Brand Price Changes and Impact on Sales

Goals

To provide examples of brands that have lowered (3 examples) or raised (3 examples) the prices of their products or services, and how that affected sales, to inform a pricing strategy for a luxury watch brand.

Early Findings

General Insights on Price Raising/Lowering by Brands

  • In 2019 reports, Mondelēz saw a 2.5% rise in the U.S. and Canada revenues based on raised prices on its products, while AB InBev's U.S. revenues grew 1.8% driven by a price increase.
  • When the iPhone 8 hit the market back in 2017, the lowest price for a 64GB version $699, which was later reduced to $599 in 2018. In its 2018 reporting, Apple reported iPhone sales down 15% year-over-year.
  • In a price alignment strategy in 2015 in the Asia Pacific region, Swiss-made watch brand Tag Heuer retailers offered a 15% discount on the marked prices of the watch. In 2016, Tag Heuer reported that its watch sales were up 18% year-over-year.

Insights on Pricing for Luxury Brands

  • "The price of any product stemming from a luxury brand must reflect the key messages of any luxury brand; quality, heritage, and exclusivity."
  • In cases where luxury brands provide entry-level offering to lure more shoppers, the strategy may bring short-term gains but give long-term brand deficits.

Summary of Findings

  • In the first hour of research, we determined that there is available information on pricing changes on brands, and the impact on sales, although the information may not precompiled. In addition, in our research, we learnt that the rise or drop in sales may not be strictly driven by raising or lowering of brand price as other factors such as product innovation and quality could also be a factor.
  • In providing our early findings, we have assumed a global focus. However, if a different approach is desired, for example, specific focus on the U.S., this would have to be communicated to us in any reply.
  • Based on this preliminary research we propose to provide the requested information as elaborated below:

Proposed next steps:

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