g has fundamental implications for brand managers. To explore this further, we mined the Kantar Millward Brown BrandZ database to answer; whether price sensitivity has increased in Australia; if so, what has been the winning strategy in combating this trend; and what should the savvy marketer do when faced with price sensitivity? Has price sensitivity increased in Australia? The short answer is yes. Looking at 10 categories over 10 years, we see that in 80 per cent show an increase in people claiming to make price-based purchase decisions. In the retail sector, this was particularly evident in oral care and hair care and was a pattern mirrored by the UK and around the globe.   *Changes in price based purchase by category (Australia, UK and Global) What has been the winning strategy in combating this trend? So should brands continue to cut their brand building budgets and instead focus on slashing prices? Data suggests that this is not the right approach. Our analysis shows that brands that were perceived to be getting cheaper experienced little positive change or even a decrease in survey based market share. In fact, brands that grew share over this same period were perceived to be more expensive than those that declined. Meanwhile the brands that did grow equity over this same period were shown to; be more meaningful—with an emotional connection and/or by meeting a rational need; become more salient—or come to mind more readily as a brand to seek out. The very strongest growing brands in these categories also differentiated from their competitors in some unique way. In effect this means that consumers will default to seeing brands through price tags when the proposition of those brands is not clear or important to them. We deduced from this pattern that brands that invested in strong, compelling creative which offered a differentiated position, were better positioned for future growth than others and were more able to grow share despite consumers increasingly making price based decisions. Such is the case with Head and Shoulders. Like other shampoos, Head and Shoulders was also perceived to have lowered its prices from 10 years ago. However, from 2007 to 2016, it also become the most meaningful and the most differentiated brand in its category. In fact, Head and Shoulders nearly doubled consumer’s predisposition to buy its product over this period. How were they able to achieve this? By focusing their creative strongly on their key anti-dandruff credentials while also driving home dandruff prevention and great looking hair at the same time, they created an emotional and rational connection with consumers that far surpassed the value of the dollar. The problem with price-driven buying is that it creates a cycle of category commoditisation. Consumers are price sensitive so brands reduce price; competitor pricing leads to volume losses which force more price decreases and a shift of dollars away from innovation and marketing and into discounting. This further erodes the ability to charge a premium by decreasing differentiation and it leads to the need to keep prices low to meet volume targets. What is a savvy marketer to do when faced with price sensitivity Consumers will always want the best prices, but offering your brand at a discount can undermine profits and threaten viability. Our findings show that brands that focus on brand building and media spend during periods of increasing price sensitivity are the ones that grow in the long run. From our BrandZ report, we know that strong brands have been shown over the last decade to produce a better financial return to shareholders. Instead of dropping prices, smart brands are utilising strategies to create and sustain a meaningful difference that helps consumers justify spending more. For example: Build perceptions of value – By framing perceptions of value, premium brands can gain competitive advantage over cheaper brands provided the claim is defensible and not undermined by consumer experience. In Australia, Sensodyne is a good example of this. The brand has doubled its survey based share from 2007 to 2016 based primarily on increasing the perception that it is different from its competitors. This allows the brand to demand the second highest level of premium in the category. Get creative with added value – Even when dealing with price-sensitive consumers or a heavily discounted product category, smart brands can usually create the opportunity to keep a little more profit than other brands. In addition to above-the-line support, they aim to incentivise buyers in ways that do not include direct price discounting, relying instead on added value promotions, layaway plans, monthly payments and loyalty schemes. Build premium credibility – Make it easier for consumers to justify why they are paying a higher price for the brand by focusing on markers of premium such as packaging, store location, functionality and usage occasion. Mechanisms like these are designed to build credibility around a brand’s premium positioning and make it easier for consumers to navigate especially when they are linked to a deep understanding of the consumer, the competitive environment and what makes the brand meaningfully different. By understanding your competition and knowing your brand’s meaningful difference, you can ensure that consumers perceive your brand as premium and avoid the trappings of a price sensitive market. As the retail environment continues to be a competitive minefield, it will be the brands that look to bolster their brand and re-create value that will win out in the end.