Optimal Price*Pack architectures enable an organization to achieve its RGM objective while satisfying the needs of the shoppers
01. Confronting Challenges
In light of the global crisis in commodities, oil, and logistics, one of the largest FMCG manufacturers was under pressure to increase prices while managing shopper-centric Brand*Price*Pack architecture in one of Central Asian Market. Therefore, they had to overcome the following difficulties:
- The Core Category was losing value/revenue mix in comparison to its volume, resulting in Value share loss.
- Compared to its neighboring markets, the core category had the lowest revenue realization per unit in the market.
- Due to a better shopper proposition for the large pack/upsize pack, revenue growth was further held back.
02. The Methodical Approach
The Decision Point team had proposed the following approach to reduce the impact of the price increase.
03. DP’s Analytics Methodology for Price*Pack Architecture
The Price*Pack Architecture framework that Decision Point used for the client includes the following elements:
As a result of the PPA framework delivered by Decision Point, the Global FMCG Manufacturer was able to:
1. Enhance gross profit by 2-3% by aligning initiatives that have the potential to impact 5+ million USD in the gross profit.
2. Captured commercial portfolio opportunities such as recruitment pack strategy, pricing, and communication. In addition, multi-packs were introduced to cater to specific trade outlets.
3. Guardrails were put in place for Planning and implementing judicious pricing increases to increase top-line sales.
4. Determined pricing opportunities through correcting the PPL Equation, thereby leading to an overall optimal price*pack recommendation, and balancing upsizing benefits for large packs.