Stay ahead of the trade-down curve: Strategic responses for revenue growth

In our article, we explored how economic uncertainty has become the defining characteristic of today’s business landscape. As market volatility continues, trade-down behavior has emerged as a particularly challenging pattern for businesses.

Trade-down behavior – where a shift to purchasing a less expensive alternative occurs – isn’t new, but its current manifestation presents unique challenges and opportunities. For business leaders, understanding and strategically responding to this behavior is no longer optional; it’s essential for maintaining growth and profitability in uncertain times.

The trade-down landscape: 4 patterns reshaping behavior

What sets today’s situation apart from previous economic downturns is the unprecedented combination of post-pandemic economic recalibration, increased digital transparency, and an environment where many have already experienced extended periods of financial pressure – making them quicker to adjust spending patterns when uncertainty rises.

The trade-down patterns in the current market reveal nuanced behaviors that extend beyond simply choosing the cheapest option. Today, it’s not just about opting for the cheapest alternatives, but an active search for the best value. According to SKIM’s Consumer Perception of Price & Promotion Survey, there is a careful consideration of quality, features, and brand reputation. This leads to value-oriented decisions rather than purely driven by price.

Beyond product substitution, we’re seeing significant channel migration, where there is an increasing aptitude to shop around to find the best deals, leaning into outlets that offer everyday low prices and stronger promotional deals. This shift impacts a brand’s overall volume and pricing power, regardless of whether direct product trade-down occurs.

The decision-making process leading to these changes is powered by the continued increase in digital influence. The ability to extensively leverage digital tools to not only price compare but also read reviews and seek recommendations before purchasing, provides the opportunity to make more informed choices, creating increased challenges for brands in conquering the trade-down dynamic.

Additionally, some categories are seeing a bump in sales as a way of pre-empting potential price increases, particularly in larger expense categories where economic shifts might drive future costs higher. This “stocking up” behavior represents yet another dimension of how purchasing patterns are evolving in response to economic uncertainty.

Beyond the discount spiral: Strategic defenses against trade-down

SKIM’s Habitual-Deliberate Loop framework helps explain how market disruptions break regular habits and create opportunities to re-engage with the right approach.

Rather than simply cutting prices – which is a short-term solution that puts your long-term brand value at risk – you can employ strategic approaches to minimize the chance of trading down.

A key approach is to build meaningful differences in your category. This requires a tri-level strategy that moves from understanding fundamental category drivers to identifying your brand’s unique position, and lastly, to crafting persuasive communication plans:

With this strategic framework as a foundation, you can implement several specific tactics to address trade-down:

• Portfolio architecture optimization: Implement a clear Good-Better-Best hierarchy within your portfolio, allowing movement within your brand family rather than switching to competitors.
• Value-added innovation: Introduce products or features that offer enhanced value to deter the search for cheaper alternatives. This could include improved formulations, larger pack sizes at a better volume price, or added functionalities.
• Strategic promotion and bundling: Create targeted promotions that drive trial and awareness, not as a crutch that erodes long-term pricing power and profitability.
• Brand equity reinforcement: Consistently communicate quality, reliability, and trust to reduce the likelihood of trade-down based solely on price. Brands with strong emotional connections tend to weather economic downturns better.
• Portfolio rationalization: Evaluate your entire portfolio, eliminate underperforming items, and prioritize hero value and premium offerings with strong differentiation and a loyal base. This creates an easier-to-navigate portfolio with clear value propositions.

Winning back loyalty from traded-down customers

Customers who have already traded down present a unique challenge. Understanding the underlying motivation is critical. For example, consumers with price concerns, product dissatisfaction, or who perceive better value can be found elsewhere all require different responses. Our SKIM Habitual-Deliberate Loop framework (shown above) reveals how market disruptions create natural openings for re-engagement as purchasing patterns are reassessed.

Many businesses find success by combining data-driven personalization with clear value messaging. Those who effectively articulate benefits beyond price – emphasizing quality, reliability, and emotional connection – often see stronger results. Our research consistently shows there hasn’t been an abandonment of trusted brands; but instead, a compelling justification for a more premium price point.

The most sustainable approach balances short-term recovery tactics with long-term loyalty building. While discount promotional incentives may bring customers back initially, highlighting the unspoken trade-offs of lower-priced alternatives helps create more durable relationships that transcend price sensitivity.

3 takeaways to navigate trade-down with greater confidence

In summary, to navigate market volatility and combat trade-down pressure effectively:

1. Understand your audience deeply: Challenge your assumptions on what you think you know! Continuously monitor changing needs, perceptions, and trade-down triggers.
2. Differentiate on value, not just price: Clearly articulate why your offering is worth not trading down. Reinforce brand equity and value perception across all customer touchpoints.
3. Optimize your portfolio architecture: Create clear good-better-best options that capture your audience at multiple price points while leveraging data-driven insights to anticipate changes rather than just reacting to them.

Ready to make decisions with greater precision and certainty?

At SKIM, we partner with the world’s leading businesses to develop and implement resilient revenue management, innovation, and brand communication strategies that stand strong during market uncertainty.

Our data-driven approach provides clarity when it’s needed most, ensuring your responses to trade-down behavior are grounded in consumer insights rather than market speculation.

Let’s navigate uncertainty together to bring greater confidence to your decision-making process.

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This is the second in our series of content addressing economic uncertainty in 2025. As markets worldwide experience unprecedented volatility, we’re sharing practical insights to help business leaders make confident decisions in challenging times.