Cracking the code: How shopper segmentation can unlock the power of price pack architecture
Price pack architecture (PPA) may well be the secret weapon of the marketing world, and we believe getting it right is the key to unlocking the hearts (and wallets) of shoppers.
First, we must pose the question: what is PPA? It is the assortment of products offered by brands: different designs, sizes, features, sub-brands, and price points. Its objective is to create a clear and consistent structure that makes it easy for consumers to understand and choose the appropriate product. PPAs should offer a range of options that cater to different shopper needs and preferences while maintaining a balance between value and profitability for the company.
Our take on PPA
Our strategic PPA framework and analytical toolkit provides a structured and disciplined approach to assessing price pack architecture. The framework puts the spotlight on shopper needs, growth opportunities, differentiated solutions across channels, and maximizing brand value propositions.
Based on a holistic review of the commercial and shopper data available, and with input and context from the local market team, we can provide informed recommendations in four key areas: how to understand the shopper, where to play, how to win, and how to execute.
- How to Understand the Shopper: Segmenting shoppers gives us profiles that tell us who does the shopping, when, and why they buy what they buy. This allows brands to get a deeper understanding of shopper motivations and buying moments, and thus tailor their offerings to specific shopper demographics (e.g., families vs. singles or low income vs. high income), channels (e.g. grocery stores vs. discount stores) and missions (e.g. weekly vs. stock up).
- Where to Play: At the intersection of these channels and other key category segments (such as life stage or product group), we look at profit ranges – this helps us understand and prioritize growth opportunities for the brand across the whole category and break them down by channel and product format. We then look at sub-segment attractiveness based on category trends, retail sales, fair share opportunity, and expected profitability.
- How to Win: Once we’ve identified where to play, we can focus on highlighting white space opportunities based on a synthesis of commercial and shopper data. This is when brands can start defining pack roles: what’s an ‘entry pack’ in this category, what’s a ‘frequency pack’ or ‘upsize pack’, and are there any ‘upscale packs’? By analyzing the brand’s assortment versus shopper needs in the relevant channel and conducting a review of competitor offerings, we can provide informed pack recommendations for specific shopper segments in specific channels.
- How to Execute: The outcome is a shopper-centric business case with recommended changes to a brand’s price pack architecture in each channel. Our recommendations focus on driving growth and can be used to pitch opportunities to internal stakeholders and retailers, with trade guidance on item-level must-carry lists, potential delists, pricing benchmarks, and placement opportunities.
Overall, these steps provide brands with actionable insights and strategies to optimize their price pack architecture, achieve a higher share in the market, and grow their categories.
Step up your game!
Your PPA is not set in stone. As part of strategic planning, we typically recommend that brands do this exercise annually. However, due to a lack of bandwidth, this often gets overlooked. It is important to remember that category dynamics and consumer habits and attitudes change constantly – thus, brands that neglect to review and update PPA may struggle to stay relevant and can miss out on market opportunities.
Our price pack architecture framework drives growth and provides deeper insights into the shopper: the why, what, where, and how they buy – all in order to create sustainable revenue and profit growth. A well-designed PPA allows brands to cater to different customer needs and preferences by offering a range of products with varying sizes and prices. Stay ahead of the competition by stepping up your PPA game.