Blog articles about Price and Portfolio Management
People are poor predictors of their own behavior. Context changes corrupt their intentions. A context change may be as simple as a product discount, or as complex as a severe crisis. In both situations, the question is whether behavior changes, and particularly whether it will subsequently stick. We argue that, after the current crisis only a few new routines will establish. Trend lines from before a crisis will be similar after the crisis, maybe somewhat mitigated or accelerated.
Here we reflect on past crises and share 3 pitfalls consumer brands should avoid in preparing for the recession.
The COVID-19 crisis and the Corona crash are shaking the context for consumer decision behavior. As a result, the context for net revenue management (NRM) has also been disturbed for consumer goods companies.
Companies must adapt revenue strategies to the new situation, at the same time as consumers are adapting to “the new normal.” To be successful, you need to anticipate and influence consumer decisions in a changing environment. This holds true in times of normalcy, but especially during the recession to come.
Although the COVID-19 crisis is not yet over, learnings from previous crises and knowledge of consumer behavioral frameworks mean we can map out consequences for net revenue management strategies.
So, what should you consider in planning your next moves?
Consumer behavior is usually embedded in daily habits; sometimes consumers make more deliberate decisions. COVID-19 triggered a dramatic change in the context of consumer decision making: Many daily habits have come to an abrupt halt; more decisions are now deliberate.
Your company is probably feeling the immediate impact of these behavioral shifts and you may be charged with adapting short-term marketing strategies accordingly.
COVID-19 has radically changed the context in which we make decisions, disrupting many habits. No one can predict if the behavioral shifts will last or what the recovery period will look like.
Online shopping and media consumption will undoubtedly continue to grow (as it was pre-COVID-19) … but to what degree? Will brand-loyal consumers who switched brands due to limited stock eventually return?
FMCG revenue professionals are challenged with creating a win-win-win situation: Provide consumers with the right product at the right price, create value with retail customers in challenging times, all while delivering top and bottom line growth. And all of this while working within legal limits in countries that prohibit resale price maintenance.
Leading consumer goods companies are increasingly adopting a net revenue management (NRM) approach to tackle this challenge. By applying a structured approach to analytics and encouraging open-mindedness, companies like Unilever are maximizing their net revenue and profits.
Exploring a virtual shelf approach to launching a premium brand
In 2018, Nestlé signed a $7.2 billion deal to market, sell and distribute Starbucks’ packaged products outside of the company’s cafes, providing Starbucks at home. With high brand recognition, Starbucks would clearly make an impact at the coffee shelf. However, one of Nestlé’s European insights team saw an opportunity to rethink the crowded grocery store shelf to drive even more growth – for Nestlé and its customers.
Albert van Meeteren, Nestlé’s Head of Consumer and Shopper Insights and Analytics, wanted to see how they could best launch Starbucks in a “new and innovative” way in Dutch supermarkets by focusing on in-store execution.
Exploring a data-fusion approach for holistic pricing decisions
Whether you’re introducing a new SKU or reacting to a market change, managing your pricing strategy can often feel like a complicated balancing act.
You know solid revenue decisions should be grounded in sound data, but that input often comes from a variety of sources and stakeholders.
Understanding decision-making and choice overload in crowded markets
In today’s highly competitive telecommunications market, consumers face an abundance of choices online. To thrive in this environment, your product portfolio strategy should be optimized based on how decision-making is changing. You need to know how customers identify the best carrier and plan for their needs. And that’s where the most accurate customer and market insights can help.
When inflation hits, your pricing strategy inevitably feels the pressure. On the one hand, raising product prices will protect margins. On the other, you can’t risk pricing yourself out of the market. When consumers feel this pressure, their spending habits are likely to change, especially in developing countries and high-inflation regions.
Today’s subscription economy not only presents consumers with more choices, but also more personalized experiences. For telecom, tech and online brands these heightened expectations place even greater pressure on maximizing the revenue per user.
Whereas in the past you could position your products and services based on traditional demographic insights, those rules no longer apply today — especially when it comes to pricing.