Price is not just a figure on a tag; it’s a delicate balance between perceived value and financial feasibility. While perceptions shape our understanding of value, the reality of affordability often dictates our purchasing decisions. Understanding and effectively managing this interplay is crucial for brands seeking to maintain pricing power and foster growth.

At Kantar, we’ve extensively analyzed these pricing dynamics, recognizing that mastering pricing levers is essential for brands to thrive. However, amidst economic fluctuations and shifting consumer sentiments, affordability has emerged as a pressing concern overshadowing traditional value perceptions.

Despite encouraging economic indicators, consumer sentiment remains persistently low, reflecting underlying uncertainties about economic stability. While inflation has moderated since its peak, the cumulative impact of price hikes over the past years has strained household budgets across various expenditure categories.

The aftermath of pandemic relief measures, coupled with sluggish wage growth, has left consumers grappling with financial constraints. Middle-income households, in particular, have felt the pinch, as evidenced by rising consumer debt and delinquencies.

In this landscape, affordability takes precedence over traditional value considerations. Consumers are focused on stretching their dollars across essential expenses, redirecting attention away from discretionary purchases. As brands navigate these challenges, aligning pricing strategies with evolving consumer realities becomes imperative.

While perceptions of value remain important, addressing affordability concerns requires a nuanced approach that resonates with consumers’ financial constraints. By understanding the complex interplay between perception and reality in pricing, brands can adapt their strategies to meet consumer needs effectively in a shifting economic landscape.