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Price vs. Value: Packaging’s Role

By: Craig Sawicki
Posted: November 1, 2011, from the November 2011 issue of GCI Magazine.

A recent news article stated that Walmart now believes its major retail competitor is the myriad of dollar stores. For the past decade, many articles have been written about Walmart’s lust for the Target customer. Target products have been more design-oriented and higher priced, with the assumption that the Target customer was more sophisticated and had more disposable income. But with the economy as it is, most involved with selling products assumed that Walmart would win the battle with its purchasing power and lower prices. It proves the sales adage that there’s always someone offering a lower price.

The private label market, too, has thrived during current economic downturns (as noted in many 2011 market reports that appeared in GCI magazine). When the higher priced brands languished, private label equivalents picked up those consumers looking only for cost value.

Large brand owners, though, have room to reduce prices—whether through couponing or specials—further pushing down price expectations and forcing private labels brands to reduce prices even further.

There was a definite downturn in high end products sales in 2010, but that trend seems to be reversing now and higher end is on rebound. Consumers just expect more for their money now than they did, and assess value differently—and value only sometimes relates directly to price. Consumers may still spend more for a bottle of shampoo, a lotion or color cosmetics, but they now expect something truly special—whether with the product or the package or both.

Consumers are no longer content with what they’ve always bought or used; they expect more if they’re going to pay more. And marketers are responding.

Response to New Value