Pricing-Strategy

PRICING'STRATEGY'
A'fresh'outlook'on'eﬀec:ve'pricing'

'
CONTENTS'
'
'
1. An'evolved'role'for'
Pricing'Strategy'
2. Against'the'backgrop'
of'an'ever'more'
challenging'landscape'
3. Leading'success'in'
Pricing'Strategy'
requires'a'strategic'
stepKchange'
4. How'to'ﬁnd'out'more'

Pricing'strategy'plays'a'major'role'in'driving'growth,'but'
needs'to'evolve'into'a'core'strategic'asset
But'–'in'many'businesses,'Pricing'is'under<leveraged,'too'tac=cal'and'designed'from'the'“bo@om<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'porFolio
•  Develop'&'embed'best'prac=ces'to'transform'Price'Pack'into'a'strategic'capability'across'the'business
•  Enhance'innova=on'with'increased'commercial'insight,'rigour'&'focus'at'key'stages'to'sustain'success
•  Evolve'price'posi=oning'across'channels'to'drive'margin'&'diﬀeren=ate'based'on'consumer'need
A'fundamental'driver'of'long<term'growth,'directly'connec=ng'commercial'teams'to'the'consumer…
PORTFOLIO'STRATEGY
PRICE'ARCHITECTURE

CUSTOMER'TERMS
CONSUMER'BENEFIT
Drive'brand'equity'&'
consumer<value'through'
innova=ve'pricing
Work'with'retail'
landscape'to'develop'
terms'across'channels
Op=mal'price/pack'
architecture'to'drive'
penetra=on'
Direct'average'prices'
across'the'porFolio'to'
growth'sales'&'margin
Develop'fundamental'
skills,'capabili=es'and'
structures
INTERNAL'CAPABILITIES
PRICING'STRATEGY'JOURNEY

Industry<wide'issues'are'having'a'significant'effect'on'
growth'&'profitability…
Margin'Dilu=on
Value'created'through'sales'diluted'through'costly'customer'
terms'&'promo'cycles
Rise'of'the'Discounter
Emergence'of'discounters'as'credible'alterna=ves'to'tradi=onal'retailers,'en=cing'
consumers'with'compelling'value<based'proposi=ons'at'comparable'quality'
Retailer'Price'Wars
Destruc=ve'price'wars'undercut'compe==on'&'
combat'discounters,'as'suppliers'see'margin'&'
brand'equity'erosion
Consumer'Promo<Promiscuity
Consumers'buying'more'on'promo,'amplifying'margin'
pressures'&'crea=ng'a'culture'of'discoun=ng
Lack'of'Sustained'Innova=on'Success
Significant'investments'made'in'Innova=on'&'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?

…with'companies'beginning'to'feel'the'pressure…
Revenue'&'margin+growth+in'
decline,'whilst'spend'is'
increasingly'difficult'to'control'
Innova:on'process+lacks+
commercial+rigour,'is'too'reac6ve,'
and'rarely+delivers+aSer'the'first'12'
months…'
Customers'feel'we'lack+credible+
commercial+strategies,'affec:ng'
rela:onships…'
Annual'trade'investments'are'
increasing+ahead+of+margin…'
P&L'is'increasingly+geared+
through'significant'promo'
investment…'
Price'&'Pack'strategy's:ll'isn’t'
considered'as'an'internal'
strategic+capability…++
Our'channel'strategy'&'price'
posi:oning'lacks+clarity+&+clear+
governance…+

…suffering'from'a'visible'impact'on'performance'
• Business'Impacts
•  Failure'to'capitalise'on'growth'opportuni=es'diverts'
focus'&'resources'&'detracts'from'successful'innova=on
•  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'&'reputa=onal'costs'as'customer'&'
consumer'confidence'falters
24%'
• NPD'Life'Cycle
•  12'Months
•  24'Months
•  36'Months
•  0<6'Months
76%'of'FMCG'launches'fail'in'the'first'year
Highly<geared,'unsustainable'P&L'
• £'Revenue
5'years'ago
2'years'ago
Today
•  8'years'ago
• Business'Impacts
•  Baselines'decline'as'a'result'of'chronic'price'wars'
•  Shoppers'become'increasingly'promo<promiscuous,'
driving'promo'downward<spiral
•  Significant'&'con=nuous'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

Companies'need'to'shik'focus'to'lead'success'in'
Pricing'Strategy
Drive'strategy'through'a'consumer<lens'to'develop'the'right'price,'
pack'&'range'across'the'porFolio
Evolve'price'posi=oning'across'channels'to'drive'margin'&'
diﬀeren=ate'based'on'consumer'need
Enhance'innova=on'with'increased'commercial'analysis,'rigour'&'
focus'at'key'stages'to'sustain'NPD'success
Develop'&'embed'best'prac=ces'to'transform'Pricing'into'a'strategic'
capability'across'the'business
1'
2'
3'
4'

Develop'&'embed'best'prac=ces'to'transform'Pricing'
into'a'strategic'capability'across'the'business
Integrate'&'align'func=ons'to'transform'ways'of'working'across'&'within'teams
Promote'a'strategic,'innova=ve'culture'to'develop'robust'&'sustainable'commercial'strategy
Simplify'&'ra=onalise'data'streams'to'leverage'exis=ng'resources'&'unlock'new'value
Develop'simple'and'eﬀec=ve'analy=c'models'&'tools'to'improve'insight'depth,'range'&'quality'
Pricing'as'a'Strategic'Commercial'Capability
Data'
Strategic'
Culture
Analy=cs
Collabora=on
Outside'In
Consider'commercial'strategy'from'the'consumer,'customer'and'wider'value'chain

Benefits
•  Strategy'framed'by'outside<in'consumer'trends,'
rather'than'bo@om<up'business'mandates
•  Balanced'ra=onal'&'emo=onal'consumer'insights
•  Informs'credible'&'compelling'category'stories'
for'customers
•  Aligns'diverse'business'func=ons'around'a'single,'
mutually'beneficial'goal
•  Refocuses'category'agendas'back'to'quality,'
value'and'equity'growth
•  Iden=fies'unique'white<spaces'and'sources'of'
future'growth'based'on'genuine'need
Drive'strategy'through'a'consumer<lens'to'develop'
the'right'price,'pack'&'range'across'the'porFolio
• Develop'an'“outside<in”'approach,'pulng'
the'consumer'at'the'core'of'Pricing
• Drive'strategy'with'authen=c'and'whole<
minded'consumer'insights
• Connect'organisa=on,'customers'&'
compe=tors'through'a'consumer<lens
CUSTOMER'
/'CHANNEL

COMPETITION
ORGANISATION
SHOPPER'/
'CONSUMER

Evolve'price'posi=oning'across'channels'to'drive'
margin'&'differen=ate'based'on'consumer'need
•  Sales<led'change'in'business'philosophy'to'develop'channel'pricing'leadership'vs.'peers
•  Develop'considered,'strategic'consumer'price'posi=oning'price'with'clear'maximin'corridors
•  Establish'enablers,'skills'&'frameworks'to'implement'defensible'pricing'structures'with'customers
Evolve'pricing'
strategy'across'
channels'to'drive'
margin'&'
differen=ate
*"Actual"price"(range)"at"1me"of"publica1on"for"a""specific"Cola"brand

Enhance'innova=on'with'increased'commercial'analysis,'
rigour'&'focus'at'key'stages'to'sustain'NPD'success
Expanded Ideation
Outside-In
Commercialisation
Sustained
Execution
X-Functional
Planning
Incorporate'idea=on<phase'insights'with''
compe=tor'war<gaming,'customer'
review'&'organisa=onal'readiness'
assessments'to'comprehensively'
evaluate'&'sign<off'NPD'success'from'a'
commercial'lens
Include'whole<minded'&'non<obvious'
consumer'insights,'and'price,'pack,'
porFolio'&'channel'analysis'to'
expand'range'&'depth'of'idea=on
Form'cross<func=onal'teams'to'
develop'credible'commercial'
founda=ons,'clear'category'stories'
and'tac=cal'growth'levers,'driving'
belief'&'buy<in'across'the'
organisa=on
Create'internal'&'external'
branding,'communica=ons'&'
launch'plans.
Develop'whole<minded'KPIs'
&'methodologies'to'evaluate'
success,'refine'NPDs'in<
market,'and'diffuse'
knowledge'&'best<prac=ces'
effec=vely
Commercialisa=on
Idea=on
Planning
Launch'&'Evaluate'
Considered
Execution

Interested?'How'to'ﬁnd'out'more…
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
+44'(0)'20'3735'5762

info@ﬁkh<p.com

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