In today's retail market, 70 per cent of products are sold at a standard price position, 20 per cent are aimed at the price-watching consumer and just 10 per cent fit into the premium end of the market, according to Michelle Gibson, a senior consultant in Promar International's strategic consulting division.
But there is a blurring of differentiated pricing strategies at the bottom end of the scale, as the cheaper, discounted section of the market begins to eat into the 70 per cent middle ground. "There is a growth in the number of incredibly price conscious manufacturers and retailers," said Gibson. "And that is set to grow as price competition becomes more intense."
The tomato category is amongst the most segmented in fresh produce already and producers and suppliers of tomatoes should therefore try to extricate themselves from the lower price point end of the market and look to target the premium segment wherever possible, she added.
Using the example of Tesco Online, Gibson said: "Tesco has a minimum of 15 varieties of tomato online, from Value tomatoes, at £1.29 a kilo, to Finest Sweet Plum tomatoes, at £5.96 a kilo. That is a premium of 450 per cent from top to bottom of the scale and represents the real opportunity for growers to add value to their offer."
The challenge this throws up is that growers and suppliers need to show the ability to switch from "selling 90 per cent tangibles (product, distribution) to selling 80 per cent intangibles (experience, suitability", she said. "Today foods are sold 70 per cent on the product itself and 20 per cent on the basis of accessibility and availability, tomorrow's focus will be based 60 per cent on experiential factors, and 30 per cent on the suitability of the product to different uses."
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