Managing Inflation

Having to increase product prices to cope up with high inflation is a difficult task marketers are confronted in some markets. While i was in Ukraine for instance, we had an annual estimation of a minimum cumulated inflation ratio of 17%. This meant prices had to be revised all year long!

The standard procedure is to plan revision milestones in advance, in agreement with all the involved departments. Ideally, such exercise should be done for all categories. This creates a high degree of complexity for the entire organization, especially for the sales department, but a correctly coordinated price increase strategy will give you credibility vs random and unjustified increases.

Category coordination is especially important as direct comparison from consumers might not be necesarily the right thing to do, and the products loose value perception  fast.

Timing needs as well to be coordinated with the actions undertaken by competition. Consider whether you want to follow a reactive or a proactive strategy. For instance, a number two in the market should better have a reactive strategy, waiting to see what the main competitor does. A reactive strategy is justified because in such scenario a move in the opposite direction would be fatal.

Posted by Ignacio Molins