Evidently, but not unexpectedly, the COVID-19 pandemic has changed the market landscape and customer expectations on giant levels for every sector.
No industry would have remained untouched by the impact of the crisis, and Consumer Packaged Goods (CPG) is no exception.
The pricing methods and revenue management processes used earlier will no longer be of much importance post-COVID. Even the industry-leading companies that had invested highly in their ways will need to upgrade their revenue management systems in alignment with the customer demands, their buying patterns, and rapidly changing market value.
Even without the intervention of COVID-19, the picture was changing for consumer goods, as the majority of modern customers were favoring seamless online shopping. The consumer goods sector was bound to adapt as per customer expectations and introduce new ways to enhance their experience and deliver more value.
The shift to dynamism calls for consumer industry leaders to rethink and revise their revenue growth and management strategies to ensure their growth and meet objectives. But how to do this? Let’s see below-
How to Enable the Revenue Reset in CPG?
Most companies were already experimenting and advancing their revenue management practices and are in better shape to make a move. They had already taken sophisticated measures by leveraging cutting-edge technologies and tools to optimize their pricing solutions and better understand their customers, market, and retailers.
The revenue management reset calls to focus upon the following major points-
✔ Adopting Dynamism
As the consumer industry is pivoted around the factors like economic status of the customers, product features & demand, and price considerations as they primarily define customers’ buying choices and patterns.
Dynamism implies the ability to adapt quickly to change and make adjustments to respond rapidly. It means to become volatile enough to survive in a crisis situation with efficiency.
This is possible by building robust systems and algorithms to track the behavior of consumers, customers, and competitors in real-time and observe the demand shift. This sophisticated tracking system collects data from various external sources such as web traffic patterns, search results, retail panel data, online price scrapers, etc. and integrates it with comprehensive dashboard software and KPIs.
In addition, the CPG companies will require acting on this real-time information and respond quickly.
✔ Deliver value
Delivering value is basically assuring consumers that they are benefitting from the purchase, as we are delivering ‘more for less’.
The post-pandemic time requires CPG companies to reset their expectations, processes, and capabilities. The quote ‘delivering value’ has an obvious meaning, and companies can use any of these options to adhere to it-
- Lowering price per unit for larger packages
- Aligning the price points with consumer demands
- Targeted promotions
Choosing any of the above three approves the condition of delivering ‘more for less’. The larger packages enable the value-conscious consumers to upend their stocks and use the lower price-per-unit in their favor.
Companies can also use targeted promotions, short-term deals, and limited-time offers, while preserving the current package prices, to offer consumers with an irresistible urge to stock up.
Other than that, the CPG companies can also revise or enhance their pack-price architecture to offer lower price points to the consumers, without losing their margins.
✔ Differentiate Pack-Price Architecture
While it’s tempting for the CPG companies to stick to a one-price-for-all approach in terms of simplicity and speed, it will hardly benefit you in the changed and enhanced market landscape.
The new market is focused upon customer demands, consumption occasions, buying criteria, and shopper missions, and CPG need to grab these opportunities for their advantage as the shift in the market is the best time to make advancements and grow.
The differentiated pack-price architecture aims to better meet the unique consumer demands across all channels, i.e. grocer, online, mass, trade, discount, etc.
To enable purposeful assorting of prices and tailor them to consumers and their customers, businesses can back it by a stout online pack-price strategy.
Now that the consumers are tilting towards online means, for many obvious reasons, the CPG companies need a dynamic and all-in-one revenue management approach that keeps tabs on online occasions, discount offers, buying options, and the overall purchase.
Embracing the new pricing reality and resetting the revenue management policies will help the CPG companies to regain stability in times of crisis.
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