Building Pricing Power despite inflation?

Pricing vs. Purpose tension in inflationary times?

Following a series of sessions with senior marketing and finance leaders at companies around the world, at the Institute for Real Growth, and at the The B2B Institute about the tension between these 2 concepts, many asked for more reading on Pricing (Power).

The financial “why” of marketing is to build strong intangible assets on the balance sheet. Then to monetize them via the P&L. Warren Edward Buffett ‘s #1 criterium to invest in any company is whether it has Pricing Power or not: the ability to raise prices on its Brands over time, without curtailing demand or losing share to a competitor.In math equation terms, Pricing Power is the "necessary condition" for long term brand success. Purpose is the "sufficient" condition. It is all about "and", not "or", as I argued last year in Marketing Week. However, many companies are increasingly at risk to throw away the proverbial Purpose baby with the inflation bathwater, hoping to protect margins for another quarter.

What lessons have been learned? How to balance a fiduciary duty to shareholders vs. to all stakeholders?

For your convenience, I compiled 2 chronological lists, from the most recent publications to (pre-inflation) classics. A mix of technical and more accessible articles and academic books.

Recent Articles (post inflation):

1. "How to Grow despite Inflation" (May 2022) - Simon-Kucher

2 "Talking to Your Customers About Prices" (March 2022) - Harvard Business Review

3. "Warren Buffet's Top Tips for Beating Inflation" (March 2022) - Investing.com

‍4. "Five Ways to Adapt Pricing to Inflation" (Feb 2022) - McKinsey & Company.

5. "The 4Ps of Marketing: What You Need to Know" (2022) - Neil Patel just a quick modern refresh about the "P" of Price, useful for the many people who never heard about the 4P Marketing Mix, and who may equate "Marketing" only to "advertising" or to "social media management" (both a fine subset of the "P" of Promotion only)

Books (pre and post inflation)

1. "Beating Inflation: an Agile, Concrete and Effective Corporate Guide" (2023) - Hermann Simon

2. "Marketing and Finance: Creating Shareholder Value" (2013) - Malcolm McDonald, Brian D Smith & Keith Ward.

3. "Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie Or Die" (2013) - Eric Siegel

4. "The Psychology of Price: How to Use Price to Increase Demand, Profit, and Customer Satisfaction" (2012) - Leigh Caldwell

5. "Power Pricing: How Managing Price Transforms the Bottom Line" (1996) - Robert Dolan & Hermann Simon.

The lists above are not meant to be exhaustive. (Beating) Inflation is a broad topic, with major macro-economic ramifications across society, and with many good/bad historical lessons. Inflation has positives too. Last, there are also valuable lessons from countries with a long history of high inflation (Turkey, Argentina, …) .

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