How pricing and promotion execution transforms CPG businesses
By Colin Wright, Worldwide Industry Director, Consumer Goods, Microsoft on June 28, 2017
Filed under Retail & Consumer Goods
In the 1780s, the industrial revolution saw the invention of water and steam power to mechanize production. This transformed the world as we knew it. Then, in the 1870s we began to use electric power to create mass production. In the 1970s, electronics, IT and automated production emerged and changed our world again. Today, we are entering into a fourth wave of the industrial revolution where we are blurring the physical and the digital divide[i]. Information is moving faster, and nearly everything can be connected.
One side effect of this transformation is how managers and employees spend their time. By using cloud technology and advanced analytical tools people can quickly gain insights, simplify complex processes, and integrate systems that previously did not work together. This is what a day in the life of a consumer packaged goods (CPG) organization manager might look like when the digital and physical are finally intertwined.
To see how a cloud solution empowers the workforce, let’s look at the daily activities of Frank, the manager of Northwind Traders, a mid-size CPG company.
Plan pricing and promotions
First thing in the morning, Frank walks in to work and quickly looks at the pricing and promotion dashboard on his computer. It shows how his pricing and promotions are performing. With everything at his fingertips, Frank does not miss the days when all this data was stored in different spreadsheets. He now has consolidated pricing systems with the ability to calculate pricing changes anytime, anywhere, and is able to develop and execute complex promotions quickly.
Frank saves a huge amount of time, energy, and, ultimately, money because his sales team is free to make sales, rather than reconciling those spreadsheets. He’s able to quickly combine data from multiple different channels. He no longer has siloed data from the online and in-person sales. He quickly sees pricing and promotion performance across his omnichannel offerings, accurately plans his online prices, and ensures they are congruent with in-person offerings.
Defend pricing and promotion decisions
Later that afternoon, Frank finds out that a representative from a compliance group is coming to his office to check on pricing discrepancies between two global retailers. Frank must be able to defend his pricing decisions to the compliance group. He quickly prepares for the meeting and doesn’t spare a thought for how frantic this process was in the past. Frank is confident that he can supply answers quickly and accurately. Frank can see that, while both accounts receive the same bulk-purchase discount, one company has been doing business with him for 10 years, and receives a long-time-customer-loyalty discount. The second company has only been doing business with the CPG company for one year, and does not receive this specific discount. Frank leaves the meeting happy that he has a system that provides real-time pricing information for accounts, validates differences in accounts, and helps him avoid legal issues.
React to changes in price and promotions
After he has dealt with the compliance group, Frank spends time looking at his sales data to see if there are any adjustments he could make to prices to boost profit. He knows that if he optimizes his pricing he can target the right prices to improve ROI overall from four to 18 percent[ii]. With his solution, he is able to gain real-time visibility into margins, before promotions go live. This means that he can predict how a promotion will impact his bottom line, and avoid costly mistakes. So, he decides to implement a BOGO promotion, to raise sales. He finds that if he puts this promotion in place for the next two weeks, he will be able to impact overall revenue at the end of the quarter by six percent.
Frank knows his sellers are also taking advantage of the increased visibility to give customers pricing breakdowns in the field. Thanks to better line of sight, Frank’s field seller can offer the customer an intriguing cross-sell offer, and increase both sales and revenue.
The solution that made the difference
Flintfox Pricing and Promotion Execution, built on Microsoft Cloud technology, provides retailers and CPG organizations, like Northwind Traders, the tools to manage all pricing requirements and seamlessly develop and execute complex trade promotions. This cloud-based solution gives businesses the tools required to administer all pricing arrangements across vendors, customers, products, and transactions. These capabilities enable organizations to account for dynamic market conditions in a flexible, scalable manner. Try the Pricing and Promotion Execution solution on Microsoft AppSource today, and for more information follow @FlintfoxIntl.
LinkedIn: Colin Wright