Sunday, January 11, 2009

Raise prices in a recession?

Reports are that Kellogg is about to hike prices on most of its cereal brands, the second increase in less than one year.

I understand that costs do tend to increase (although oil has dropped significantly), but I wonder (as I have before) how much consumers will be willing to spend on high-priced, name-brand cereal during a recession. Are short-term profits really that important at this time?

Innovation is still the long-term answer, but right now the big cereal companies need to find ways to express value in their brands, and they need to do this in a way that it is convincing to consumers. How will they respond?

Technorati Tags: , ,

No comments: