A 180-point growth in profits in one quarter isn’t an accident.
Pricing integrity is something I talk a lot about with my brand management students and clients.
You develop price integrity over the long term.
It is like I tell folks about brand equity: “You build brand equity by spoonfuls, but you tear it down in buckets.”
The same applies to price integrity.
Here is where Kraft Heinz is getting wins and where they are likely to continue to see success:
- Focusing on profits and not revenue. Like Mark Ritson teaches his students in the Mini MBA: “It isn’t what you make, but what you keep.”
- They are continuing to invest in their marketing team. You don’t grow by cutting. your marketing budget like many businesses seem to believe. From the outside, it looks like Kraft Heinz hasn’t bought into the idea driving too many marketing organizations that marketing is just the coloring in department.
- Avoiding discounts. Kraft Heinz proves something that is true, but I hate to share: you can’t avoid all discounts. Kraft Heinz does some discounts but at a lower rate than most other businesses. Meaning people aren’t looking for them as the commodity to fill the role of “ketchup”, they buy Heinz because they like it.
In my brand management classes and workshops, here are a few things I tell folks about price integrity:
- Like your strategy, your price integrity comes due to the throughline of your strategy. You may have short-term hiccups that will make you question your decisions, but you have to trust the work you’ve done in your research and strategy to give you the courage to continue to push in the direction you’ve chosen.
- Discounts destroy your brand. Once you open the discount door, people are going to always have the idea in the back of their minds that there might just be a better deal if they hold off.
- A 1% increase in your price gets you 10-11% in increased profits. 1% discounts cause you to lose 10-11% of profits.
- Discounts are for dummies! Just don’t do it.
Join me for a FREE pricing session on August 15th at 1 PM Eastern time.