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FIFTH P Strategy 
Pricing Strategy 
1
1 An evolved role for Pricing strategy 
2 Against the backdrop of an ever more challenging landscape 
3 Leading success in Pricing Strategy requires a strategic step-change 
4 How to find out more
Pricing strategy plays a major role in driving growth, but 
needs to evolve into a core strategic asset 
A fundamental driver of long-term growth, directly connecting commercial teams to the consumer… 
PRICING STRATEGY JOURNEY 
PORTFOLIO STRATEGY PRICE ARCHITECTURE CUSTOMER TERMS CONSUMER BENEFIT 
Drive brand equity & 
consumer-value through 
innovative pricing 
Work with retail 
landscape to develop 
terms across channels 
Optimal price/pack 
architecture to drive 
penetration 
Direct average prices 
across the portfolio to 
growth sales & margin 
INTERNAL CAPABILITIES 
Develop fundamental 
skills, capabilities and 
structures 
But – in many businesses, Pricing is under-leveraged, too tactical and designed from the “bottom-up”… 
…given current market dynamics, this has to change - Pricing has to evolve into a strategic growth lever 
• Drive strategy through a consumer-lens to develop the right price, & range across the portfolio 
• Develop & embed best practices to transform Price Pack into a strategic capability across the business 
• Enhance innovation with increased commercial insight, rigour & focus at key stages to sustain success 
• Evolve price positioning across channels to drive margin & differentiate based on consumer need
1 An evolved role for Pricing strategy 
2 Against the backdrop of an ever more challenging landscape 
3 Leading success in Pricing Strategy requires a strategic step-change 
4 How to find out more
Industry-wide issues are having a significant effect on 
growth & profitability… 
Consumer Promo-Promiscuity 
Consumers buying more on promo, amplifying margin pressures 
& creating a culture of discounting 
Rise of the Discounter 
Emergence of discounters as credible alternatives to traditional retailers, enticing 
consumers with compelling value-based propositions at comparable quality 
Margin Dilution 
Value created through sales diluted through costly customer terms 
& promo cycles 
Retailer Price Wars 
Destructive price wars undercut competition & 
combat discounters, as suppliers see margin & 
brand equity erosion 
Lack of Sustained Innovation Success 
Significant investments made in Innovation & NPD, but most fail 
within the 12 month mark 
The Future…? 
More of the same, or can companies turn it 
around with evolved, integrated Pricing 
thinking?
…with companies beginning to feel the pressure… 
Revenue & margin growth in 
decline, whilst spend is 
increasingly difficult to control 
Innovation process lacks 
commercial rigour, is too reactive, 
and rarely delivers after the first 12 
months… 
Annual trade investments are 
increasing ahead of margin… 
Customers feel we lack credible 
commercial strategies, affecting 
relationships… 
P&L is increasingly geared 
through significant promo 
investment… 
Price & Pack strategy still isn’t 
considered as an internal 
strategic capability… 
Our channel strategy & price 
positioning lacks clarity & clear 
governance…
…suffering from a visible impact on performance 
Highly-geared, unsustainable P&L 76% of FMCG launches fail in the first year 
24% 
• 12 Months • 0-6 Months • 24 Months • 36 Months 
•Business Impacts 
• NPD Life Cycle 
• Failure to capitalise on growth opportunities diverts 
focus & resources & detracts from successful innovation 
• Significant costs emerge from write-offs and excess stock 
sold below market value to discounters 
• Overly intensive resource, energy & capital spent in 
developing unsuccessful NPD 
• Increased trading & reputational costs as customer & 
consumer confidence falters 
• £ Revenue 
• 8 years ago 5 years ago 2 years ago Today 
•Business Impacts 
• Baselines decline as a result of chronic price wars 
• Shoppers become increasingly promo-promiscuous, 
driving promo downward-spiral 
• Significant & continuous investment in Promo 
required to sustain revenues, at detriment of margin 
• Urgent need to reverse “promo junky” consumers, 
without any sustainable mechanism to do so 
• % Promo 
Baseline 
Sold on Promo
1 An evolved role for Pricing strategy 
2 Against the backdrop of an ever more challenging landscape 
3 Leading success in Pricing Strategy requires a strategic step-change 
4 How to find out more
Companies need to shift focus to lead success in 
Pricing Strategy 
Develop & embed best practices to transform Pricing into a strategic 
capability across the business 
Drive strategy through a consumer-lens to develop the right price, 
pack & range across the portfolio 
Evolve price positioning across channels to drive margin & 
differentiate based on consumer need 
Enhance innovation with increased commercial analysis, rigour & 
focus at key stages to sustain NPD success 
1 
2 
3 
4
Develop & embed best practices to transform Pricing 
into a strategic capability across the business 
Simplify & rationalise data streams to leverage existing resources & unlock new value 
Develop simple and effective analytic models & tools to improve insight depth, range & quality 
Outside In Consider commercial strategy from the consumer, customer and wider value chain 
Integrate & align functions to transform ways of working across & within teams 
Promote a strategic, innovative culture to develop robust & sustainable commercial strategy 
Pricing as a Strategic Commercial Capability 
Data 
Analytics 
Collaboration 
Strategic 
Culture
Drive strategy through a consumer-lens to develop 
the right price, pack & range across the portfolio 
Benefits 
• Strategy framed by outside-in consumer trends, 
rather than bottom-up business mandates 
• Balanced rational & emotional consumer insights 
• Informs credible & compelling category stories for 
customers 
• Aligns diverse business functions around a single, 
mutually beneficial goal 
• Refocuses category agendas back to quality, value 
and equity growth 
• Identifies unique white-spaces and sources of 
future growth based on genuine need 
CUSTOMER 
/ CHANNEL 
ORGANISATION 
COMPETITION 
SHOPPER / 
CONSUMER 
• Develop an “outside-in” approach, putting 
the consumer at the core of Pricing 
• Drive strategy with authentic and whole-minded 
consumer insights 
• Connect organisation, customers & 
competitors through a consumer-lens
Evolve price positioning across channels to drive 
margin & differentiate based on consumer need 4 
• Sales-led change in business philosophy to develop channel pricing leadership vs. peers 
• Develop considered, strategic consumer price positioning price with clear maximin corridors 
• Establish enablers, skills & frameworks to implement defensible pricing structures with customers 
Evolve pricing 
strategy across 
channels to drive 
margin & 
differentiate 
* Actual price (range) at time of publication for a specific Cola brand
Enhance innovation with increased commercial analysis, 
rigour & focus at key stages to sustain NPD success 
Expanded 
Ideation 
Outside-In 
Commercialisation 
Create Sustained 
internal & external 
branding, Execution 
communications & 
launch plans. 
Develop whole-minded KPIs 
& methodologies to evaluate 
success, refine NPDs in-market, 
X-Functional 
Planning 
Incorporate ideation-phase insights with 
competitor war-gaming, customer 
review & organisational readiness 
assessments to comprehensively 
evaluate & sign-off NPD success from a 
commercial lens 
Include whole-minded & non-obvious 
consumer insights, and price, 
pack, portfolio & channel analysis to 
expand range & depth of ideation 
Form cross-functional teams to 
develop credible commercial 
foundations, clear category stories 
and tactical growth levers, driving 
belief & buy-in across the 
organisation 
and diffuse 
knowledge & best-practices 
effectively 
Commercialisation 
Ideation 
Planning 
Launch & Evaluate 
Considered 
Execution
1 An evolved role for Pricing strategy 
2 Against the backdrop of an ever more challenging landscape 
3 Leading success in Pricing Strategy requires a strategic step-change 
4 How to find out more
Interested? How to find out more… 
+44 (0) 20 3735 5762 
info@fifth-p.com 
We are Fifth P. Since 2011, we’ve worked with our clients in the FMCG & consumer product 
industries across Europe to create growth strategies that sustain long-term growth & leave lasting 
legacies
Pricing strategy - Fifth P Industry Viewpoint

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Pricing strategy - Fifth P Industry Viewpoint

  • 1. FIFTH P Strategy Pricing Strategy 1
  • 2. 1 An evolved role for Pricing strategy 2 Against the backdrop of an ever more challenging landscape 3 Leading success in Pricing Strategy requires a strategic step-change 4 How to find out more
  • 3. Pricing strategy plays a major role in driving growth, but needs to evolve into a core strategic asset A fundamental driver of long-term growth, directly connecting commercial teams to the consumer… PRICING STRATEGY JOURNEY PORTFOLIO STRATEGY PRICE ARCHITECTURE CUSTOMER TERMS CONSUMER BENEFIT Drive brand equity & consumer-value through innovative pricing Work with retail landscape to develop terms across channels Optimal price/pack architecture to drive penetration Direct average prices across the portfolio to growth sales & margin INTERNAL CAPABILITIES Develop fundamental skills, capabilities and structures But – in many businesses, Pricing is under-leveraged, too tactical and designed from the “bottom-up”… …given current market dynamics, this has to change - Pricing has to evolve into a strategic growth lever • Drive strategy through a consumer-lens to develop the right price, & range across the portfolio • Develop & embed best practices to transform Price Pack into a strategic capability across the business • Enhance innovation with increased commercial insight, rigour & focus at key stages to sustain success • Evolve price positioning across channels to drive margin & differentiate based on consumer need
  • 4. 1 An evolved role for Pricing strategy 2 Against the backdrop of an ever more challenging landscape 3 Leading success in Pricing Strategy requires a strategic step-change 4 How to find out more
  • 5. Industry-wide issues are having a significant effect on growth & profitability… Consumer Promo-Promiscuity Consumers buying more on promo, amplifying margin pressures & creating a culture of discounting Rise of the Discounter Emergence of discounters as credible alternatives to traditional retailers, enticing consumers with compelling value-based propositions at comparable quality Margin Dilution Value created through sales diluted through costly customer terms & promo cycles Retailer Price Wars Destructive price wars undercut competition & combat discounters, as suppliers see margin & brand equity erosion Lack of Sustained Innovation Success Significant investments made in Innovation & NPD, but most fail within the 12 month mark The Future…? More of the same, or can companies turn it around with evolved, integrated Pricing thinking?
  • 6. …with companies beginning to feel the pressure… Revenue & margin growth in decline, whilst spend is increasingly difficult to control Innovation process lacks commercial rigour, is too reactive, and rarely delivers after the first 12 months… Annual trade investments are increasing ahead of margin… Customers feel we lack credible commercial strategies, affecting relationships… P&L is increasingly geared through significant promo investment… Price & Pack strategy still isn’t considered as an internal strategic capability… Our channel strategy & price positioning lacks clarity & clear governance…
  • 7. …suffering from a visible impact on performance Highly-geared, unsustainable P&L 76% of FMCG launches fail in the first year 24% • 12 Months • 0-6 Months • 24 Months • 36 Months •Business Impacts • NPD Life Cycle • Failure to capitalise on growth opportunities diverts focus & resources & detracts from successful innovation • Significant costs emerge from write-offs and excess stock sold below market value to discounters • Overly intensive resource, energy & capital spent in developing unsuccessful NPD • Increased trading & reputational costs as customer & consumer confidence falters • £ Revenue • 8 years ago 5 years ago 2 years ago Today •Business Impacts • Baselines decline as a result of chronic price wars • Shoppers become increasingly promo-promiscuous, driving promo downward-spiral • Significant & continuous investment in Promo required to sustain revenues, at detriment of margin • Urgent need to reverse “promo junky” consumers, without any sustainable mechanism to do so • % Promo Baseline Sold on Promo
  • 8. 1 An evolved role for Pricing strategy 2 Against the backdrop of an ever more challenging landscape 3 Leading success in Pricing Strategy requires a strategic step-change 4 How to find out more
  • 9. Companies need to shift focus to lead success in Pricing Strategy Develop & embed best practices to transform Pricing into a strategic capability across the business Drive strategy through a consumer-lens to develop the right price, pack & range across the portfolio Evolve price positioning across channels to drive margin & differentiate based on consumer need Enhance innovation with increased commercial analysis, rigour & focus at key stages to sustain NPD success 1 2 3 4
  • 10. Develop & embed best practices to transform Pricing into a strategic capability across the business Simplify & rationalise data streams to leverage existing resources & unlock new value Develop simple and effective analytic models & tools to improve insight depth, range & quality Outside In Consider commercial strategy from the consumer, customer and wider value chain Integrate & align functions to transform ways of working across & within teams Promote a strategic, innovative culture to develop robust & sustainable commercial strategy Pricing as a Strategic Commercial Capability Data Analytics Collaboration Strategic Culture
  • 11. Drive strategy through a consumer-lens to develop the right price, pack & range across the portfolio Benefits • Strategy framed by outside-in consumer trends, rather than bottom-up business mandates • Balanced rational & emotional consumer insights • Informs credible & compelling category stories for customers • Aligns diverse business functions around a single, mutually beneficial goal • Refocuses category agendas back to quality, value and equity growth • Identifies unique white-spaces and sources of future growth based on genuine need CUSTOMER / CHANNEL ORGANISATION COMPETITION SHOPPER / CONSUMER • Develop an “outside-in” approach, putting the consumer at the core of Pricing • Drive strategy with authentic and whole-minded consumer insights • Connect organisation, customers & competitors through a consumer-lens
  • 12. Evolve price positioning across channels to drive margin & differentiate based on consumer need 4 • Sales-led change in business philosophy to develop channel pricing leadership vs. peers • Develop considered, strategic consumer price positioning price with clear maximin corridors • Establish enablers, skills & frameworks to implement defensible pricing structures with customers Evolve pricing strategy across channels to drive margin & differentiate * Actual price (range) at time of publication for a specific Cola brand
  • 13. Enhance innovation with increased commercial analysis, rigour & focus at key stages to sustain NPD success Expanded Ideation Outside-In Commercialisation Create Sustained internal & external branding, Execution communications & launch plans. Develop whole-minded KPIs & methodologies to evaluate success, refine NPDs in-market, X-Functional Planning Incorporate ideation-phase insights with competitor war-gaming, customer review & organisational readiness assessments to comprehensively evaluate & sign-off NPD success from a commercial lens Include whole-minded & non-obvious consumer insights, and price, pack, portfolio & channel analysis to expand range & depth of ideation Form cross-functional teams to develop credible commercial foundations, clear category stories and tactical growth levers, driving belief & buy-in across the organisation and diffuse knowledge & best-practices effectively Commercialisation Ideation Planning Launch & Evaluate Considered Execution
  • 14. 1 An evolved role for Pricing strategy 2 Against the backdrop of an ever more challenging landscape 3 Leading success in Pricing Strategy requires a strategic step-change 4 How to find out more
  • 15. Interested? How to find out more… +44 (0) 20 3735 5762 info@fifth-p.com We are Fifth P. Since 2011, we’ve worked with our clients in the FMCG & consumer product industries across Europe to create growth strategies that sustain long-term growth & leave lasting legacies

Editor's Notes

  1. Not sure if this slide or slide 10 goes first. Personal opinion is this one, as don’t think you necessarily need to go down into the details on meeting one – these give sufficient detail to talk around, but should have the full case studies of these examples in appendix at least, if not as the next slide… Maybe need 2 X these slides Case study snapshot rules The pithy one-liner (orange text) A la Accenture ads, a pithy one-line summation of the project, ensuring £££ / % is detailed – one line overview of why we did it The Brief One line statement of issue Company logo Our Approach The three key things that we did, succinctly, clearly, using as little technical / etc. jargon as possible – i.e. make it accessible Lasting Impact Three key benefits to the approach – succinct, tangible, believable Will need input from you guys and Sahaj to refine the case studies in this format. Equally, will need to choose the right ones for Suntory
  2. Not sure if this slide or slide 10 goes first. Personal opinion is this one, as don’t think you necessarily need to go down into the details on meeting one – these give sufficient detail to talk around, but should have the full case studies of these examples in appendix at least, if not as the next slide… Maybe need 2 X these slides Case study snapshot rules The pithy one-liner (orange text) A la Accenture ads, a pithy one-line summation of the project, ensuring £££ / % is detailed – one line overview of why we did it The Brief One line statement of issue Company logo Our Approach The three key things that we did, succinctly, clearly, using as little technical / etc. jargon as possible – i.e. make it accessible Lasting Impact Three key benefits to the approach – succinct, tangible, believable Will need input from you guys and Sahaj to refine the case studies in this format. Equally, will need to choose the right ones for Suntory
  3. Not sure if this slide or slide 10 goes first. Personal opinion is this one, as don’t think you necessarily need to go down into the details on meeting one – these give sufficient detail to talk around, but should have the full case studies of these examples in appendix at least, if not as the next slide… Maybe need 2 X these slides Case study snapshot rules The pithy one-liner (orange text) A la Accenture ads, a pithy one-line summation of the project, ensuring £££ / % is detailed – one line overview of why we did it The Brief One line statement of issue Company logo Our Approach The three key things that we did, succinctly, clearly, using as little technical / etc. jargon as possible – i.e. make it accessible Lasting Impact Three key benefits to the approach – succinct, tangible, believable Will need input from you guys and Sahaj to refine the case studies in this format. Equally, will need to choose the right ones for Suntory
  4. Not sure if this slide or slide 10 goes first. Personal opinion is this one, as don’t think you necessarily need to go down into the details on meeting one – these give sufficient detail to talk around, but should have the full case studies of these examples in appendix at least, if not as the next slide… Maybe need 2 X these slides Case study snapshot rules The pithy one-liner (orange text) A la Accenture ads, a pithy one-line summation of the project, ensuring £££ / % is detailed – one line overview of why we did it The Brief One line statement of issue Company logo Our Approach The three key things that we did, succinctly, clearly, using as little technical / etc. jargon as possible – i.e. make it accessible Lasting Impact Three key benefits to the approach – succinct, tangible, believable Will need input from you guys and Sahaj to refine the case studies in this format. Equally, will need to choose the right ones for Suntory
  5. Not sure if this slide or slide 10 goes first. Personal opinion is this one, as don’t think you necessarily need to go down into the details on meeting one – these give sufficient detail to talk around, but should have the full case studies of these examples in appendix at least, if not as the next slide… Maybe need 2 X these slides Case study snapshot rules The pithy one-liner (orange text) A la Accenture ads, a pithy one-line summation of the project, ensuring £££ / % is detailed – one line overview of why we did it The Brief One line statement of issue Company logo Our Approach The three key things that we did, succinctly, clearly, using as little technical / etc. jargon as possible – i.e. make it accessible Lasting Impact Three key benefits to the approach – succinct, tangible, believable Will need input from you guys and Sahaj to refine the case studies in this format. Equally, will need to choose the right ones for Suntory
  6. Not sure if this slide or slide 10 goes first. Personal opinion is this one, as don’t think you necessarily need to go down into the details on meeting one – these give sufficient detail to talk around, but should have the full case studies of these examples in appendix at least, if not as the next slide… Maybe need 2 X these slides Case study snapshot rules The pithy one-liner (orange text) A la Accenture ads, a pithy one-line summation of the project, ensuring £££ / % is detailed – one line overview of why we did it The Brief One line statement of issue Company logo Our Approach The three key things that we did, succinctly, clearly, using as little technical / etc. jargon as possible – i.e. make it accessible Lasting Impact Three key benefits to the approach – succinct, tangible, believable Will need input from you guys and Sahaj to refine the case studies in this format. Equally, will need to choose the right ones for Suntory
  7. Not sure if this slide or slide 10 goes first. Personal opinion is this one, as don’t think you necessarily need to go down into the details on meeting one – these give sufficient detail to talk around, but should have the full case studies of these examples in appendix at least, if not as the next slide… Maybe need 2 X these slides Case study snapshot rules The pithy one-liner (orange text) A la Accenture ads, a pithy one-line summation of the project, ensuring £££ / % is detailed – one line overview of why we did it The Brief One line statement of issue Company logo Our Approach The three key things that we did, succinctly, clearly, using as little technical / etc. jargon as possible – i.e. make it accessible Lasting Impact Three key benefits to the approach – succinct, tangible, believable Will need input from you guys and Sahaj to refine the case studies in this format. Equally, will need to choose the right ones for Suntory
  8. Not sure if this slide or slide 10 goes first. Personal opinion is this one, as don’t think you necessarily need to go down into the details on meeting one – these give sufficient detail to talk around, but should have the full case studies of these examples in appendix at least, if not as the next slide… Maybe need 2 X these slides Case study snapshot rules The pithy one-liner (orange text) A la Accenture ads, a pithy one-line summation of the project, ensuring £££ / % is detailed – one line overview of why we did it The Brief One line statement of issue Company logo Our Approach The three key things that we did, succinctly, clearly, using as little technical / etc. jargon as possible – i.e. make it accessible Lasting Impact Three key benefits to the approach – succinct, tangible, believable Will need input from you guys and Sahaj to refine the case studies in this format. Equally, will need to choose the right ones for Suntory
  9. Not sure if this slide or slide 10 goes first. Personal opinion is this one, as don’t think you necessarily need to go down into the details on meeting one – these give sufficient detail to talk around, but should have the full case studies of these examples in appendix at least, if not as the next slide… Maybe need 2 X these slides Case study snapshot rules The pithy one-liner (orange text) A la Accenture ads, a pithy one-line summation of the project, ensuring £££ / % is detailed – one line overview of why we did it The Brief One line statement of issue Company logo Our Approach The three key things that we did, succinctly, clearly, using as little technical / etc. jargon as possible – i.e. make it accessible Lasting Impact Three key benefits to the approach – succinct, tangible, believable Will need input from you guys and Sahaj to refine the case studies in this format. Equally, will need to choose the right ones for Suntory
  10. Not sure if this slide or slide 10 goes first. Personal opinion is this one, as don’t think you necessarily need to go down into the details on meeting one – these give sufficient detail to talk around, but should have the full case studies of these examples in appendix at least, if not as the next slide… Maybe need 2 X these slides Case study snapshot rules The pithy one-liner (orange text) A la Accenture ads, a pithy one-line summation of the project, ensuring £££ / % is detailed – one line overview of why we did it The Brief One line statement of issue Company logo Our Approach The three key things that we did, succinctly, clearly, using as little technical / etc. jargon as possible – i.e. make it accessible Lasting Impact Three key benefits to the approach – succinct, tangible, believable Will need input from you guys and Sahaj to refine the case studies in this format. Equally, will need to choose the right ones for Suntory