Companies have a difficult road ahead. Economic profit growth was 1/3 of the previous decade, and continuous cost pressures, supply shortages, and a changing consumer are creating a dreadful atmosphere. Worse, this will be the norm for the next 12-24 months. Hence, CPG companies are finding improvements using Revenue Growth Management.
RGM is the future
A McKinsey study showed that companies that focus on RGM have 7% more organic growth. But even RGM is evolving for today’s challenges. Simply improving price or trade promotion in isolation will not sustain long-term growth and leaves opportunities on the table.
CPG companies can take an integrated approach across their assortment, price, and trade investments by analyzing consumers’ buying motivations and needs by leveraging consumption data and economic leading indicators. The net result produces dramatic revelations and drives coordination across sales, marketing, finance, and supply chain organizations.
Why does this work? Simply, it focuses on the consumer and allows business to execute their strategies across operations. The prior statement has always been the goal, yet it was nearly impossible until recently.
The latest advancements in AI, machine learning, and data computing power have made these insights real and viable. It is now possible to analyze every demand driver to sense and anticipate shifts in consumer behavior. More importantly, that consumer demand information is readily shareable across disparate solutions to align organizational decisions.