FIFTH P Strategy
Pricing Strategy
1
1 An evolved role for Pricing strategy
2 Against the backdrop of an ever more challenging landscape
3 Leading success in...
Pricing strategy plays a major role in driving growth, but
needs to evolve into a core strategic asset
A fundamental dri...
1 An evolved role for Pricing strategy
2 Against the backdrop of an ever more challenging landscape
3 Leading success in...
Industry-wide issues are having a significant effect on
growth & profitability…
Consumer Promo-Promiscuity
Consumers bu...
…with companies beginning to feel the pressure…
Revenue & margin growth in
decline, whilst spend is
increasingly diffic...
…suffering from a visible impact on performance
Highly-geared, unsustainable P&L 76% of FMCG launches fail in the first y...
1 An evolved role for Pricing strategy
2 Against the backdrop of an ever more challenging landscape
3 Leading success in...
Companies need to shift focus to lead success in
Pricing Strategy
Develop & embed best practices to transform Pricing in...
Develop & embed best practices to transform Pricing
into a strategic capability across the business
Simplify & rationali...
Drive strategy through a consumer-lens to develop
the right price, pack & range across the portfolio
Benefits
• Strateg...
Evolve price positioning across channels to drive
margin & differentiate based on consumer need 4
• Sales-led change in ...
Enhance innovation with increased commercial analysis,
rigour & focus at key stages to sustain NPD success
Expanded
Ide...
1 An evolved role for Pricing strategy
2 Against the backdrop of an ever more challenging landscape
3 Leading success in...
Interested? How to find out more…
+44 (0) 20 3735 5762
info@fifth-p.com
We are Fifth P. Since 2011, we’ve worked with o...
Pricing strategy - Fifth P Industry Viewpoint
of 16

Pricing strategy - Fifth P Industry Viewpoint

Fifth P Industry Viewpoint on Pricing Strategy
Published on: Mar 4, 2016
Published in: Business      
Source: www.slideshare.net


Transcripts - Pricing strategy - Fifth P Industry Viewpoint

  • 1. FIFTH P Strategy Pricing Strategy 1
  • 2. 1 An evolved role for Pricing strategy 2 Against the backdrop of an ever more challenging landscape 3 Leading success in Pricing Strategy requires a strategic step-change 4 How to find out more
  • 3. Pricing strategy plays a major role in driving growth, but needs to evolve into a core strategic asset A fundamental driver of long-term growth, directly connecting commercial teams to the consumer… PRICING STRATEGY JOURNEY PORTFOLIO STRATEGY PRICE ARCHITECTURE CUSTOMER TERMS CONSUMER BENEFIT Drive brand equity & consumer-value through innovative pricing Work with retail landscape to develop terms across channels Optimal price/pack architecture to drive penetration Direct average prices across the portfolio to growth sales & margin INTERNAL CAPABILITIES Develop fundamental skills, capabilities and structures But – in many businesses, Pricing is under-leveraged, too tactical and designed from the “bottom-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 portfolio • Develop & embed best practices to transform Price Pack into a strategic capability across the business • Enhance innovation with increased commercial insight, rigour & focus at key stages to sustain success • Evolve price positioning across channels to drive margin & differentiate based on consumer need
  • 4. 1 An evolved role for Pricing strategy 2 Against the backdrop of an ever more challenging landscape 3 Leading success in Pricing Strategy requires a strategic step-change 4 How to find out more
  • 5. Industry-wide issues are having a significant effect on growth & profitability… Consumer Promo-Promiscuity Consumers buying more on promo, amplifying margin pressures & creating a culture of discounting Rise of the Discounter Emergence of discounters as credible alternatives to traditional retailers, enticing consumers with compelling value-based propositions at comparable quality Margin Dilution Value created through sales diluted through costly customer terms & promo cycles Retailer Price Wars Destructive price wars undercut competition & combat discounters, as suppliers see margin & brand equity erosion Lack of Sustained Innovation Success Significant investments made in Innovation & 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?
  • 6. …with companies beginning to feel the pressure… Revenue & margin growth in decline, whilst spend is increasingly difficult to control Innovation process lacks commercial rigour, is too reactive, and rarely delivers after the first 12 months… Annual trade investments are increasing ahead of margin… Customers feel we lack credible commercial strategies, affecting relationships… P&L is increasingly geared through significant promo investment… Price & Pack strategy still isn’t considered as an internal strategic capability… Our channel strategy & price positioning lacks clarity & clear governance…
  • 7. …suffering from a visible impact on performance Highly-geared, unsustainable P&L 76% of FMCG launches fail in the first year 24% • 12 Months • 0-6 Months • 24 Months • 36 Months •Business Impacts • NPD Life Cycle • Failure to capitalise on growth opportunities diverts focus & resources & detracts from successful innovation • 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 & reputational costs as customer & consumer confidence falters • £ Revenue • 8 years ago 5 years ago 2 years ago Today •Business Impacts • Baselines decline as a result of chronic price wars • Shoppers become increasingly promo-promiscuous, driving promo downward-spiral • Significant & continuous 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
  • 8. 1 An evolved role for Pricing strategy 2 Against the backdrop of an ever more challenging landscape 3 Leading success in Pricing Strategy requires a strategic step-change 4 How to find out more
  • 9. Companies need to shift focus to lead success in Pricing Strategy Develop & embed best practices to transform Pricing into a strategic capability across the business Drive strategy through a consumer-lens to develop the right price, pack & range across the portfolio Evolve price positioning across channels to drive margin & differentiate based on consumer need Enhance innovation with increased commercial analysis, rigour & focus at key stages to sustain NPD success 1 2 3 4
  • 10. Develop & embed best practices to transform Pricing into a strategic capability across the business Simplify & rationalise data streams to leverage existing resources & unlock new value Develop simple and effective analytic models & tools to improve insight depth, range & quality Outside In Consider commercial strategy from the consumer, customer and wider value chain Integrate & align functions to transform ways of working across & within teams Promote a strategic, innovative culture to develop robust & sustainable commercial strategy Pricing as a Strategic Commercial Capability Data Analytics Collaboration Strategic Culture
  • 11. Drive strategy through a consumer-lens to develop the right price, pack & range across the portfolio Benefits • Strategy framed by outside-in consumer trends, rather than bottom-up business mandates • Balanced rational & emotional consumer insights • Informs credible & compelling category stories for customers • Aligns diverse business functions around a single, mutually beneficial goal • Refocuses category agendas back to quality, value and equity growth • Identifies unique white-spaces and sources of future growth based on genuine need CUSTOMER / CHANNEL ORGANISATION COMPETITION SHOPPER / CONSUMER • Develop an “outside-in” approach, putting the consumer at the core of Pricing • Drive strategy with authentic and whole-minded consumer insights • Connect organisation, customers & competitors through a consumer-lens
  • 12. Evolve price positioning across channels to drive margin & differentiate based on consumer need 4 • Sales-led change in business philosophy to develop channel pricing leadership vs. peers • Develop considered, strategic consumer price positioning price with clear maximin corridors • Establish enablers, skills & frameworks to implement defensible pricing structures with customers Evolve pricing strategy across channels to drive margin & differentiate * Actual price (range) at time of publication for a specific Cola brand
  • 13. Enhance innovation with increased commercial analysis, rigour & focus at key stages to sustain NPD success Expanded Ideation Outside-In Commercialisation Create Sustained internal & external branding, Execution communications & launch plans. Develop whole-minded KPIs & methodologies to evaluate success, refine NPDs in-market, X-Functional Planning Incorporate ideation-phase insights with competitor war-gaming, customer review & organisational readiness assessments to comprehensively evaluate & sign-off NPD success from a commercial lens Include whole-minded & non-obvious consumer insights, and price, pack, portfolio & channel analysis to expand range & depth of ideation Form cross-functional teams to develop credible commercial foundations, clear category stories and tactical growth levers, driving belief & buy-in across the organisation and diffuse knowledge & best-practices effectively Commercialisation Ideation Planning Launch & Evaluate Considered Execution
  • 14. 1 An evolved role for Pricing strategy 2 Against the backdrop of an ever more challenging landscape 3 Leading success in Pricing Strategy requires a strategic step-change 4 How to find out more
  • 15. Interested? How to find out more… +44 (0) 20 3735 5762 info@fifth-p.com 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

Related Documents