Marketing, Pricing & Selling
Segmentation, portfolio, product & price strategy
for consumer goods & retail
Vocatus is an international consulting firm supporting consumer goods and retail companies in developing customer-centric segmentation, portfolio, product, and pricing strategies. Our approach is based on behavioral economics, which is state-of-the-art in understanding, predicting and changing customer decisions.
Segmentation, portfolio, product & pricing strategy
Market segmentation & positioning brands
In mature markets characterized by different customer needs and high competitive intensity, it is not enough to understand the preferences of the average customer and align the product perfectly with those. That would be comparable to offering grey gummy bears because the blend of red, green and yellow is grey. If companies do that, they ultimately do not reach any customers, because each one will feel better served by a supplier who offers a specific flavor.
So, if manufacturers don’t want to or cannot address every individual need through mass customization, they need to segment the needs in the market and decide which segments they want to address and which not. Those should be segments which 1) offer economic potential, 2) are not (well) served by market competitors yet, and 3) resonate well with the needs of a firms’ offering. Companies with multi-brand portfolios can hence position their brands in such a way that they address different segments and do not cannibalize each other.
In theory, there is an infinite number of ways to build a segmentation. The art of segmentation is to find segments that:
- explain buying behavior (e.g., from attitudes and needs),
- differ along observable characteristics (e.g., demographics),
- contain information about how to reach them (e.g., media usage), and
- form a consistent story so the company can establish a common language across the organization about its customers.
We support you with that.
Expand or reduce the portfolio in the most efficient way
Usually, an expansion of a product portfolio only makes sense if manufacturers can use it to attract new target groups, or to sell more to existing customers without cannibalizing existing products.
A reasonable portfolio expansion is therefore typically not a product that is well received overall but a product that best complements the existing portfolio. If chocolate, vanilla and strawberry, for example, are the most popular ice cream flavors, an ice cream manufacturer that already offers chocolate and vanilla should not necessarily introduce strawberry next. That is because strawberry may only reach customers who already like chocolate and vanilla. Meaning he is cannibalizing his existing portfolio. Instead, he would be better off introducing a more exotic flavor that addresses a niche market.
We support our customers in the optimal expansion or even the most efficient reduction of their portfolio. With conjoint or TURF analyses, we can simulate extensive market situations with complex interdependencies (e.g. line pricing, channel dependencies).
Simulate & optimize price adjustments
Pricing has the most direct and immediate impact on profit. At the same time, adjusting prices is very risky. Therefore, whenever companies change prices, they should carefully check whether and to which competitors they are losing customers, consumption volume or purchase frequency, as well as what increase in sales you can expect.
Using conjoint analyses, we are able to simulate the consequences of price adjustments even in very complex market situations characterized by a large number of products and competitors. As a consequence we can tell our customers whether it is worth adjusting the prices of their products and what the optimal portfolio pricing should look like in terms of sales or revenue. Further, we are also able to simulate the effects of competitors’ pricing actions and whether and how you should react to them.
Beyond the short-term effects on volume and value, we give advice on the long-term effects of price measures. Although a price reduction almost always boosts sales in the short-term, it destroys customers’ perception of value and price acceptance in the long run. Conversely, even though a price increase may cost some sales at the beginning, it trains the “price acceptance muscle” and is, therefore, a worthy investment in future price increases.
How to understand & improve price perception
Especially in times of inflation and uncertain economic prospects, customers review their spending behaviors and may be scrutinize entire categories or channels. Thus, they may shift their retail purchases from supermarkets to discounters, buy conventional instead of organic, or private labels instead of branded goods.
Responding to such saving strategies with price reductions often has little impact, as customers no longer even get as far as comparing the prices of individual products. Therefore, manufacturers and retailers face the challange to communicate, and create the impression that it is still reasonable to choose a particular brand or visit a specific retailer.
Essentially, this is a question of price image management, which requires manufacturers and retailers to understand which price image dimensions are relevant to customers and which ones should be occupied by means of communication.
Even in challenging economic times, we help to position products in the correct mental accounts.
What our customers say about us
"…clear understanding what truly drives purchase decisions…"
“With a clear understanding of what truly drives purchase decisions, their recommendations were concise, actionable and well accepted throughout the organization.”
"... it was important to us to work with THE experts in pricing strategy."
“Vocatus consistently provided an excellent service, from conceiving the project right through to analysing, interpreting, and presenting the results. And our hypothesis was totally confirmed too.”
Ard Jen Spijkervet
Esselte Leitz GmbH & Co KG
"While searching for an expert in the area of price strategy, there was no way around Vocatus."
“Thanks to their pragmatic and solution-oriented approach and support, we have received valuable tactics to optimize our price strategy and design of our product range. In the future, we would always count on the expertise of Vocatus to fall back on.”
Vertbaudet Deutschland GmbH
We regularly develop segmentation strategies for a large consumer goods manufacturer in the home care sector. The results are used to prioritize new product developments, develop marketing messages and allocate marketing budgets efficiently.
Portfolio development & Price optimization
We develop market simulation tools for a beauty care company for many years now, to simulate the effects of product launches and price adjustments on sales, turnover, cannibalization and churn.
We advise various food retailers on the right design of promotions, product placements and the selection of corner items, which should be priced particularly careful, because they shape the retailer's price image.
“There are real experts at work whose top priority is to eventually provide real and implementable recommendations for action. Thanks to the study results […] we now know what exact motivations drives our costumers’ decisions.“
Rolf Stefan Schäfer
Senior Manager Business Steering & Pricing