PricingSmarterProfitableGrowthinMatureCategories

6KeystoSuccess

2

01.

03.

05.

02.

04.

06.

MakingBetterPortfolioDecisions

StopOrganizationalSpin

CompetitionDo’sandDon’ts

FindingInefficiencies

ImplementationValueBasedPricing

3

01.StopOrganizationalSpin

StopOrganizationalSpin

Focusedunderstandingon

driversofchange

From To

Variablecapability&many

templates=multipleopinions

5

02.FindingInefficiencies

FindingInefficiencies

Focusingonprofitable

activities

Relyingonthe

“DiscountingDrug”

From To

Example:FindingInefficiencies

7

Example:FindingInefficiencies

8

Truths&Myths

•  Breakingthroughapricethresholdwillkillyourbusiness

9

•  Thresholdstendtoyield5-7%additionalriskbutusuallyonlywhencrossing99cbarriers

Truths&Myths

•  Dealdepthisakeydriverofpromotedsales

10

•  Extremelyshallowdiscounts(i.e.$0.20offona$3.00itemcanworka“little”bit)

•  Communicateatleast$1offtoyieldlargerlifts(whereproductsallow)

•  Focusinonconsumer-friendlyprice-points($0.99,$1.99,$2.99)

•  Whenabrandisheavilypromoted,opportunitiesoftenexisttoraiseregularpricesandmakepromotionsevenmoreeffective

Truths&Myths

•  AggressivepricepointsareBAD!

11

•  CommercialInvestmentrequiredisakeydriver•  Retailermargincompressiontoachieveprice

pointmayyieldfavorablemanufacturerprofit•  Categorydynamicsplayarole

•  Holdingpowerofproduct•  Categoryexpandability•  Liftcomparison(aggressivevs.shallow

discount)

CaseExample#1–RemoveBadSpend

12

•  Highmarginbusinesswithhighpromotionfrequency•  Organizationalviewwastopromotemoreandmoregivenhighmarginring•  EvaluationofROIrevealedworstspendincompany•  3yearsofreducingpoortradeinvestmentswhilereinvestinginstrongshopper

programshasdeliveredconsistentlystrongvolume&revenuegrowth

CaseExample#2–PromoDepth

13

•  Investingtounprofitablelevelstohold/gainshare•  Manycompetitorseffectivelyleveraginghigh/lowstrategytowin•  IncreasedbothRSP&FSPtomaintain/increasedepthofdiscount•  Somevolumeerosion/sharelosswithsignificantprofitgains

14

03.MakingBetterPortfolioDecisions

ProductMixManagementMultiplecriteria

–  Industrytrends–  Profitability–  Manufacturermargin–  Existingpromoreliance–  Distribution–  Innovatewithpurpose

Differentiatedtargets–  Pricerealization–  Volumegrowth–  Distributiongains

15

RetailerMixManagementMultiplecriteria

–  Profit/week–  Manufacturermargin–  Growthopportunities–  Brandimage

Differentiatedtargets–  Pricerealization–  Volumegrowth

16

MakingBetterPortfolioDecisions

17

18

CompetitionDo’sandDon’ts04.

CompetitionDo’sandDon’ts

19

Runyourownplay!

•  Focusonyourshoppersandretailerpartnersmorethancompetitors

•  Useregularpricetodeterminebrandposition

•  Usepromostrategytodriveoverallvalueofbrandinmarket

20

ValueBasedPricing05.

ValueBasedPricing

21

•  Shiftfocusawayfromcost+desiredmarginpricing

•  Don’tbeafraidtotakepricewithoutacommoditystory

•  Workwithretailersongrowingprofitdollarsthroughyourbrands

22

Implementation06.

Implementation

23

•  Goals

•  Processes

•  Managementengagement

•  Simplescorecards•  alignedwithstrategy

•  Peopleperformancereviews

Howtogetanorganizationtosingfromthesamesongsheet

PricingSmarterProfitableGrowthinMatureCategories