covering all aspects of marketing effectiveness. We have also undertaken several studies providing econometric models on the impacts of pricing and taxation on overall consumption as well as sales of individual brands and categories. These were conducted to support industry-wide submissions to HM Treasury.
Our most recent drinks industry study was for a brand who wished to understand how to optimise pricing in the face of new government-supported regulation on price promotions. The important dimension for the client was to ensure that if price promotions were reduced that the reduction in volume sales would not lead to reductions in profits.
This required using econometric modelling to understand the price elasticity of the brand in differing major retailers using weekly EPOS data.
The models we derived explained more than 95% of the week-on-week movements in sales and provided precise estimates of the impacts of changes in relative, price thresholds, price promotions, in-store feature and display, and other factors such as advertising support. The results showed that people have very little brand allegiance in the category and that individual brand sales were therefore sensitive to price movements as shown in the diagram 3. Again the scales have been suppressed for reasons of client confidentiality.
The client was able to use these results in setting pricing strategy and tactics for the brand and see from this how to increase overall profitability by more than 15% providing an ROI on the cost of the project of many thousands of percent.