Monday, March 26, 2007

How much is too much?

Prices rise. That's a reality of life. Cereal price will rice, and that is to be expected.

But, at what point do cereal price increases drive consumers away from cereal, or at minimum, to generic brands, etc?

I'm not sure there is a good answer to this. Even marketing surveys done by the big companies probably do not reflect the actual responses by consumers. Yet, it is a valid question, especially considering the tough competition in the cereal industry and the increasing decline in cereal consumption in North America.

According to Market Watch, General Mills has recently indicated that they may be increasing prices. There is even speculation that they may resort to shrinking the box size as a way to keep costs down.

Pricing always comes down to value. Cereal companies must never lose sight of offering value in the consumer's mind. This means innovation and a strong brand image.

I fear that they are getting closer to losing the value battle.

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