There are only three variables in the profit equation of FMCG companies: volume, costs and most importantly, though frequently overlooked, price.
In our recent global survey involving leading FMCG companies, around 60% of respondents, highlighted that profitability growth is the highest priority for their organization, with only 43% stating “Price realization” as a key goal for the coming months.
Why so? Many organizations focus their attention on the volume component of the profit equation, with discussions relating to costs centering around reductions or efficiencies. However, the price at which an item is sold remains the biggest driver of profit, as any additional realized price flows straight to the bottom line of the P&L across all of the volume.
Pricing is a multidimensional “risk and opportunity” factor that needs to be well understood and managed by CPGs to maximize their brand equity, address the right market opportunities, win over competition, and realize sustainable growth.
Revenue Growth Management (RGM) and the pricing lever
In this miniguide, you will find a step-by-step approach to price realization that will help you structure winning pricing frameworks and build actionable strategies across brands, channels and customers.
You will also find tips to help you get stakeholders to align around common data, metrics and KPIs that are foundational to understand pricing structures, defensibility, and leakage. You’ll learn how Artificial Intelligence (AI) and Machine Learning (ML) can be used to generate optimal pricing programs.
A final section of the guide will help you identify and address potential internal barriers and provide a blueprint for adopting a phased approach to ensure long-term RGM success.
Revenue Management from Insights to Action Mini-Guide Series
In this series, we will examine the role of each key revenue management lever – assortment, pricing, and trade promotions – and how their well-orchestrated interplay is paramount for CPGs to create winning revenue management strategies.
Read our entire miniguide series and learn how to fast-forward digital transformation and inspire successful revenue growth management strategies for your organization, at speed and scale.