FINANCE & MANAGEMENT

REVENUE MANAGEMENT

The process of improving revenues and profitability through consistent and sustainable commercial and trade policies, leveraging the GTM strategy to correctly position prices, discounts & product mix between the different channels in line with your product value proposition.

What challenge(s) do our clients face?

How to build a robust and effective capability to design, set and monitor pricing, commercial policies and trade spend in a way that is aligned to increasingly fluid channels, competition and consumer journeys?

As channels become more fluid and markets more competitive, guaranteeing the correct price positioning and commercial policy is essential in realizing an organization’s commercial and marketing strategies.

It is common in this new reality to find companies facing a negative price spiral, consciously or unconsciously, due to a variety of challenges:

  • Setting the right price: Deploying a price-to-consumer strategy based on competitors’ positioning, consumer willingness to pay, real price to consumer and channel knowledge is a challenge both in terms of information, tools and also internal alignment. Protecting margins across channels while remaining competitive requires dynamism and may change from region to region.
  • Connecting revenue management to strategy: Designing Commercial and Trade policies which enable the organization’s strategy and goals regarding brand positioning, market share and profitability, within their current context is also difficult. It requires deep knowledge of company product positioning and client base.
  • Aligning commercial policy with sales objectives: Protecting the sales goals and avoiding disruptive price conflicts between clients requires a harmony between commercial conditions and sales targets / incentives which is hard to achieve.
  • Optimizing trade spend: Allocating trade spend based on customer needs and resource optimization, rather than “gut feeling” truly engages a company in thinking sell through rather than sell to its clients
  • Monitoring revenue management processes through a clear governance: Implementing and sticking to a documented governance to limit “out of policy” approvals which disrupt positioning or profitability is easier said than done. A company must evolve its revenue management process structure over years. Biting off more than one can chew is a common mistake and can jeopardize the whole concept of Revenue Management
  • Reaching a shared understanding between stakeholders: Considering how Revenue Management policies can be built to meet different (and sometimes conflicting) stakeholder needs and setting expectations on the true potential and limit of Revenue Management as a lever is a challenge in itself.

How do we help?

We can support you in translating the product strategy of your organization to the price-to-consumer; from setting fair margins between channels, through to defining the best implementation strategy.

We support both products and services companies in:

  • Price-to-consumer strategy redesign: How to position your products or services from a consumer-centric perspective and to capture opportunities considering your marketing and commercial strategies and the market’s reality;
  • Commercial policy redesign: How to structure your organization’s Commercial Policy based on your Go-to-Market strategy, to balance price architecture between channels and regions to ensure that the commercial team is equipped with simple and effective price levers;
  • Trade spend optimization: How to define your optimal level of investment and measure return, to provide direction on future trade spend allocations;
  • Governance and processes redesign: Design the governance and processes related to Revenue Management to monitor the outcomes of the defined pricing, commercial policy and trade spend strategies, and react to make adjustments;
  • Deployment strategy: Evaluate the best implementation strategy, defining how to phase price changes, when to pilot, and how to “sell” the renewed offering, considering the risks, the impacts (in clients and consumers) and the complexities of each change. This may involve us assisting you in executing pilots and waves of implementation.
  • Enabling tools: We are not software or research sellers, we understand the company needs, evaluate tools in the market and recommend what we find to be the best investment for the company moment and need.

What are the benefits?

  • Re-create revenue management as a strategic enabler: Set product positioning, price-to-consumer and commercial policy as direct activations of Marketing and GTM strategies, ensuring coherence across the organization
  • Improve top line results: Drive volume through clear positioning, brand recognition and right price-to-customer for the company portfolio
  • Improve bottom line results: Protect margin through effective capture of opportunities along the value chain, and optimized resource allocation in promotions and discounts based on ROI
  • Increase monitoring capability: Bring visibility over market prices, competitor behavior, and opportunities along the value chain, defining the best way to capture and analyze information

How does it work?

Revenue Management must start with an understanding from the consumer perspective and market reality. It is then possible to translate this perspective ‘outside-in’ into your objectives along the whole value, defining the price-to-consumer, sell-in prices, trade levers and margins to be targeted in each channel.

Our approach to Revenue Management considers not only our experience from applying our methodology in organizations from different sectors, but also an organization’s team’s knowledge about its market reality. We go beyond data analysis to make sure we understand the company strategies and ability to implement our recommendation, making every project unique. Working side-by-side with teams across the organization, our approach is divided into seven steps:

Integration does not believe that there is a standard solution that serves all of our clients in a proper way we want to make sure that the strategy we design together will be fully suited to your reality, to the conditions of your market and to the dynamics of the channels and regions where you operate. We capture your team’s perspective and understand the reality in the field, so we can adapt our methodology to be most effective for you. We analyze sell-out prices against main competitors in different channels and regions, considering the marketing strategy, the Go to Market strategy and the internal profitability perspective. We define the new prices-to-consumer together with you through multifunctional workshops, using a variety of tools from existing to tailor made research. Understand of the current maturity level of Revenue Management: 2 1 Set the price-to-consumer strategy: We map the margins applied by different links along the value chain, and how this translates into the formation of prices-to-consumer and opportunities to be captured. We leverage extensive internal and external information to analyze sell-in sell-out variations among channels, and work closely with the sales team to bring the reality of the field. 3 Assess margins along the value Based on the risks and complexities of the new way of working, the impact to the team, and the impacts on clients and consumers, we develop the implementation roll out plan to minimize disruption. We design and manage an implementation pilot, in which the new prices to consumer and commercial policy will be tested in a sample of the market (if applicable). Taking these findings, we support the adjustment to the model to guarantee fit with reality. Finally, we design and monitor the roll-out strategy for the implementation of the new price structure and commercial policy, ensuring your team is equipped to manage future phases. 7 Deployment strategy: We evaluate your current commercial policy’s ROI and alignment with Marketing and Sales strategies through assessing historical sales performance by client segments and product. Based on this assessment, we identify opportunities for adjustment and optimization. 4 Assess Commercial Policy rules and trade spend: We reconstruct the sell-in price lists and define the types and ranges of discount. Considering On and Off invoice discounts and trade investment, we conduct a financial simulation to assess the impacts of the new commercial policy definitions on the company’s P&L and clients. This helps to understand whether the new price structure and trade policy are viable, or whether they need to be adjusted. 5 Commercial Policy redesign and financial impact simulation: We design the governance structure meeting instances, activities, roles and responsibilities, inputs and outputs (such as price granularity) to monitor Revenue Management closely moving forward. We set the future Organizational Structure, roles and responsibilities and processes within the Revenue Management area. We define the systems and information infrastructure required to enable the future team. 6 Assess and redesign governance and processes:

We can be as hands-on as needed throughout the project – training your sales team, producing negotiation materials, and/or managing the implementation of new systems and tools – to make sure the transition is as smooth as possible.

SUCCESS STORIES

CHALLENGE

A home appliance client approached us to help them implement a pre-defined Commercial Policy strategy, by analyzing the transition and speed of implementation. From the initial review of documentation, inputs from internal interviews and visits to the field, it became clear that the designed strategy was overly complex, non-compliant with legislation, and misaligned between Sales and Marketing.

APPROACH

We took a step back and together with the client simplified the solution – making adjustments to consider local tax regulations and to ensure product positioning aligning Marketing and Sales strategies through consumer price and channel price relativity.

Based on the new Commercial Policy, we defined a roll out strategy minimizing possible impacts, and developed tools and procedures for the company to be able to implement without investment in additional systems.  For the first two pilots, we monitored the implementation, increasing the speed of the transition where possible based on feedback from the field.

RESULT

We supported the implementation of the first 2 pilots and sped up the roll out plan based on feedback from the Sales Team, who were seeing the benefits of price consistency, reduced conflicts between clients, better visibility of investment returns and overall higher profitability. The project was rolled out to all channels and regions, and as a result, over the following 2 years the organization increased market share by 15%, and profitability by 30%.

CHALLENGE

A major producer of metal fittings and sanitary ware approached us to review its commercial policy, which had been in place for many years, and to implement a new Revenue Management area in the company. Despite being the national market leader, the organization had different brand awareness and market share in different categories/regions but served all with a single commercial approach.

APPROACH

Understanding the client’s reality, we saw that the challenge went beyond pricing into product portfolio. Adjusting the scope of the project, we undertook a product portfolio analysis which considered scarcely available information on share, competitors and consumer behavior.

Through workshops with a multifunctional client team we defined a new and clear price strategy to consumer, as well as overlaps and gaps in products which required adjustment to the portfolio in the short term.

We constructed our analysis in multiple regions to ensure it fit different contexts and prepared the internal team to lead the implementation moving forward.

RESULT

Through the project we built a comprehensive price architecture aligned with the Organization’s Product and GTM strategies, aimed at reducing price conflicts between channels and regions. The adjusted value chain margins recovered the market share that had been lost in recent years, increased net revenue by 15%, and added 2p.p to the bottom line.

CHALLENGE

An American fast-moving consumer goods company had just recently broken a joint venture with a Brazilian company and was advancing as a standalone operation in the Brazilian market. With a newly designed GTM strategy, the company had the challenge of correctly positioning a new portfolio for its consumers and adjusting the whole value chain according to the new segmentation, including sell in prices and trade allowances that should be executed by a brand new direct sales force.

APPROACH

We assessed the situation of each part of the distribution chain in the commercial policy from an outside-in perspective, and defined the new parameters of the revenue management policy, including; corrections in price positioning, adjustments in regional prices, definition of promotional prices, and corrections between channel margins. To guarantee a smooth transition and adequate oversight in future, we designed and implemented a new governance model and necessary tools.

RESULT

The new commercial policy provided a profitability gain of 4 p.p. and of 40% in absolute values. These results were even better than the predicted outcomes, allowing a bigger penetration of the portfolio.

OUR INDUSTRY EXPERIENCE

We have worked with several premier FMCG companies as they take on the incredible complexity of defining and implementing Revenue Management strategies. This experience includes projects across Food & Beverages, Personal Care & Homecare, as well as organizations in the Pharmaceuticals, Distribution, Metal Fittings & Sanitary Ware, and Home Appliances.

Working across continents (South America, North America and Europe) our professionals have developed an understanding of the market dynamics, best practices and client/consumer needs across geographies as well as industry segments. This allows us to bring robust and customized solutions to our clients that take into consideration the internal and external context.

TALK TO US

Gary Singer

Gary Singer is a Managing Partner at Integration. He brings more than 25 years of experience helping companies in diverse industries improve top- and bottom-line results through new Sales and Marketing Strategies. Gary holds an MBA in Marketing & Statistics from the University of Chicago and a bachelor's degree in Quantitative Business Analysis from Pennsylvania [...]

Guido Solari

Guido is the leader of our Buenos Aires and Santiago office and is a director within our Marketing & Sales practice. Having worked with Integration since 2006, he has completed a wealth of projects across Latin America, the United States, Canada and Europe with clients spanning many sectors, including Retail, Consumer Goods, Government, Healthcare and [...]

Hugo Ribeiro

Hugo is a Founding Partner at Integration and can count on more than 30 years of experience in consulting. Hugo, who holds a post-graduate degree in Business Administration from Harvard University, is a senior specialist in the area of Finance & Management and frequently leads projects in Organizational Structure, Strategic Planning, M&A, Improvement of Productivity, [...]

Ian Matiussi

Ian joined Integration in 2010 and now with over a decade of experience, he is a Manager in our Marketing & Sales practice. Comfortable with a wide range of topics in this area, he is especially known for his expertise in strategic marketing initiatives such as Market Scans, Go-to-Market and Commercial Policy. His track record includes sectors [...]

Jorge Gomes

Jorge is a highly experienced professional in our Finance & Management practice having joined Integration in 2008. Jorge has travelled to countries around the world in support of our clients, leading projects related to revenue management, strategic planning, M&A and more. He has a well-rounded experience having completed multiple projects for clients across sectors including [...]

Lucas Tavolaro

Lucas joined Integration in 2011 and found his home in our Finance & Management practice. He has supported our clients in the creation Strategic Roadmaps, M&A synergy evaluations, Go-to-Market strategies, Cost Efficiency and Strategic Sourcing projects. His experience includes sectors such as Consumer Goods, Construction & Property Development, Education, Private Equity, Oil & Gas, and [...]

Luis Bernal

Luis is a Manager in the Marketing & Sales practice. Originally from Columbia, Luis is an entrepreneur at heart, and has worked in several start-ups in Colombia, receiving his MBA from IPADE. He has accumulated international consulting experience whilst working across the United States, Mexico, Caribbean and Central America, Colombia and Brazil in industries such [...]

Quentin Girard

Since 2013 Quentin has worked in our London and São Paulo offices specializing in Finance & Management projects. He has led engagements across a wide array of countries in Europe, South America and Central Asia. His primary experience includes projects related to Route to Market, Cost Efficiency, Cost-to-Serve and Strategic Roadmap Design, in sectors such [...]

Rodrigo Pasianotto

Rodrigo Pasianotto is a Director at Integration, with more than 15 years of consulting experience, especially in the field of Marketing and Sales Consulting. Rodrigo has supported our clients across a range of challenges focusing on Strategic Roadmap, Go-To-Market, Market Scan, Entry Strategy, Brand Positioning, among other methodologies. He holds an MBA from Haas School [...]

Stephen Fournier

Stephen Fournier is a Manager within Integration’s U.S. operation. Stephen is an experienced Strategy and Supply Chain consultant. He supports our clients in the development of Supply Chain Strategies, improving Operational Eficiencies and completing Strategic and Operational Transformations in sectors such as Food and Beverage, Consumer Goods and Retail. Stephen holds a degree in Management [...]

Home | Consulting Services | Finance & Management | Revenue Management