It’s not just that prices are rising. Trust is also falling.
From supermarket shelves to electricity bills and even monthly subscription renewals, consumers are feeling the squeeze. Not only are 85% of people in the UK worried about inflation, it’s influencing what they can afford and the brands they buy.
The easy way out would be to point fingers at the global, uncontrollable geopolitical forces: economic policies, rising energy costs and Trump’s now infamous tariffs. These are serious, disruptive forces and very much part of the equation.
But brands aren’t off the hook. In fact, over two in five (43%) consumers believe businesses are profiteering by pushing prices higher than necessary, indicating that trust is waning for some brands.
Whether that perception is fair is beside the point. What matters is that it’s widespread, which suggests that many brands still aren’t delivering their price increase in a way that feels justifies and reasonable to consumers.
When long-term value is clear, price becomes secondary
The past few years have tested even the most resilient businesses. The cost of living rose at a pace not seen in decades, however some brands have not only weathered the storm but grown through it by delivering real value and building trust.
This doesn’t mean relying on short-term tactics or clever packaging tweaks. In fact, true innovation is customer-centred and easily one of the most effective tools for strengthening maintaining pricing power; this is where a brand commands a price premium due to its ability to be ‘meaningfully different’.
Too often, innovation budgets are among the first to be cut when costs need trimming. But this kind of myopic thinking often undermines the very thing that gives brands the right to charge more. The strongest businesses invest in innovation that allows them to stand out and strengthens consumer loyalty.
Take Mondelez for example. In 2023, during a period of intense inflation, it was the only major CPG company to grow both value and volume. Unlike competitors who leaned on price hikes, Mondelez listened to its audience and focused on launching products that consumers were excited to try.
This included the launch of an AI-powered content platform to scale personalised marketing across brands like Oreo and Ritz. It also introduced lower-calorie alternatives to family favourites like Chips Ahoy, catering to changing habits around health and portion control.
Innovation gives brands something tangible to charge extra for. It moves pricing decisions away from margin-draining discounts and towards premium value exchange.
Finding your meaningful difference
Of course, innovation only delivers if it’s aligned with business goals. That means giving R&D teams the backing needed, and building a clear commercial case for how it supports sustainable pricing and growth.
Let’s be honest, what do all customers truly want? Genuine value – any old product or service will not make the proverbial basket if it fails to inspire and delight. When it solves a real problem or creates a relevant new benefit, innovation earns pricing power and builds loyalty in the process.
No, ‘smaller packs for the same price’ is not innovation. Shrinkflation has been called out repeatedly – the pushback Pringles received shows it’s a false economy. Consumers see through it, and it risks long-term damage to brand equity.
McDonald’s is another standout example of smart, simple innovation that works. The fast-food chain has evolved across the board, from plant-based menu options to its McCafé range and McDelivery partnerships. Most recently, it brought back the much missed Snack Wrap, a fan favourite first introduced in 2006. It’s this level of consistency that has helped it become one of the world’s most valuable brands, alongside giants like Amazon and Google.
Winning trust, even when purse strings tighten
A brand’s perceived difference, which is the emotional and functional difference it holds in consumers’ minds, accounts for 94% of its pricing power. The clearer your point of difference, the greater your ability to raise prices without losing customers.
Everyone knows that budgets are tight. But that doesn’t mean innovation should stop. In fact, it should become more focused, rooted in data and shaping consumer expectations. This isn’t about ideas for their own sake but about solving real problems in relevant ways.
Don’t wait for certainty or economic stability. The past two decades have taught us that stability is no longer a guarantee, nor is it a prerequisite for action. When innovation is meaningful and aligned with customer needs and clearly communicated, consumers will pay top dollar.
They won’t blame you for raising prices. They’ll recognise the value in what you’re offering.
