When I taught, I always told my students that it was not easy to start and run a business. There are many decisions to make, including what price to charge. If all of these decisions were easy then we could all get rich running our own business.
Falling sales could be caused by a rightward shift in demand. When that happens prices fall. But it probably is not easy for stores & companies to guess exactly how much demand has fallen in order to know how much to cut price.
See With Falling U.S. Sales, Companies Are Trying to Hit the Sweet Spot for Prices: Makers of cigarettes, snacks and cosmetics are tinkering with their products to win back value-obsessed shoppers by Natasha Khan of The WSJ. Excerpts:
"Shoppers are getting more difficult to please. Confronted with falling sales, makers of cigarettes, potato chips, cosmetics and garbage bags are re-examining what they offer—and at what price.
Reynolds American is trying to reach low-income smokers with a more affordable pack of Newport cigarettes. The maker of Cheetos and Doritos is playing around with how many servings of chips it includes in a multipack."
Consumers are on edge. Tariff threats, stock-market swings and whipsawing directives from the White House are causing Americans to feel more pessimistic about the economy than they did before President Trump took office. Consumer sentiment fell about 5% in the University of Michigan’s preliminary February survey to its lowest reading since July 2024.
Many consumers are looking for good value, but that doesn’t necessarily mean a lower price.
“They are looking for better and enhanced value in the products, which means they are trading up to innovation,” Linda Rendle, CEO of Clorox said on a call with analysts this month."
“When we talk to consumers, value is the number one decision maker,” PepsiCo CEO Ramon Laguarta told analysts this month."
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