Unlocking potential with Revenue Growth Management

Strategize, adapt, and thrive

Brands have endured a period of unparalleled instability

Many companies had to implement immediate measures to safeguard profits. First, the emphasis was on managing volumes and enhancing supply chain productivity. Then, the focus shifted to transferring cost increases in response to severe inflation. 

Key challenges

Brand manufacturers are facing a highly pressured market where sustainable growth is becoming increasingly challenging. With changing retailer priorities, intensifying regional and international competition, shifts in consumer expectations and price sensitivity, and volatile economic markets, companies must overcome pressures from all sides.

Pricing today requires precision

In recent years, costs soared due to inflation, prompting a fresh urgency to address pricing strategies. Like many brand manufacturers, you may have relied on periodic price hikes to offset cost increases.

However, the landscape has shifted, and the days of frequent and substantial price increases are over. While cost pressures persist, consumers are increasingly sensitive to high prices. This leads to a decline in consumption, particularly among lower-income segments.

Today, pricing remains a critical aspect of revenue growth management. However, the approach must evolve. It's no longer about blanket price increases across all products; instead, brands must adopt a more nuanced approach. Strategic price adjustments, targeted at specific products and segments, are key to maintaining consumer trust and driving sustainable growth.

There’s a delicate balance between securing profits and remaining competitive in the market. You must make pricing decisions with precision, considering consumer price thresholds and market dynamics. 

Retailers are joining forces

As consumer brands, you've likely experienced the mounting pressure from retailers. The demands for price cuts, increased promotion budgets, and reduced shelf space for national brands are all too familiar. However, what's changing now is the acceleration of these trends. 

Retailers are not just looking to optimize their own operations; they're actively seeking ways to bolster their competitiveness. They’re joining forces through international alliances and centralized purchasing departments to exert more influence during negotiations. 

Now you’re negotiating with not just one retailer, but an entire international buying group spanning multiple banners. These alliances wield significant power, and they're leveraging it to drive price alignment. What does this mean for you? It's a shift in perspective, requiring you to consider not just your national market but the broader international landscape. 

Retailers are now comparing and demanding price alignment as a starting point for negotiations. It's a new pressure on your shoulders, but also an opportunity to rethink your approach to retailer relationships. 

Consumers are reevaluating their spending

In today's economic climate, consumer price sensitivity is at an all-time high. With inflation outpacing salary increases, consumers are feeling the pinch. As a result, we're witnessing notable shifts in purchasing behavior across various categories. 

One prevalent trend is the phenomenon of trade-downs. Some consumers are still willing to engage with product categories, but they're opting for more affordable alternatives. Instead of splurging on premium national brands, they're gravitating towards mid-tier options or even private labels.  

But it's not just trade-downs that are impacting consumer choices. We're also seeing instances of trade-outs, where consumers completely exit certain product categories due to perceived affordability issues. 

Of course, these shifts vary across different consumer segments. Nevertheless, the overarching trend remains: consumers are reevaluating their spending habits and seeking value-conscious alternatives. 

Moreover, the frequency of consumer purchases has undergone a notable change. Rather than making one large shopping trip, many consumers now prefer to make smaller, more frequent purchases. This allows them to exert greater control over their spending, with each trip to the store governed by a predetermined budget. As a result, while purchase frequency has increased, the average transaction amount has decreased significantly. 

Chasing promotion ROI

Let's face it – the pressure is on. Retailers are increasingly hungry for a larger share of your promotional budget. Promotions are the ticket to increased foot traffic and customer loyalty. Yet, as budgets expand, the market becomes saturated, and each promotion's impact diminishes. 

Navigating these challenges requires skill and strategic acumen. It's not just about throwing more promotions into the mix. It's about optimizing every aspect of your promotion management strategy to maximize impact and drive revenue growth. 

For many brand manufacturers, the status quo may seem appealing – but it's a risky proposition. Without continuous improvement in promotion management, you risk falling behind, compromising your competitiveness, profitability, and long-term sustainability. 

What is revenue growth management?

RGM is about driving profitability by strategically managing your prices, products, placements, and promotions.

Revenue Growth Management (RGM) goes by various names – from Profit and Revenue Gross Management (PRGM) to Net Revenue Management (NRM). However, regardless of its title, the principles remain steadfast and applicable across industries.

At its core, RGM is about optimizing every aspect of your business to ensure maximum revenue generation. RGM is not just about increasing sales volume; it's about driving profitability by strategically managing your prices, products, placements, and promotions. The right product with the right price in the right location with the right activation to tackle the right consumer.

RGM isn't exclusive to a particular industry. It's a versatile tool that can be applied across sectors – from consumer packaged goods to luxury brands, tourism to transportation. The fundamental goal is to align your offerings with consumer needs and market demands to capture value effectively.

Breaking down silos within organizations is a critical aspect of successful RGM. Too often, different departments operate in isolation, each with its own perspective and objectives. RGM breaks these barriers. It fosters collaboration and ensures you make decisions with the consumer's best interests in mind. 

 

Moreover, RGM represents a shift in mindset – from a sole focus on volume to a more balanced approach that prioritizes value and margin. This shift requires strong leadership support, starting from the CEO down to every level of the organization.

Implementing RGM isn't just about setting up a new department. Revenue growth management requires a cultural and capability change that requires buy-in from all stakeholders. For RGM to thrive, it needs to be positioned strategically within the organization, with clear authority and a mandate to drive change.

Whether you're just starting your RGM journey or looking to enhance existing practices, Simon-Kucher can guide you every step of the way. From designing methodologies to executing strategies, we ensure that your RGM initiatives deliver tangible results, driving sustainable revenue growth across your business. 

 

How Simon-Kucher can transform your revenue growth management

When it comes to revenue growth management, we're not just another consultancy – we're THE experts. We leverage advanced analytics and data-driven insights to drive revenue growth through revenue growth management. 

By analyzing price elasticity, optimizing pricing and promotion strategies, and refining portfolio pack architecture, we help you gain a competitive advantage in the market. Our strategic decisions are informed by comprehensive data and analytical models, ensuring alignment with consumer preferences, and maximizing net revenue. 

Our track record spans across all verticals, channels, and geographies, and we bring unparalleled experience to the table. 

 End-to-end expertise

From strategy to operations, we cover every aspect of RGM. While others may offer frameworks and playbooks, we dive deep into the nitty-gritty details, ensuring the successful implementation of our recommendations.

Data-driven recommendations

We know how to harness the power of data to drive informed decision-making. With our customized Power BI tools and dashboards, we empower you to optimize your RGM strategies with precision. 

 Long-term sustainability

Our approach goes beyond just delivering a one-off project. We equip your team with the tools and capabilities needed to sustain RGM excellence for years to come. Our dashboards and KPIs ensure that you can make informed decisions long after our engagement ends.

 Tailored solutions

Whether you're just starting your RGM journey or looking to take it to the next level, we tailor our approach to your specific needs and capabilities. Our step-by-step transformation program ensures that you can progress at a pace that suits your organization.

Dedicated RGM team

With a dedicated team focused on RGM 2.0, we bring fresh perspectives and innovative solutions to the table. We're committed to driving measurable results and lasting impact for your business. 

Transformation partners

At Simon-Kucher, we don't just deliver solutions – we deliver transformation. Let us be your partner in unlocking the full potential of your revenue growth management strategies. 

Our experts

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Get in touch

With over 35 years of experience in consumer sector, we help you prioritize and implement the right commercial growth strategies to outperform market trends. We take a 360 degree approach to understand the behavior and needs of the market, combining our expertise and agile mindset with our client’s knowledge to unlock your sustainable, profitable growth potential and do so at pace.