Blog articles about Price and Portfolio Management

What revenue management teams need to know about shifting consumer behavior in EU

After years of inflation, shoppers are becoming resistant to price increases. If you’re responsible for CPG / FMCG brands, you’ve likely seen consumers jump ship and are feeling the pressure to dial up promotions to increase sales this year.  

But promotions are expensive and can take a big bite out of your profits.   

So how can you create the right promotion strategy to entice consumers back to your brand, without sacrificing your bottom line? 

The key to optimal promotion strategies which drive incremental value is understanding and predicting consumer behavior. The SKIM revenue management practice recently conducted new research to explore these shifting price perceptions in Europe. 

Read on to learn these insights and uncover the promotional “sweet spot” that creates a win-win-win for your company, retailer and consumer.  

In the past decades, high inflation rates mostly only challenged smaller, troubled economies like Argentina, Venezuela or Turkey. But with CPI prints now topping 9% in the US and the UK, and 10% on average for the 38 countries in the OECD, inflation now touches us all. And it’s not going away anytime soon.

As vulnerable consumer segments reach the limits of their wallet and more affluent consumers start to feel the squeeze as well, your company is likely struggling to maintain margins and please shareholders.

So, what can you do about this?  In this article, you’ll learn a three-step process to mitigate the effects of inflation on your business. We share proven strategies our clients have adopted to successfully tackle inflation.

Have you ever opened your door and wondered: “What is in the package that just arrived?” Not since the early days of Netflix, when those red envelopes containing DVDs arrived in the mail, have so many consumers been confronted with a huge question mark at their doorstop.

This shopper phenomenon has been caused by an explosion in digitally enabled subscriptions for nearly every imaginable FMCG and Direct to Consumer category, combined with the popularity of Amazon Prime Subscribe and Save.

How is your company tackling the subscription economy? Do you know how the subscription lifestyle is impacting shopper journeys in your category?

Perhaps your team is already experimenting with a direct-to-consumer offer, or maybe you’re in the early stages of mapping out your subscription strategy.

Either way, it’s important to understand exactly how subscriptions are shifting consumer behavior and perceptions.

Read on for our latest insights on the ubiquity of the subscription lifestyle and five issues your team will want to address to succeed in this channel.

Online service providers have enjoyed a boom in sales over the past several months. Consumers have either increased their consumption or have been forced to try services ranging from media streaming and online subscriptions to food delivery apps.

As we gradually return to “normalcy,” many companies are wondering: which services will consumers continue to subscribe to, and which will be abandoned? Will these new habits stick?

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.