2.
CONTENTS
1. An
evolved
role
for
Pricing
Strategy
2. Against
the
backgrop
of
an
ever
more
challenging
landscape
3. Leading
success
in
Pricing
Strategy
requires
a
strategic
step-‐change
4. How
to
find
out
more
3.
CONTENTS
1. An
evolved
role
for
Pricing
Strategy
2. Against
the
backgrop
of
an
ever
more
challenging
landscape
3. Leading
success
in
Pricing
Strategy
requires
a
strategic
step-‐change
4. How
to
find
out
more
4. Pricing strategy plays a major role in driving growth, but
needs to evolve into a core strategic asset
But – in many businesses, Pricing is under-‐leveraged, too tac=cal and designed from the “bo@om-‐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 porFolio
• Develop & embed best prac=ces to transform Price Pack into a strategic capability across the business
• Enhance innova=on with increased commercial insight, rigour & focus at key stages to sustain success
• Evolve price posi=oning across channels to drive margin & differen=ate based on consumer need
A fundamental driver of long-‐term growth, directly connec=ng commercial teams to the consumer…
PORTFOLIO STRATEGY
PRICE ARCHITECTURE
CUSTOMER TERMS
CONSUMER BENEFIT
Drive brand equity &
consumer-‐value through
innova=ve pricing
Work with retail
landscape to develop
terms across channels
Op=mal price/pack
architecture to drive
penetra=on
Direct average prices
across the porFolio to
growth sales & margin
Develop fundamental
skills, capabili=es and
structures
INTERNAL CAPABILITIES
PRICING STRATEGY JOURNEY
5.
CONTENTS
1. An
evolved
role
for
Pricing
Strategy
2. Against
the
backgrop
of
an
ever
more
challenging
landscape
3. Leading
success
in
Pricing
Strategy
requires
a
strategic
step-‐change
4. How
to
find
out
more
6. Industry-‐wide issues are having a significant effect on
growth & profitability…
Margin Dilu=on
Value created through sales diluted through costly customer
terms & promo cycles
Rise of the Discounter
Emergence of discounters as credible alterna=ves to tradi=onal retailers, en=cing
consumers with compelling value-‐based proposi=ons at comparable quality
Retailer Price Wars
Destruc=ve price wars undercut compe==on &
combat discounters, as suppliers see margin &
brand equity erosion
Consumer Promo-‐Promiscuity
Consumers buying more on promo, amplifying margin
pressures & crea=ng a culture of discoun=ng
Lack of Sustained Innova=on Success
Significant investments made in Innova=on & 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?
7. …with companies beginning to feel the pressure…
Revenue
&
margin
growth
in
decline,
whilst
spend
is
increasingly
difficult
to
control
Innova:on
process
lacks
commercial
rigour,
is
too
reac6ve,
and
rarely
delivers
aSer
the
first
12
months…
Customers
feel
we
lack
credible
commercial
strategies,
affec:ng
rela:onships…
Annual
trade
investments
are
increasing
ahead
of
margin…
P&L
is
increasingly
geared
through
significant
promo
investment…
Price
&
Pack
strategy
s:ll
isn’t
considered
as
an
internal
strategic
capability…
Our
channel
strategy
&
price
posi:oning
lacks
clarity
&
clear
governance…
8. …suffering from a visible impact on performance
• Business Impacts
• Failure to capitalise on growth opportuni=es diverts
focus & resources & detracts from successful innova=on
• 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 & reputa=onal costs as customer &
consumer confidence falters
24%
• NPD Life Cycle
• 12 Months
• 24 Months
• 36 Months
• 0-‐6 Months
76% of FMCG launches fail in the first year
Highly-‐geared, unsustainable P&L
• £ Revenue
5 years ago
2 years ago
Today
• 8 years ago
• Business Impacts
• Baselines decline as a result of chronic price wars
• Shoppers become increasingly promo-‐promiscuous,
driving promo downward-‐spiral
• Significant & con=nuous 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
9.
CONTENTS
1. An
evolved
role
for
Pricing
Strategy
2. Against
the
backgrop
of
an
ever
more
challenging
landscape
3. Leading
success
in
Pricing
Strategy
requires
a
strategic
step-‐change
4. How
to
find
out
more
10. Companies need to shik focus to lead success in
Pricing Strategy
Drive strategy through a consumer-‐lens to develop the right price,
pack & range across the porFolio
Evolve price posi=oning across channels to drive margin &
differen=ate based on consumer need
Enhance innova=on with increased commercial analysis, rigour &
focus at key stages to sustain NPD success
Develop & embed best prac=ces to transform Pricing into a strategic
capability across the business
1
2
3
4
11. Develop & embed best prac=ces to transform Pricing
into a strategic capability across the business
Integrate & align func=ons to transform ways of working across & within teams
Promote a strategic, innova=ve culture to develop robust & sustainable commercial strategy
Simplify & ra=onalise data streams to leverage exis=ng resources & unlock new value
Develop simple and effec=ve analy=c models & tools to improve insight depth, range & quality
Pricing as a Strategic Commercial Capability
Data
Strategic
Culture
Analy=cs
Collabora=on
Outside In
Consider commercial strategy from the consumer, customer and wider value chain
12. Benefits
• Strategy framed by outside-‐in consumer trends,
rather than bo@om-‐up business mandates
• Balanced ra=onal & emo=onal consumer insights
• Informs credible & compelling category stories
for customers
• Aligns diverse business func=ons around a single,
mutually beneficial goal
• Refocuses category agendas back to quality,
value and equity growth
• Iden=fies unique white-‐spaces and sources of
future growth based on genuine need
Drive strategy through a consumer-‐lens to develop
the right price, pack & range across the porFolio
• Develop an “outside-‐in” approach, pulng
the consumer at the core of Pricing
• Drive strategy with authen=c and whole-‐
minded consumer insights
• Connect organisa=on, customers &
compe=tors through a consumer-‐lens
CUSTOMER
/ CHANNEL
COMPETITION
ORGANISATION
SHOPPER /
CONSUMER
13. Evolve price posi=oning across channels to drive
margin & differen=ate based on consumer need
• Sales-‐led change in business philosophy to develop channel pricing leadership vs. peers
• Develop considered, strategic consumer price posi=oning price with clear maximin corridors
• Establish enablers, skills & frameworks to implement defensible pricing structures with customers
Evolve pricing
strategy across
channels to drive
margin &
differen=ate
* Actual price (range) at 1me of publica1on for a specific Cola brand
14. Enhance innova=on with increased commercial analysis,
rigour & focus at key stages to sustain NPD success
Expanded Ideation
Outside-In
Commercialisation
Sustained
Execution
X-Functional
Planning
Incorporate idea=on-‐phase insights with
compe=tor war-‐gaming, customer
review & organisa=onal readiness
assessments to comprehensively
evaluate & sign-‐off NPD success from a
commercial lens
Include whole-‐minded & non-‐obvious
consumer insights, and price, pack,
porFolio & channel analysis to
expand range & depth of idea=on
Form cross-‐func=onal teams to
develop credible commercial
founda=ons, clear category stories
and tac=cal growth levers, driving
belief & buy-‐in across the
organisa=on
Create internal & external
branding, communica=ons &
launch plans.
Develop whole-‐minded KPIs
& methodologies to evaluate
success, refine NPDs in-‐
market, and diffuse
knowledge & best-‐prac=ces
effec=vely
Commercialisa=on
Idea=on
Planning
Launch & Evaluate
Considered
Execution
15.
CONTENTS
1. An
evolved
role
for
Pricing
Strategy
2. Against
the
backgrop
of
an
ever
more
challenging
landscape
3. Leading
success
in
Pricing
Strategy
requires
a
strategic
step-‐change
4. How
to
find
out
more
16. Interested? How to find out more…
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
+44 (0) 20 3735 5762
info@fikh-‐p.com
