Economic pressures drive business innovation in pricing

Companies reassess consumer preferences for cost-effective and value-added solutions.

Companies are concentrating on delivering cost-effective solutions and enhancing value propositions with premium features and unique experiences, according to Karolina Grigorijevaite, Senior Consultant and Team Lead for Innovation at Euromonitor International.

"This year, businesses are prioritising innovations around pricing and value, driven by the economic pressures and changing consumer preferences," Grigorijevaite explained. "They mostly focus on delivering cost-effective solutions and enhancing value prepositions by incorporating premium features and unique experiences."

A critical step in the innovation process is assessing product potential by understanding which industries and categories hold the best opportunities for growth. Monitoring industry-specific innovation trends and the competitive landscape allows businesses to identify where to play and react quickly to changes.

Economic conditions have increased consumer price sensitivity, prompting businesses to innovate their pricing strategies. Consumers seek budget-friendly options without compromising quality, pushing companies to optimise their price points, offer discounts, and develop flexible pricing models to attract and retain cost-conscious consumers.

"The high cost of living continues to affect consumer purchasing behaviour," said Grigorijevaite. "This trend leads companies to introduce extensions of established brands rather than launching completely new ones. For example, in Singapore, sub-brands, which are brand extensions like new flavours, accounted for 87% of new food and beverage launches, compared to 13% for new brands."

Beyond affordability, companies are redefining value by enhancing their offerings with premium features, exclusive experiences, and engaging partnerships. Leveraging social and consumer-facing platforms, businesses create personalised and memorable experiences. They also address specific consumer needs through innovative products.

"Consumers are looking for more affordable products, but they're also looking for companies to signal what additional value these products bring to their lives," Grigorijevaite said. "We see that consumers all across the globe and in the region are looking for products that are healthier, have added functional benefits, and reduce negative qualities, such as, for example, sugar."

Price sensitivity remains a critical factor, varying by category and consumer product. Brands must be cautious with their pricing strategies, especially when introducing new products, given the current economic and socioeconomic background.