Achieving Holistic Pricing with Trade Spend Management Software
Success for sales teams in the consumer-packaged goods (CPG) industry hinges on evolving effective pricing strategies that balance maximising revenue, satisfying retailers’ demands and keeping products affordable for consumers.
Trade spend management (TSM) software can be a true gamechanger here, enabling sales teams to navigate complex pricing landscapes with both agility and precision.
This article delves into the concept of holistic pricing and shows how Trade Spend Management empowers CPG sales teams to optimise profitability and build lasting partnerships with retailers.
The Complexity of Holistic Pricing
Holistic pricing is a comprehensive approach to determining product prices that factors in various elements, including production costs, market demand, competitive landscape, and retailer relationships. Traditional pricing strategies were often static and lacked the flexibility needed to adapt to dynamic market conditions. However, the evolving nature of the CPG industry demands a more agile and data-driven approach.
Holistic pricing recognises that pricing decisions are entwined with a multitude of factors, such as promotional strategies, contract negotiations, and consumer behaviour. The challenge lies in synthesising this intricate web of variables to make informed pricing choices that align with business goals while satisfying retailer requirements.
Trade Spend Management Software (TSM)
Trade spend management software is a powerful tool that allows CPG teams to tackle the complexities of holistic pricing head-on. It provides a centralised platform for sales teams to analyse, strategize, and execute pricing and promotion plans in a data-driven manner. TSM software leverages advanced algorithms and combines multiple, relevant data sources (e.g., ex-factory data, syndicated data) to enable sales teams to make informed decisions that enhance profitability and foster collaborative relationships with retailers.
How Trade Spend Management Software Helps Holistic Pricing
Scenario Creation and Analysis: Holistic pricing depends on a keen understanding of market trends and consumer behaviour. TSM software enables sales teams to create multiple scenarios that reflect different pricing strategies, promotional plans, and contract terms. This dynamic approach allows teams to analyse the impact of various factors on revenue and profitability, helping them make better informed decisions.
Data Integration and Automation: Trade spend management software integrates effortlessly with ERP systems like SAP, ensuring that data flows easily between platforms. This eliminates the need for manual data entry and reduces the risk of errors, enabling sales teams to focus on strategic decision-making.
Retailer Collaboration: Through the seamless integration of syndicated data, trade spend management software provides visibility on retailer profitability. This facilitates effective collaboration between manufacturers and retailers by providing transparent insights into pricing, promotions, and contractual terms. This transparency builds trust and enhances communication, leading to more productive negotiations and stronger partnerships.
Profitability Analysis: Trade spend management software supplies a comprehensive view of revenue and profitability, including gross profit, and retailer margin analysis. Sales teams can assess the impact of pricing changes and promotional activities on overall profitability, ensuring that decisions align with financial objectives.
Agility and Decision Making: With TSM software, sales teams can adapt quickly to changing market conditions and emerging opportunities. The ability to generate actionable insights and scenarios in real time empowers sales teams to make on-the-spot decisions during negotiations, fostering a more agile approach.
Audit-proof Approval Flow: TSM software features an audit-proof approval flow, facilitating a systematic process for obtaining approvals from stakeholders. Sales teams create pricing, contracts, and promotional scenarios which are presented as detailed proposals, and which undergo collaborative feedback and multi-level approvals, all recorded in a comprehensive audit trail. This means that CPG teams can be confident their pricing strategies will meet compliance and accountability standards.
A Single Architecture: Efficient Trade spend management software employs a unified single architecture, eliminating the need to knit together different software solutions. This creates a one-number principle, which enhances efficiency and alignment across the organization by synchronizing data smoothly across all functionalities. With real-time, accurate information on pricing, promotions, and contracts available throughout all software functions, sales teams can make well-informed decisions, fostering a collaborative and synchronized approach to trade spend management. The centralized database and streamlined processes optimize workflow efficiency, reducing the duplication of efforts, and enabling a cohesive pricing strategy that aligns with financial objectives.
Navigating a Holistic Pricing Strategy with TSM
Imagine a CPG sales team preparing for negotiations with a major retailer. Using trade spend management software, the team can create multiple scenarios that explore different pricing and promotional strategies. They can assess the impact of a range of factors such as price increases, promotional spend, and contract terms, on profitability. By considering retailer-specific demands and market trends, the team can develop a balanced approach that maximises revenue without compromising profitability.
During negotiations, the sales team can employ TSM software to address retailer queries and adjust pricing strategies on the spot. The software’s real-time insights and scenario analysis empower the team to make informed decisions that align with both parties’ interests. As a result, the negotiations are more productive, and a mutually beneficial agreement can be reached.
Holistic pricing is a strategic requirement in a CPG world that demands a deep understanding of market dynamics, retailer relationships, and consumer behaviour. Trade spend management software’s ability to create and analyse multiple scenarios, integrate data seamlessly, adapt to market trends, and foster retailer collaboration, gives sales teams a competitive advantage. By leveraging TSM software, CPG sales teams can optimise profitability, enhance decision-making, and establish enduring partnerships with retailers. As the CPG industry continues to evolve, embracing holistic pricing through TSM will be the cornerstone of success for forward-thinking sales teams.
With a focus on holistic pricing strategies and data-driven insights, Visualfabriq’s trade spend management software offers your sales teams an essential tool to enhance decision-making and strengthen collaborations with retailers. Delve into the possibilities of a more informed and effective CPG sales strategy by scheduling a demo today. To learn more and explore the benefits, click here.