Does price really matter?

Managing what customers think about price is more important than reality

Tuesday 01 January 2008

Report

Retailers invest huge amounts of effort and money in price. Chinese consumers have a surprisingly poor knowledge of actual prices, but do know where to get the best deal. Managing the perception of price is critically important for all retailers, but in the grocery around China's Western brands are coming of badly and may be wasting margin. Targeted investment in perception-driving products and categories is one of the proven mechanisms to harness price as an effective competitive weapon.

In 2007 and 2008 the media was buzzing with reports on China’s dramatic food price inflation and its implications,. The food CPI eventually peaked at no less than 23% growth in February 2008 and since then has never looked back – indeed, in 2008, it is deflation that is making headlines. Sustained deflation is tough for retailers but not so bad for consumers.

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