Do price elasticities vary by market channel?

This question can be answered by an analysis of data across different market channels for products of various categories. The analysed channels included: Hypermarkets (>2500m2), Supermarkets (2500>=400m2), Convenience (<400m2), Petrol Stations, and major categories such as instant soups, detergents, auto dish wash, air care, confectionery, carbs, snacks, laundry detergents, dairy, shampoo, tobacco and water.

The measured elasticities confirmed that consumers are less price sensitive when their purchase is impulsive/need driven. Very similar trends were also observed for promotional price elasticities. Overall, the analyses indicated that a brand's price elasticity was found to be lower in Impulse than in Planned Purchase channels and elasticities tend to be similar in Hyper- and Supermarkets.

In comparison to Hypermarkets/ Supermarkets, a brand's elasticity is often significantly lower in Impulse Purchase channels. This lowering of price sensitivity was even more pronounced in Impulse Channels, where purchases are likely to be more need-driven (ie in Petrol Stations). This helps define the broad guidelines for regular price and promotional price strategies across channels.

Hypermarkets & Supermarkets

Shelf price position is critical. The available time and a wide product range increase consumers' price sensitivity. Shoppers' promotional responsiveness is higher than in other channels due to the longer length of time spent in the store. They are more likely to look for price deals and private transport will facilitate bulk purchases.

Convenience Stores

Consumers are less price-focused and purchases are need-driven (for instance, a top-up purchase of necessities). A competitive regular price strategy within the available range is still relevant. Promotions are generally less efficient and therefore need to be well-presented and attractive. Large volume offers will be less suited to the Convenience shopper.

Petrol Stations

Product availability is more important than price point as consumers' purchase is impulse-driven. A lack of range will also reduce price-consciousness. Promotions would only work on pure impulse purchase categories, ie soft drinks and confectionery, and need to be very attractive and well located.