Brands are now combining price hikes with "shrinkflation," a tactic dubbed "maximiniflation." Milka chocolate, for example, raised its price and reduced its bar size, causing a 20% sales drop in Germany. Consumers are now hyper-aware of these dual tactics, making it a critical risk for brand reputation.

To convince a CEO of a brand's value, ask one simple question: 'Do we have pricing power?' This metric—the ability to raise prices at or above inflation without losing demand—cuts through marketing jargon. It is the most direct, tangible indicator of brand health that resonates with finance-focused leadership.

Contrary to the typical premium brand strategy of relying on quality alone, Zabar's revitalization in the 1960s and 70s was driven by an aggressive employee who initiated price wars. By driving prices down, sometimes below cost in events like the "caviar war," the store generated massive publicity and customer traffic, cementing its status as a New York institution.

The adage "you don't know your price until the customer says no" is useful for finding a price ceiling. However, PepsiCo's experience shows the danger of ignoring persistent rejection. Four years of declining sales demonstrated a fundamental value proposition problem, not just an optimized price point, which melted their stock.

Pricing power allows a brand to raise prices without losing customers, effectively fighting the economic principle that demand falls as price rises. This is achieved by creating a brand perception so strong that consumers believe there is no viable substitute.

Consumer Packaged Goods (CPG) companies drove revenue through price increases, but this came at the cost of falling volumes. By pushing prices closer to the perceived value, they eliminated the "consumer surplus"—the extra value a customer feels they get. This made private label alternatives more attractive and damaged long-term brand relevance.

When a new KFC premium product wasn't selling, they doubled the price instead of discounting it. This aligned the price with consumer expectations for a premium item, signaling quality and causing sales to soar. Low prices can imply low quality for high-end goods.

The allure of massive distribution at a mass-market retailer like Walmart is a trap. It establishes the lowest possible price point for your product, which every subsequent retail partner will use as a benchmark, limiting your brand's long-term profitability and pricing power.

While intended to drive sales, frequent discounting damages brand perception by training consumers to see the brand as low-value. This creates a "deselection barrier" where they won't consider it at full price, eroding long-term brand equity for short-term gains.