Gabriele Herrmann-Scharnberg is a director at Kantar with extensive market research and consumer insights expertise. Mary Kyriakidi is a global thought leader, driving Kantar’s evidence-based narratives on brand growth and marketing effectiveness.
In 2025, marketers are facing increasing pressure to justify their budgets and demonstrate their impact on driving profitable business growth. And there's a disconnect between how marketers and finance teams view marketing’s impact on the bottom line.
To bridge this gap, we need to speak a common language by looking at the profit equation: Profit = Sales * Price – Costs. These days, marketing's contribution is primarily measured through its impact on sales volume. This overlooks its crucial role on the other side of the equation: price.
New research from Google and Kantar highlights the powerful connection between marketing, brand equity, and pricing power. It reveals how strong brands influence strong prices — and demonstrates marketing's undeniable impact on business growth.
The importance of building brand equity in a price-sensitive world
The topic of price has rarely been more relevant. A global rise in inflation has had a significant impact on both consumers and brands. Businesses, faced with rising costs, have been forced to re-evaluate their pricing structure — without losing the trust and support of their customers. And, in response, people are constantly looking for brands that bring them more value to justify any price increases.
We often focus on marketing’s contribution to customer acquisition and sales volume when we measure the impact of investments. “While crucial, this isn't the whole story,” said Michał Protasiuk, research manager at Google and co-author of the report. “Marketing also builds brands, influencing consumer price perception — a particularly important factor during periods of high inflation.”
He explained: “Strong marketing can mitigate the negative impact of rising prices on sales volume. It affirms the brand’s association with positive features, like quality, and makes the price worth paying. However, commonly used effectiveness metrics don't capture these indirect pricing effects, preventing marketers from seeing the complete picture of their investments.”
In this price-sensitive world it’s key for marketers to cultivate brand equity through brand building. This can help to attract and retain customers — and act as a protective barrier against competitors.
There’s clear evidence for brand building’s impact on price too: strong brands consistently command prices up to twice those of weaker competitors.1 This allows businesses to maintain profitability even in challenging economic times.
How a brand’s price elasticity informs profitability
To understand how brands can command strong prices — also known as their “pricing power” — we need to measure their resistance to price pressure.
Price elasticity quantifies this phenomenon, showing how demand for a product fluctuates relative to a change in price. High elasticity means a small price change can cause a big shift in customer demand; low elasticity suggests relative immunity to price movements.
For example: if a pet-care brand with high price elasticity raises the price of a bag of cat food by 50 cents, sales could drop sharply as price-sensitive customers switch to cheaper alternatives. On the flip side, low price elasticity means customers will likely keep buying the same cat food even if the price increases by $3 per bag.
While categories have different baseline elasticities — influenced by factors like purchase frequency, competition, number of available alternatives, and switching costs — strong marketing can help individual brands transcend these category norms. This means they can increase prices without experiencing a significant drop in sales volume.
This resilience creates opportunities for revenue growth through strategic price management. But how brands build this pricing power matters.
While marketing communication can significantly improve price elasticity, too much focus on promotional messaging can have the opposite effect. Our analysis suggests that moving away from promotion-heavy communication toward balanced brand building can reduce price elasticity by up to 20% in the long run.2
Pricing under pressure: Elasticity in action
So how does marketing contribute to pricing power, and how can we quantify its contribution?
We worked with a U.K. skincare brand that recently increased prices by 14%, but the team had invested heavily in brand building before making this price change.
“We used an analytical model to simulate the impact of low pricing power for this skincare brand,” said Jorge Alagon, global head of data science innovations at Kantar. “The model suggested that without strong brand investment, they would have experienced a 10% decline in sales volume and only 2% revenue growth.3
However, prior to this change, the brand was able to reduce its price elasticity from -0.7 to -0.6, meaning its customers became less sensitive to price changes.4 As a result, sales volume fell by only 7%, turning what could have been a challenging price rise into a 7% revenue boost.5
“The skincare brand was able to generate an extra 5% in revenue by increasing its pricing power,” explained Google researcher Michal Protasiuk. “Interestingly, our research showed that 76% of that extra revenue came as a direct result of marketing investment.”
And frozen food manufacturer McCain reduced its price elasticity by a staggering 47% over nine years — raising base sales by 44% — through consistent investment in brand advertising.
In both these cases, the direct link between marketing activity and price elasticity demonstrates how brand building creates commercial resilience. Not just by communicating value, but by fundamentally altering how people respond to price changes.
Fuelling marketing success in 2025
Economic stress often triggers a protective reflex in businesses: cut costs, hold onto cash, and wait for a better day. Organisations instinctively pull back — and marketing budgets present a seemingly painless target.
Our research shows that this approach creates a false economy as regaining lost market share typically requires a disproportionate reinvestment — approximately $1.85 for every $1 initially saved through cuts.6
Strong marketing doesn't just drive immediate returns — it builds brand equity and creates long-term resilience against price pressures.
Key steps for building a strong brand:
- Measure your marketing impact. Build pricing power with marketing that demonstrates value, uniqueness, and quality. Then, analyse your brand's pricing power and price elasticity, for example through price sensitivity testing to determine what customers are willing to pay. Conduct regular surveys to track brand equity too. These metrics reveal how well your marketing builds a customer base that's less sensitive to price changes.
- Speak the language of finance. Collaborate with your finance team to understand the impact of marketing activities on pricing and, ultimately, how this drives greater profitability for the business.
- Invest in your brand's future. Consistent brand building strengthens brand equity, allowing you to weather economic storms and emerge stronger. Champion marketing as a must-have investment for long-term success.
Read “The Effectiveness Equation” report for more marketing and measurement insights.
