Learn about Pricing Full Potential (PFP) Analyzer and read current research.More
The more market power you have, the more you stand to gain from your pricing strategy.
- The Economist Group—Lean Back, 7 November 2013
As marketers continue to waste an average of 20 to 30 percent of their budgets, Soyoung Kwon, A.T. Kearney principal, explains why this waste is occurring and the steps companies can take toward prevention.More
How can CPG companies cut waste and improve companywide P-O-P efforts.
Most CPG companies allow multiple internal groups with differing priorities to plan, develop, and execute their point-of-purchase (P-O-P) strategies, making the entire system difficult to manage and almost impossible to measure.
This paper, underwritten by RockTenn and produced in collaboration with A.T. Kearney and the Path To Purchase Institute, highlights a new A.T. Kearney framework that helps companies improve their in-store marketing efforts. The framework can bring savings of up to 12 percent sales increases, unit cost reductions of 45 percent, and increased speed to market.
Finding the best person to oversee P-O-P efforts is step one. Step two is creating an enterprise-wide system to address the problems of waste and inefficiency. The framework addresses three primary issues: strategy design and planning; supply chain; and improving execution.Close
Indian automakers face an uncertain future. Understanding what car buyers really want—and what they don’t—will be crucial.
Consider this story from India’s burgeoning automotive industry: Bolstered by its sizable marketing muscle, an Indian automaker launches Model X. Sales are promising for a month or so, but then begin to plateau. Soon, rivals launch competing models and Model X sales plummet. The automaker reviews its options: Re-launch Model X with a peppier engine and minor design tweaks, increase dealer discounts, or scuttle the model and go back to the drawing board.
Now imagine the company takes a different route: Before making drastic changes to the model, it unearths customer preferences, thus discovering the reasons for Model X’s poor performance. Applying a quantitative market research technique known as choice-based conjoint analysis, the company analyzes customer perceptions of its product relative to competing models in the market to identify specific areas of underperformance and therefore its customer preference “sweet spot.” It then reintroduces Model X—with minor design changes and a marginally lower price—with dramatic results.
This hypothetical example underscores how choice-based analysis is used to unearth true customer preferences whereby manufacturers can make design modifications that not only improve the vehicle’s overall utility but also increase sales.Close
A.T. Kearney has crafted a framework that P-O-P companies can use to systematize and coordinate their in-store marketing efforts.
Based on decades of point-of-purchase and marketing operations consulting work with top CPG companies, A.T. Kearney has crafted a framework that P-O-P companies can use to systematize and coordinate their in-store marketing efforts. Marketers who've already implemented these P-O-P recommendations report sales increases of up to 12 percent, unit cost reductions as high as 45 percent, and speed-to market increases of up to 50 percent.
As a means to better understand P-O-P compliance rates, spending, and the delegation of tasks within company structures, A.T. Kearney and the Path to Purchase Institute created a survey underwritten by RockTenn titled the P-O-P Excellence survey.
In this survey, respondents indicated that, on average, 20 percent of all P-O-P is wasted—a figure that rose to 50 percent for some programs. Common factors include specific programming demands of individual retail chains and excessive customization, a lacking or nonexistent system of cost accountability, and the fact that various sales, brand, and support teams may be empowered to pursue their own game plans. The net result is too many players on the field.
The primary issues that must be addressed are: strategy, planning and development, supply chain, and the improvement of execution. If there's any consensus about P-O-P, it's that not enough of it shows up in the stores.Close
Sales is a whole new animal—especially business-to-business (B2B) sales—and companies worldwide know they must radically alter the way they operate.
Sales executives are losing sleep these days thanks to more channels, regulations, complicated products, and demands from customers. Sales is a whole new animal—especially business-to-business (B2B) sales—and companies worldwide know they must radically alter the way they operate. We have four suggestions for them.Close
How do the leaders stay consistently ahead of their markets while formerly thriving businesses fail?
What causes one leading company to stay consistently ahead of the market while another formerly thriving company flounders? The question is intriguing—and pressing, too, during these times of volatility. To explore the reasons and possible solutions, we conducted a study of industry champions. The result was a matrix that measures market success—a combination of growth in sales relative to market growth, and market share relative to the next largest competitor. Where BCG's matrix was created to help companies plan their portfolios, this matrix is used to chart a company's evolution and derive insights about its strategies. We call it the four seasons matrix:
- Spring. Companies that have outgrown their market but are not (yet) market leaders
- Summer. World leaders that have outgrown their markets
- Autumn. World leaders with below-average growth, gradually losing their positions
- Winter. Market followers that are growing more slowly than their market
We chose the axes of growth and market share because both metrics have a strong, proven relationship to long-term profitability and shareholder value. Combining those measures provides a solid basis for picking long-term winners.Close
It is not at all difficult to turn customer dissatisfaction or even mere indifference into pure delight.
Creating a unique customer experience is one of the best ways to achieve sustainable growth, particularly in industries that are stagnating. If a telco, a utility, or an insurance company can create a highly differentiated customer experience that turns dissatisfaction or indifference into delight, it will recruit an army of vocal advocates online and offline, gain market share, and generate revenue growth.
Sound simple? It isn't, especially in sectors where the core product or service is difficult to differentiate. But it is doable, as Disney, IKEA, and ArcelorMittal have demonstrated. These firms are among the 15 Summer Champions identified by A.T. Kearney from an initial list of 500 as companies that outgrew their markets consistently over a five-year period despite being the largest players in their sectors.Close
Like being stuck in quicksand, struggling against the social media mindset simply hastens your demise.
Social media has become an integral part of our daily lives. We use Facebook, LinkedIn, Twitter, YouTube, Blogspot, and other social networking services to converse with friends and colleagues and to share family photos, videos, and important moments in our lives. It is a conversation over the (digital) backyard fence where your side of the fence is in Melbourne and your neighbor's is in Paris.
Yet people who skillfully blog and tweet with friends and family have not brought these same skills to the workplace. Although social media has distinct, valuable implications for corporations, most executives still see it as ... well, a mystery. The openness of Web interactions still baffles many companies as they try to squeeze the concept of social media—the square peg—into the traditional silos—the round holes—of marketing, sales, and operations.
We think it is time to change this. Rather than treat social media as a distinct element of a larger marketing strategy, companies should make it the core component of every customer-engagement strategy.
Multi-product companies often need to break their business into component parts and prioritize profit opportunities within a market context.
For businesses seeking to improve profits, the low-hanging fruit is obvious. Fixes, such as reducing manufacturing costs, improving marketing effectiveness, or optimizing a supply chain are typically among the first to be implemented. Thus, a company that has already made such improvements faces a challenge. Does it, like the fox, conclude that anything else is out of reach and therefore not worthwhile? In such challenging economic times, a company can't afford to draw such conclusions. Does it then run for a ladder and raise it to a spot where, at first glance, more fruit appears to be within reach? Because of past improvement activities that seemed promising but failed to produce bottom-line results, many companies are wisely hesitant to do so. So is there a way to take a more holistic approach—to use the ladder to learn more about the tree, use scaffolding to align efforts to achieve productive results, and even prune the tree's branches to improve the likelihood of a long-term sustainable harvest?
Yes, there is a way. We call our approach Expanding the Profit Frontier. We've used it to help companies improve overall earnings 300 to 500 basis points before interest and taxes. For example, one company saw a 1 to 2 percent revenue lift when it aligned its pricing and discount strategies with a cost-to-serve model for each customer segment. Another company, initially planning to implement a single fixed-cost reduction strategy, instead combined this one initiative with another designed to streamline the product portfolio, and achieved six times the benefits with this more holistic approach.
Success for these companies was achieved using proven tools to address all of their profit frontiers (cost reductions, price increases, portfolio adjustments and other actions)—and doing so simultaneously as part of a continual business process to ensure maximum profitability both today and in the future.
One way to survive online price wars is to avoid them altogether.
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