Why raising prices is a huge mistake

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IN SUMMARY: We are not even 90 days into the new year and already a number of CPG companies are planning to raise prices. This is a huge mistake because, despite the job market, consumers are still hurting and haven’t seen real wage growth.

Economic growth is not really benefitting the average American worker

According to The Economist “slow income growth has been the most persistent problem afflicting the US economy since the recession ended, around 2010. Wages have barely kept up with the cost of living, even as the unemployment rate dropped and the economy expanded. It’s true that wages are rising faster than they have in a decade, but that’s only because the US economy collapsed 10 years ago. Comparing current wage growth to recession-era wage growth sets a pretty low standard.”

Brands aren’t sympathetic

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Brands are corporations and most are interested in the balance sheet. Consumer know this which is why brands like Trader Joe’s are doing very well. Why should I buy Kellogg’s Frosted Flakes when I can get a store brand at 1/3 the price?

The tax cuts that went into effect rewarded shareholders and CEO’s whose paycheck is connected to the share price. Consumers aren’t dumb, they know this and when a band raises prices they fell that the brand is sticking it to them.

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Raising prices is a huge mistake and brands are going to feel it where it hurts most….in declining sales.

Originally published at www.newmediaandmarketing.com on March 3, 2019.

Written by

Marketing contrarian with over 15 years of developing leading edge and award winning digital marketing initiatives.

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