The Price Isn't Right

The Price Isn’t Right: What Happens When Shelf Prices Miss the Mark?

Jessica, a Senior Brand Director for a premium spirits company, was confident she had her portfolio's pricing under control. Her team had set clear Manufacturer's Suggested Retail Prices (MSRPs) and worked with distributors and retailers on pricing strategies. Distribution was growing fast, so some issues were to be expected market to market. But her assumptions were about to be shattered. "We assumed our MSRP was being followed most of the time," Jessica said, estimating an 80-85% compliance rate.

To confirm this, she launched a pricing audit across 290 stores at five major retail chains, including specialty liquor stores and grocery retailers. The results were a shock: only 3% of their products were priced at the MSRP. A staggering 97% of the time, retailers were setting their own prices, leading to complete chaos in the market.

The Uncomfortable Reality

The audit revealed three key problems:

• Grocery Store Inconsistency: The brand's premium spirits were being treated like commodity items in grocery stores, with constant promotions and inconsistent pricing that undermined the brand's carefully crafted positioning.
  
  
• Specialty Store Disconnect: Even specialty liquor stores, which were expected to uphold a premium image, were pricing products randomly—some were 20% higher than MSRP, while others were 15% lower.
  
  
• Distributor Blind Spot: Jessica's team realized their distributors didn't know what was happening with retail pricing either. They were focused on the sell-in price to retailers, but what happened after that was a "black box".
  
  

Taking Back Control

Armed with this concrete data, Jessica's team took decisive action:

1. Distributor Partnership: They presented the audit findings to their distributor, highlighting specific accounts that were not following the MSRP and by how much. This made pricing a shared priority.
   
   
2. Account-Specific Strategy: Instead of trying to enforce a blanket MSRP, they created customized approaches for different retailers. The grocery chain received a structured promotional calendar, while the specialty stores got specific pricing guidelines.
   
   
3. Ongoing Monitoring: To ensure the new agreements were followed, they began conducting quarterly pricing checks and expanded audits to additional key regions.
   
   

The Results

Just six months after implementing these changes, the results were dramatic:

• MSRP compliance jumped from 3% to 78%.
  
  
• Brand consistency improved, helping consumers understand the product's value.
  
  
• The relationship with the distributor was strengthened through data-driven conversations and specific trackable metrics.
  
  
• The brand's premium market position was finally (consistently!) reflected in its retail pricing.
  
  

For Jessica, the biggest win wasn't just better pricing, it was knowing what was actually happening in the market. The audit transformed the team from being reactive and "guessing to knowing". Before, they operated on assumptions and periodic store visits; now, they had data, strategy, and control. Even better, by utilizing Eileen, her company saved over 350 hours of workforce time for 1/10th the cost!

This experience proved that you can't manage what you don't measure, and in the spirits industry, the brands that win are the ones that know what's happening on the shelf.

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