Elevate Your Pricing and Promotions Strategy in 2025 with U.S. Consumer Insights
Editor's note: This article is an automated speech-to-text transcription, edited lightly for clarity.
SKIM sponsored a session given on March 12, 2025, during the Quirk’s Virtual Sessions – Consumer Reset series.
Jessica Edwards, vice president, revenue management and Mary Kate Murray, manager, presented this session. The two shared insights on U.S. consumers regarding pricing and promotional strategies.
Edwards and Murray highlighted how many U.S. consumers are changing their spending habits because of economic factors. They shared insights into how much price is considered in a purchase decision. As well as what promotional strategies are the best at bringing new customers in, retention or bringing back previous customers.
Session transcript
Joe Rydholm
Hello everybody and welcome to our session, ‘Elevate Your Pricing and Promotion Strategy in 2025 with U.S. Consumer Insights.’ I'm Quirk’s Editor, Joe Rydholm.
Before we get started, let's quickly go over the ways you can participate in today's discussion. You can use a chat tab to interact with other attendees during the session. You can use the Q&A tab to submit questions for the presenters and we'll answer as many questions as we have time for during the Q&A portion.
Our session today is presented by SKIM. Enjoy the presentation!
Jessica Edwards
Welcome everyone. Thank you so much for joining us today.
My name is Jessica and I'm going to be presenting today's session alongside my colleague, Mary Kate. We are super excited to be here with you and to share the insights that we've uncovered in our annual pricing and promotion study.
Today we're specifically going to talk about the U.S. market. If you have any questions during the presentation, go ahead and submit them using the chat. I think we should have a few minutes at the end of our presentation to do a bit of a Q&A.
So, let's go ahead and get started with a little bit about me first. I always hate to age myself, but I have been in the CPG industry for over 20 years now and I have a lot of broad experience in all things sales strategy and revenue management.
Over the last couple of years, I've been with SKIM, and I really enjoy helping our clients to navigate their journeys to long-term profitable growth. In other words, all things revenue management.
Mary Kate, you want to introduce yourself a little bit?
Mary Kate Murray
Sure, thanks.
Hello! My name's Mary Kate and I've been working at SKIM for just over five years. I've been specializing in pricing and revenue management mainly within CPG, and I've been working with some of our largest RGM clients. I help support them in understanding and predicting consumer behavior through some of our custom strategies.
Jessica Edwards
Great. So, why don't we start off by sharing a little bit of what we're going to talk about today.
We'll begin by sharing a little bit about who we are here at SKIM. Then we're going to move into some dynamics around the market over the last couple of years. And this is really going to help to set the stage for what we're going to then move into the heart of the session, which is really around consumer insights that are stemming from this research that we've conducted.
We'll talk about the importance of price; we'll talk about brand preferences and promotion in today's unique environment. Then we'll wrap up the session by talking about how to make this actionable and understanding how this information can help to inform your go-to-market strategies.
So, who exactly is SKIM?
We are a global insights driven consulting firm. We help companies across all industries around the globe to optimize go-to-market strategies. We have offices in 11 countries. Specifically, within the U.S. we have four locations in Hoboken, Atlanta, Chicago and San Francisco.
When we talk about the solutions that we cover, we reach areas within pricing and revenue management (RGM or RM), brand communications, new product development and digital strategies.
Of course, today we are going to focus primarily on pricing and revenue management in the U.S. market.
I want to take a brief step back and talk about what RGM actually is.
When we think about revenue growth management, it is all about driving long lasting profitable growth for an organization. I would say we've really seen it become a way of working across a lot of leading organizations and across all types of industries. But when we think about that long-term, double sustainable growth, what does that really mean?
When I think about revenue management, I like to think about it kind of like a puzzle and putting together all of the different pieces in order to land on that sweet spot for all of those stakeholders that we have at play. Those stakeholders can be our retail partners, the consumer and, of course, you the supplier or the company that's going to market.
When we think about these stakeholders, they are all going to have their own unique goals, their own unique ambitions and considerations. And really finding those pieces that fit together to create that winning formula can be a little bit of a balancing act in order to find that sweet spot for everyone.
And when we think about revenue management, we typically have a handful of levers that we can utilize to steer our strategy. Those include strategic price, promotion, price pack architecture, which on this slide you'll see as CPPA, mix assortment and trade terms and conditions. In today's session, we will heavily focus on strategic price and promotion specifically.
So, when I further think about revenue management in order for it to be successful, it really cannot be based on one-off initiatives. It requires an overall mindset, a way of working cross-functionally to make data-driven decisions. Those data-driven decisions really help us to take that gut feeling out of the decision-making process. When you think about the consumer as being one of those key stakeholders, it's absolutely critical that we have a deep understanding of their needs and perceptions.
I would say that this is really the one area that SKIM can come into play.
We can provide and process the data and insights that we need in order to really guide those effective decision-making needs. And at the end of the day, what we are aiming to do is influence purchase behavior and utilize those various revenue management levers that we have at hand, promotion, PAC, architecture, price, etc.
And when we think about consumers, they're really looking at all of the parts that are available and they start to make decisions in context. The channel that they're going to, the purchase occasion that they're shopping for, and they start to make these trade-offs start to make decisions that are based on that current situational context that they're in. That context is driving their overall perception of value.
So, then if we are strategic, we can really start to take those different perceptions of value and use them to influence our revenue management strategies. Fine tuning those various levers to influence the purchase decisions that help to get us to that end state, that long-term profitable sustainable growth.
At the end of the day, we're seeking to influence the purchase behavior and utilize our revenue management levers that reflect the current context and consumer perception.
I think that's probably enough about RGM specifically. I want to go ahead and get into the focus of today's session, which is all about the consumer.
To do that I'm going to hand it over to Mary Kate to give a little bit of background on what we've observed in the marketplace over the past couple of years to really help set the landscape for us.
Mary Kate Murray
Great, thank you Jessica.
As we start to look over the past few years, we're going to break things down into four main categories within this chart.
So, on that first row we're going to show you what has been happening with inflation. On the next row we're going to see what was happening with consumers. On the third row, we're going to see what we were doing here at SKIM. On the last line we're going to show you which companies we were advising during this time.
Starting with 2022, it's not news to anyone on this call but it was a period of quite high inflation and rising costs for suppliers. We saw consumers coming out of COVID-19, out of that period of uncertainty were far more accepting of price increases than many of us would have expected.
Again, our research validated low awareness of market pricing. Consumers were less clear on what they had paid six months prior versus what they were paying at the time. Thus, they had a much lower sensitivity to the overall pricing in the market.
As a result of this low sensitivity and the rising cost for suppliers, opportunistic price increases began to come to life.
Moving on to 2023, as the year progressed, we saw inflation start to slow down. But despite that slowdown, we started to see more price sensitivity among consumers. Where they had been accepting price increases before, they were starting to reach their limit. Becoming more critical of how they were spending their money, and their income was not rising to match the more expensive market. We started to see consumers trading down to lower priced items as they prioritized price in their decision making.
Our research validated this heightened sensitivity and price awareness.
As a result of these consumer shifts, brands started to see less acceptance of the increasing prices and a hint to their overall volume, which in turn led to them leaning more heavily into promotions as they sought to regain some of their market share.
Now that we've closed 2024, most developed markets are seeing inflation continuing to steady itself. But despite stabilization, consumers are still adjusting to that new normal as prices haven’t returned to that pre-2022 level and honestly aren't unlikely to.
They spent years being pushed to the edge with price increases and saw high pressure on what they could spend, and now they've become very critical of how they could and should spend their money. While consumers aren't faced with the same level of price increases as they were two or three years ago, they continue to scrutinize and be highly aware of what they're paying and what they're getting for their money.
When we looked at some external sources, we saw that a recent Shopify report said that 96% of consumers intended to adopt some type of cost savings behavior. More people identify as not impacted financially but cautious with their spending.
Also, in the latest consumer sentiment study released by the University of Michigan in January, it was reported that the U.S. consumer sentiment fell for the first time in six months with concerns about rising prices prominent among these consumers.
So, while consumers seem to be adjusting to the new reality, there is a very critical eye on their spending and a sense of future market uncertainty and an evolving definition of what they consider to be a meaningful value. This means that some companies have to continue to define and in some cases redefine what the true value of their products is.
A simple framework we like to use at SKIM to help us think about consumer behavior, especially in times of change and uncertainty, is this habitual deliberate loop.
The gist of it is that as humans, we are creatures of habit. Typically when we're shopping for certain types of products, we buy what we are used to buying. We buy what brands we know and love. We're in that habitual loop.
As we just discussed, the initial price increases right after COVID-19 didn't really impact and cause a disruption that many of us had been anticipating. So, consumers continued in that habitual loop.
As a result of increased financial pressures over time, we started to see a lot more disruption in consumer purchasing behavior, putting people in the more deliberate state of mind where they're no longer just shopping based on their habits but weighing their options and either keeping to their traditional habits or making careful decisions to adjust the purchase decisions to better make the context of this new situation.
To help guide our strategic response to these behavioral changes, it's even more important for us to make sure consumers are at the forefront of our strategic planning process. As we mentioned earlier, understanding the consumer is at the core of everything we do and it's absolutely critical for making informed revenue management decisions because if we don't limit the consumer, we can't succeed at all.
We're going to dive into how consumers are feeling about prices and promotions. And, as a little peek into the future, we'll be analyzing this research. So, be sure to stay tuned for an update later this year.
But briefly coming back to the scope of the research, we reached out to key markets around the world, including the U.S., interviewing more than 5,000 respondents. Our goal was to gain insights into consumer preferences regarding brands, pricing and promotions across categories such as household products, personal care items and food products. All respondents are responsible or co-responsible for household shopping and a regular shopper of one or more main channels.
Specifically, in the U.S., we surveyed nearly 2,000 respondents who fit the criteria we just outlined.
These participants are buyers within the relevant categories with 60% identifying as female and 40% as male. And the majority of respondents belong to the millennial generation or older, those age 26 and up. So, providing a well-rounded view of consumer behavior. We have an even split for food, personal care and household care items.
We're going to begin with a few global insights to set the stage and uncover some of the things we understood from the consumers at first.
Before I dig in, I want to take a moment to get you familiarized with the next few slides you're going to see.
On the left you're going to see the primary key learnings and then you're going to see bar charts on the right. Each cluster of these bars reflect a consumer group and each of the bars reflects a different region. The U.S. market will always be the one in orange, and on the bottom right you'll see the region legend.
Alright, so here are the insights.
Right away we see something interesting for our U.S. consumers, in line with the rest of the markets, price importance is increasing, but there's a higher proportion of U.S. customers feeling that importance of price as significantly increased in the past year despite seeing stabilization in inflation.
And that high importance of price translates into consumers being more choiceful about where they are shopping. With the U.S. being a top market for choosing a store that offered cheaper pricing over the last year, in addition to price promotion, continues to be a key driver for consumer behavior as well.
We've seen that 59% of global respondents say the importance of promotion has also increased. Highlighting that both price and promotion do go hand in hand. Consumers are still feeling the impact of past price increases and as a result, special offers have become even more significant in the decision-making process. This trend is not unique to the U.S. but it's observed across all our global markets.
Now that we understand the importance of price and promotion at a global level, Jessica's going to take us through a more meaningful look at what it is specifically that is going on within the U.S.
Jessica Edwards
All right, great. Thanks, Mary Kate.
Diving into the detail, not surprisingly, especially based on what Mary Kate just walked us through, we see the importance of price continues to be on the rise despite that more stable inflationary environment. We also see that this is really consistent across all generations.
But what we do see is that more indulgent categories, like personal care, are seeing a slightly lower level of increased sensitivity. The rate of increase is still high, but it is on the lower side when we look at it versus those household care and food items.
When we dive a little bit deeper into their actual purchasing considerations, we really start to see the sensitivity come to life.
71% of those heightened price sensitive consumers perceive promotion to be more important compared to last year. This is a really significant increase versus the general population at 55%.
We are also seeing heightened levels of trade down at the store level with two thirds of these consumers saying that they are price comparing across stores or they're actually shopping at cheaper stores more than the prior year.
We're also seeing trade down at the brand level. We're seeing nearly a third of these price sensitive consumers stating that they have begun to opt for private labels more this year than they had in the prior year.
So, we wanted to dig a little bit into those trade down dynamics. When we look a little further into the brand trade down, we can see that it's occurring across all generating end categories, but we do actually see a stronger propensity to shift to private label from Gen X and Boomers. We really see a much higher rate on food categories versus personal care and household care.
Now moving on to that slide that I had accidentally slipped to before, when we dig into store trade down, we're actually seeing that Boomers are shifting their behavior but they're doing so at a bit of a slower rate than Gen X and Millennials, who are really leading that store trade down charge.
Then different from the private label shift we were seeing, we're seeing a bit more loyalty to food shopping destinations. This is suggesting that past experience and trust drive loyalty to where consumers are shopping for food. Whereas in household care we see a stronger link to shopping at those cheaper stores or doing a bit more price comparison across stores, really suggesting less store loyalty for these categories.
We definitely cannot ignore that these price sensitive consumers are continuing to trade down both in stores and in their brand selection. But I also am happy to say that not all hope is lost here. There is a rising preference for these consumers to shift back to well-known and premium brands.
If we refer back to that habitual loop that Mary Kate had walked us through earlier, this is really showcasing that consumers are finding their way back into those old habits with that desire to purchase those well-known brands. When we take a look at the attributes that are important, past experience and quality are the top two most important attributes for these consumers. We can really see that they are looking for those trusted products that have a really strong brand reputation. But interestingly, we are also seeing that even those consumers who are trading down to private label, they are also seeking quality trusted products. We see that past experience and quality benefits are also top attributes of importance.
So, it's really clear from this that whether a consumer is buying a branded product or a private label product trust is a table stake here. It's of utmost importance. With that brands really need to reinforce what is making their offering different, what is the added value that cannot be matched by trading down?
We also wanted to dive a little bit deeper into both groups, the well-known brand buyers and those who are buying private label more. We wanted to understand what their price sensitivity versus the general population was.
What we can see here is that they are more heightened to price sensitivity than that general population. And when we look again at the attributes that are important to them, we can see that total price as an attribute is the number two most important attribute for both of these groups.
Earlier I had mentioned that 71% of these price sensitive consumers are viewing promotion to be more important than the prior year. And that's really not a surprise with all of the price sensitivity that we're actually seeing. And we're seeing this dynamic irrespective of the channel or the category despite any of that, the importance of it is still on the rise.
We also see that promotion and discount is the number one conversion tactic. We see this across all generations. Boomers actually have a bit of a higher propensity to be influenced by promotion than the other generations, but the other generations are still pretty heavily influenced by promotion as well.
I think that was probably a lot of information about that current mindset around price and promotion. So, let's take a brief step back and really tie it all together. Summing up what we've seen so far.
We have seen that the importance of price continues to grow year over year, consistently across all generations and categories. Even where there are small nuances, I would say that trend is still really strong.
We're also seeing that trade down is occurring at both a brand and a store choice level. Here we really see stronger differences by generation and category, really highlighting the importance of understanding who your consumer is and catering that go-to market strategy accordingly.
Even though we're seeing trade down as a reality, we are seeing a growing shift back into those branded products really confirming that it is possible to convert consumers back from private label.
While total price is definitely important and not something that we can ignore, quality and trust are top attributes across the board, allowing space for branded items to really communicate what that value proposition is and use that to start to win consumers back their way.
Then last, but certainly not least, not only is promotion importance significantly on the rise, but consumers are also telling us that promotion is the number one conversion tactic, especially when they're trying something new or they're making an impulse or an unplanned purchase. So, when we think about that promotion, what does that actually mean for your strategy in the coming year? What's the promotion tactic that's going to actually have an effect and attract consumers?
For that, I'm going to hand it back over to Mary Kate to chat through this with you.
Mary Kate Murray
Great. Thanks again, Jessica.
All right, so first I'm going to go through a little bit about our methodology.
For this, we used our proprietary unspoken approach, which is a very intuitive mobile first approach designed to measure both the conscious and subconscious processes in the brain that the consumers use when purchasing.
First they saw the attraction model, which is that kind of gut feel reaction that you have to stimuli like in this instance of promotion. This is used to measure the stopping power of a promotion. This takes into account not just whether people liked or disliked it, did they swipe left or right, but also the reaction time, how quickly were they able to make that decision, which helped us to understand a bit more of their subconscious process.
Next, they saw the conversion module where we start putting different promotions up against each other. When consumers start making trade-offs between the different promotions, the brain kicks in to a more deliberate and rational process.
You can scan that QR code [found at 27:22 or use link here] on the screen and try this out yourself. But for now, we're going to take a look at the results.
The results are quite simply presented on two axes with the horizontal axis being a traction or the stopping power of the promotion and the vertical axis is conversion or the extent to which the promotion can drive that choice.
Here we see that buy one get one free is the most attractive with it doing well on both attraction and conversion. This promotion benefits from the power of free and it's simple to understand which gives it stopping power. Also in terms of conversion, people just know that they're going to get a good deal. This does well across all generations, creating an opportunity to attract many consumers with this promotion.
But of course, we know that this type of promotion can be very costly to run and can really hurt your bottom line. We don't want to undo all your efforts of using price to build value by hurting the promotion.
Let's have a look at some of the other promo mechanics.
Multi-buys give us a nice alternative to the buy one, get one promotion. They drive more volume, and they reward consumers for buying slightly more quantities in order to qualify for that lower price.
As you see on the graph, the attraction of multi-buys is not as high as some of the other promotions that we tested. So, that initial stopping power is a bit less as people maybe don't understand directly how attractive the promotion is since they have to work a little harder to determine the discount, then with that buy one get one. However, the multi-buys do perform well on conversion. It's still definitely a very solid promo strategy.
However, caution is advised here because as mentioned earlier, the absolute price of a product is really important for consumers. So, we need to be quite careful that we're not crossing any price thresholds that make this multi-buy less appealing. We also want to be conscious of how many items are included in the promotion as too many products can make the promotion less attractive as our data shows that some people are going for smaller sizes.
Then up next we're going to look at direct discounts.
What we see in general is that direct discounts can be attractive, they're appealing and simple to understand, especially in communications. What we notice quite often is that they have diminishing returns. Now that might sound like a bad thing, but here it's a positive since the discount does not always need to be very high in order to attract the consumers.
In addition, direct discounts give us a lot of options for framing. So, let's have a look at what we mean by that.
We're going to look at three ways we can communicate direct discount promotions. The effectiveness of the discount can depend on many things like the starting base price, the discount depth and the currency denomination.
First, if your currency denominations are high, then it typically works best to communicate the absolute savings amount.
This works because it's very, very simple to understand and it looks appealing. Now if that's not the case, then we have a couple of different options.
For instance, we can look to see if a psychological price barrier is being crossed with our promotion. If that's the case, it makes a lot of sense to communicate both the everyday price and the promo price because that discounted rate is sitting below the psychological price barrier.
Now, if we're not crossing the psychological price barriers and the absolute savings value is not super appealing, then you're probably best communicating the relative price discount since it will feel like a bigger number.
Even if the promo depth is the exact same across all of these, depending on some of the variables and context, the way you communicate could help you in the effectiveness of the promotion.
Of course, direct discounts also have some cons.
They don't help to take consumers out of the market the way the multi-buy promotions do, and they don't help us to drive volume in times when we're concerned about those volume numbers. Now that being said, if consumers are looking to decrease their volume and decrease their consumption, then these promotions could be an effective strategy.
The final promo mechanic that we want to look at is free promos.
In terms of attraction, these perform very well as consumers are quite attracted to things that are offered for free. Obviously, we've seen documented time and time again about the power of free. However, even if the absolute price discount might be low, the logistics of the free gift and free delivery can be quite costly and hurt your bottom line as well. So, we really need to use this quite strategically to drive awareness and help attract new customers.
It's more of a marketing push and not just that promotion geared towards conversion. There are particular groups for whom free offerings seem to work particularly well, which we'll look at now.
Drilling into the generations, you'll see some key differences which should be kept in mind when you're targeting your key markets.
Free promotions are Gen Z's favorite, but as age increases, we see the popularity of the free extra diminishing while the popularity of multi-buys and price reductions increase. So Gen Z is likely more interested in exploring and open to trying new products, which free promotions allow them to do this safely. While boomers likely already know what they want and they're just looking to get it cheaper.
We do not only see differences when we talk about generations. Here we also see differences with promotion preference in terms of existing and new consumers.
We see that the buy one get one and multi-buy promotions are appealing to both groups. However, price reduction promotions are preferred by the current buyers of well-known brands while free promotions are more preferable to the new consumers.
We can also keep this in mind when considering promotion strategies as price reductions can help retain existing consumers while free offerings can be more effective in bringing in new consumers.
Alright, so now summing up briefly, the buy one get one free promotion was clearly the most attractive, but since we know it's costly, we're going to focus on the other three promotions that are a little more friendly to your bottom line and how do you utilize them.
First, we looked at the multi-buy, which are very strong in conversion. In relative terms, this connects well in general with the general trend, consumers are buying more volume to be able to qualify for a better deal, but keep in mind that that's not what everyone's doing. Some consumers are actually switching to smaller sizes and lower absolute prices.
It's really important to understand for your category what's most relevant and always, always keep those absolute price thresholds in mind.
Now for direct discounts, we saw that it works best for traction since it's easier to understand in most cases. We do have a lot of options for framing these promotions, so don't neglect that when you're negotiating your promo strategies.
As a con though, it doesn't take consumers out of the market and it doesn't help to drive volume the same way the multi-buy promos do.
Finally, the free gifts and shipping, which really should be used strategically just to drive awareness and attraction since we can't always expect the same kind of conversion based on that. However, for groups like Gen Z and those new buyers specifically, it can really help by driving that product experience. Of course, the logistics of free offerings can be costly here as well. So, use that with caution.
Jessica Edwards
All right, lots of really great information. Thanks for taking us through that, Mary Kate. A lot of good food for thought as we're thinking about promotion tactics as we're building that strategic promotional plan.
Let's wrap things up and refer back to that habitual deliberate loop that we've talked about a couple of times.
Now as a reminder, when consumers are in a habitual loop, it's that unconscious behavior that really determines what they're buying. But right now we are seeing disruptions in that habitual behavior that has been caused by that financial pressure, that build up over time.
In turn, this is resulting in consumers having different considerations as the market conditions are shifting, and consumer mindsets are shifting, we're seeing that increased importance of price and that increased influence of promotion come into play.
So, right now, consumers are making different trade-offs and different choices. They are trading down, they are trading out of a brand, they're sometimes reducing their overall consumption and we're seeing that they're even switching into cheaper channels.
When, we think about this shift in behavior, it calls out a potential risk to us that this trade down dynamic is going to become their new habitual behavior. So, what can we do about that?
As we've mentioned, we can use promotion in a really smart and sustainable way to help win those consumers back into the brand. But in order to be able to do that, we need to understand the consumer and what their changing priorities are. What are those unique needs that they have in the current context of their situation?
And while this dynamic has always been important, that consumer understanding might actually be more important now than it ever has been in the past. Once we start to really know what this consumer perception is, we can start to frame our strategies so that we're adopting and adapting to the needs of the consumers across different categories and bring them back into the brand.
If you are interested and want to understand what promotion is going to be most effective for your specific target group, if you are looking to optimize your promotional strategies for your category without breaking the bank, then reach out to us. We'd be happy to look into that with you.
We hope that you have found a few insightful nuggets of information as you're continuing to refine your 2025 plans. As a reminder of what Mary Kay mentioned earlier, stay tuned because we will be refreshing our consumer survey later this year as you move into your planning for 2026.
I guess on that note, as I think about our next survey, if you think of a question that we should add into our 2025 survey, drop us a note. We are super open, and we really welcome all the additional thoughts from your side.