Profitable revenue growth management: Best practices to drive success in CPG

Revenue growth management (RGM) has come a long way since its early days in the aviation industry in the 1950s and its later adoption in the hotel industry. Today, it’s a crucial strategy for driving sustainable profit growth in consumer-packaged goods (CPG) companies. With consumer behavior becoming more unpredictable, price sensitivity rising, and brand loyalty waning, effective RGM has never been more important. However, successfully implementing profitable revenue growth management remains a challenge. According to global consulting firm Bain & Company, “more than 80% of the CP chief executives we’ve spoken to are dissatisfied with their RGM results.” Additionally, “About 75% of RGM programs do not generate positive profit growth for both the retailer and the manufacturer.” 

Winning strategies for profitable revenue growth management 

Given these challenges, this blog post outlines best practices for achieving profitable growth through effective RGM. Implementing profitable revenue growth management requires a long view that goes beyond unsustainable quick-win tactics. By adopting a revenue and profit-focused approach, CPG companies can build resilience in a competitive market and maximize profitability. Here are six strategies that commercial teams can implement to drive success:  

1. Leverage data analytics for improved demand planning 

Accurate demand planning is the cornerstone of profitable revenue growth management in CPG. Strong demand planning helps prevent costly inventory issues and ensures product availability during high-demand periods. By creating a reliable baseline, it also serves as the foundation for other critical processes, such as trade promotion optimization and revenue planning. 

To achieve this, CPG companies should adopt best practices in demand planning, including historical data analysis and AI/machine learning. By leveraging AI, companies can identify order patterns and seasonality, which helps in predicting future demand more accurately. Additionally, with the right tools, AI can also assess the impact of marketing and promotional events, providing a comprehensive view of factors influencing demand. 

 Machine learning enhances demand forecasting by providing advanced predictive capabilities. By analyzing vast amounts of data, machine learning algorithms can identify complex patterns and make accurate predictions about future demand. This technology not only enables CPG companies to respond proactively to market changes and optimize their inventory levels but also brings significant efficiency gains and removes human bias from the forecasting process. With these benefits, companies can make more informed decisions and better align their strategies with market dynamics.  

Historical data analysis is an essential practice in CPG demand forecasting. By examining past sales data, companies can identify patterns and trends that inform future demand forecasts. However, it is best practice not to do this manually. Instead, leveraging AI/ML for this analysis is recommended. Manual analysis is often applied at a very high level in the product and plan account hierarchy, which is less reliable and less valuable for promotions. Using software for this purpose brings more detailed insights, saves time, and enables a focus on outliers. This analysis helps in understanding seasonal variations, promotional impacts, and other factors that influence demand. 

By leveraging advanced data analytics for improved demand planning, CPG companies can enhance their ability to meet consumer demand, reduce inventory costs, and ultimately drive profitable revenue growth. 

2. Develop the most optimal promotional plan 

Trade promotions are a source of top and bottom-line growth in CPG. Promotional planning, therefore, plays a crucial role in profitable revenue growth management. A well-structured promotional plan is essential for maximizing returns and aligning with broader RGM objectives. But how do you create a plan that truly drives profit? 

“Many companies cannot accurately and consistently distinguish between poorly performing promotions and more profitable ones. In a Strategy& survey, only 22 percent of companies could measure their trade spending at the individual event level.” — strategy&, PwC 

First, it’s important to evaluate past promotion effectiveness. Analyze tops and flops. This helps you understand why some promotions resonated with your customers while others didn’t. Aligning promotions with consumer demand cycles is another key strategy. For example, running a promotion for sunscreen in the summer makes sense, but doing so in the winter might not yield the same results. 

When bottom-line growth is a key objective, it’s also vital to prioritize high-ROI promotions. However, remember that the right promo plan depends entirely on your goals. Sometimes, the aim might not be ROI-driven but rather to increase market share, stimulate trial, or achieve other objectives. 

Using predictive analytics can significantly refine your promotional plans. Forecasting and analytics software can predict promotional outcomes, helping you optimize your investment. For instance, if the data shows that a certain type of promotion consistently drives higher sales, you can allocate more resources to that strategy. 

By developing the most optimal promotional plan, CPG companies can ensure that their promotions are not only effective but also aligned with their overall revenue and profitability goals. 

3. Optimize pricing strategies to capture greater value 

Pricing precision is key to profitability in profitable revenue growth management. Getting your pricing right can have a significant impact on profit growth. But how do you ensure your pricing strategies are effective? 

First, it’s important to understand your customers. Customer segmentation allows you to tailor pricing strategies to different groups based on their willingness to pay. For example, premium customers might be willing to pay more for high-quality products, while price-sensitive customers might respond better to discounts and promotions. 

Price elasticity analysis is another crucial technique. By understanding how changes in price affect demand, you can set prices that maximize revenue without driving customers away. For instance, if a small price increase leads to a significant drop in sales, it might be better to keep prices stable. 

Competitor benchmarking is also essential. Keeping an eye on your competitors’ pricing strategies can help you stay competitive and avoid losing market share. If your competitors lower their prices, you might need to adjust yours to remain attractive to customers. 

It’s important to note that we are talking about consumer prices here, but a manufacturer’s ability to influence consumer pricing may be limited. They can communicate a ‘consumer advised price’ (CAP) to the retailer, but in markets such as Europe, the actual price on the shelves is at the sole discretion of the retailer. Restricting the retailers’ ability to set their own prices would constitute a form of illegal price fixing. 

Additionally, the pricing structure from CPG toward the retailer is crucial. At what price do they buy? Can the retailer make a profit based on the consumer advised price (CAP)? 

Technology can greatly enhance pricing adjustments. Pricing software can analyze market data and provide recommendations for optimal pricing strategies. This helps you make data-driven decisions without the need for constant manual updates. 

By optimizing pricing strategies, CPG companies can capture greater value and drive profitable revenue growth. 

4. Enhance cross-functional collaboration for seamless RGM execution 

In CPG companies, breaking down silos between departments is essential for effective profitable revenue growth management. When sales, marketing, finance, and supply chain teams work together, they can create a cohesive RGM approach that drives success. 

First, it’s important to establish shared KPIs. When all departments are working towards the same goals, it’s easier to align strategies and ensure everyone is on the same page. Regular cross-departmental meetings can also help keep everyone informed and engaged. These meetings provide a platform for discussing progress, addressing challenges, and making adjustments as needed. 

Centralized performance tracking is another key practice. By having a single source of truth for performance data, teams can easily monitor progress and identify areas for improvement. This helps prevent profit losses due to misaligned strategies and inconsistent execution. 

For example, imagine a scenario where the sales team runs a promotion without informing the supply chain team. This could lead to stockouts and lost sales. However, with regular communication and shared KPIs, both teams can work together to ensure that promotions are well-coordinated and inventory levels are sufficient. 

By enhancing cross-functional collaboration, CPG companies can ensure that their RGM strategies are executed seamlessly, leading to greater profitability and success. 

5. Implement AI-enhanced tools for profitable revenue growth management 

These days, AI-enhanced tools are invaluable to ensure that your revenue growth management is profitable. These tools support complex decision-making by providing predictive insights that help CPG companies stay ahead of the curve. 

Why are AI-enhanced tools so valuable in RGM? Simply put, they can process vast amounts of data quickly and accurately, offering insights that would be impossible to obtain manually. 

One of the best practices for using AI in RGM is to leverage tools that support demand forecasting. By predicting future demand, you can ensure that you have the right products available at the right time, reducing the risk of stockouts or overstocking. AI can also help with pricing optimization by analyzing competitor prices, price elasticity, and historical sales data to recommend the best pricing strategies. 

Another practical application of AI in RGM is scenario planning. Tools like Visualfabriq can simulate different market scenarios, helping you understand the potential impact of various strategies before you implement them. This allows you to make more informed decisions and minimize risks. Additionally, AI significantly enhances operational efficiency and productivity, downsizing and reducing non-value-added activities, which is essential to survive and thrive in today’s highly competitive CPG landscape. By automating routine tasks and providing actionable insights, AI enables teams to focus on strategic initiatives and respond swiftly to market changes. 

By implementing AI-enhanced tools, CPG companies can improve productivity, decision-making speed and accuracy, ultimately driving profitable revenue growth. 

6. Monitor performance with KPIs linked to profitability goals 

Tracking the right key performance indicators (KPIs) is essential for effective profitable revenue growth management. Focus on profitability-driven KPIs like ROI on promotions, cost efficiency, and profit per product line. These metrics provide valuable insights into your RGM strategy’s performance. 

Key metrics to track include gross profit, promotional ROI, and customer lifetime value. Gross profit shows overall profitability, promotional ROI assesses the effectiveness of promotions, and customer lifetime value helps with decisions on customer acquisition and retention. 

Continuous improvement through performance reviews is crucial. Regularly assess and adjust strategies based on KPI performance to ensure alignment with profit goals. For example, if a promotion isn’t delivering the expected ROI, tweak your approach or allocate resources to more effective strategies. 

By monitoring performance with KPIs linked to profitability goals, CPG companies can drive profitable revenue growth and achieve long-term success. 

Boost your bottom line with profitable RGM 

By adopting best practices in profitable revenue growth management, CPG companies can boost profitability and build resilience in a competitive market. Leveraging data analytics for demand planning, developing optimal promotional plans, optimizing pricing strategies, enhancing cross-functional collaboration, implementing AI-enhanced tools, and monitoring performance with KPIs are key strategies to drive success. Embrace these practices to achieve sustainable profit growth and stay ahead in the industry. 

How Visualfabriq can help you with profitable revenue growth management 

Elevating your RGM game requires a blend of forward-thinking strategies and state-of-the-art technology. Visualfabriq can help you master that challenge with award-winning software for CPG, masterminded by business insiders. Empower your teams and embark on a journey of growth and success! Book a demo today to learn more. 

How to build an effective trade promotion optimization model for CPG

In the rapidly evolving world of consumer-packaged goods (CPG), staying ahead of the competition is crucial. One powerful way to do this is by building an effective trade promotion optimization model. But what exactly is a trade promotion optimization model, and why does it matter? 

A trade promotion optimization model involves using advanced analytics and predictive modeling to maximize the performance of your promotional activities. It’s like having a crystal ball that helps you see which promotions will drive the most revenue and improve your forecasting accuracy. By leveraging data-driven insights, you can make smarter decisions and transform your daily commercial operations. 

A well-built optimization model is a CPG company’s secret weapon. It helps you spend your budget more wisely, boost your return on investment (ROI), and gain a competitive edge. In this blog post, we’ll explore why building a promotion optimization model is essential, discuss the key components involved, and provide a step-by-step guide to help you get started. 

Why CPG companies need a trade promotion optimization model 

Have you ever wondered why some trade promotions seem to hit the mark while others fall flat? It’s a common challenge in the CPG industry. Inefficient spending and limited visibility into performance can make it tough to know what’s working and what’s not. This is where a trade promotion optimization model comes in. 

Think about it like this: Imagine you’re planning a big family dinner. You want to make sure you buy the right amount of food, so you don’t end up with too much or too little. You look at past dinners, consider how many people are coming, and maybe even check what dishes were popular before. This helps you make better decisions and ensures everyone leaves happy. 

Pre- and post-promotion evaluation

Similarly, an optimization model helps CPG companies make better decisions about their trade promotions. It uses data and advanced analytics to forecast outcomes before the promotion even starts. This means you can pre-evaluate the potential success of a promotion, adjust your strategy if needed, and ensure you’re setting yourself up for the best results. 

For example, let’s say a company is planning a promotion. Without an optimization model, they might not know if the promotion will drive sales or just eat into their profits. But with a model, they can forecast the impact of the promotion, make necessary adjustments before it launches, and ensure they’re getting the best results. 

After the promotion has run, the model also helps in post-evaluating the actual outcomes. This allows the company to compare the predicted results with the actual performance, learn from the data, and refine future promotions. 

Even when launching a new product, a similar approach can be taken. By linking the new product to a similar, existing product, the model can predict the impact based on the behavior of the like-for-like product. This way, the company can still forecast and optimize the promotion effectively. 

In short, a trade promotion optimization model is essential for making data-driven decisions, optimizing promotional strategies, and ultimately achieving better outcomes.

Key components of a trade promotion optimization model 

Building a trade promotion optimization model involves several crucial components. Let’s break them down: 

Data collection 

First up is data collection. Think of data as the foundation of your model. You need to gather essential data sources like historical sales, promotion outcomes, and shopper behavior. This data provides the raw material that your model will analyze to generate insights. For example, knowing how a past promotion performed can help predict the success of future ones. 

Advanced analytics 

Next, we have advanced analytics. This is where the magic happens. Using machine learning and AI, you can analyze complex datasets to uncover deep insights. These technologies can identify patterns and trends that might not be obvious at first glance. For instance, AI can reveal which types of promotions work best for different customer segments. 

Predictive modeling 

Then there’s predictive modeling. This component supports accurate forecasting of promotion outcomes. By using predictive models, you can estimate how a promotion will perform before you even launch it. This helps in making informed decisions and minimizing risks. Imagine being able to predict the sales lift from a discount campaign with high accuracy. 

Scenario planning 

Another key component is scenario planning. This allows you to test different promotional strategies and identify the optimal solutions. By running various scenarios, you can see how changes in one area might impact overall performance. For example, you can test the effect of increasing the discount percentage, changing the promotion duration, or using a different promotional mechanism. 

Together, these components form the backbone of a robust trade promotion optimization model. They enable CPG companies to make data-driven decisions, optimize their promotional strategies, and achieve better results. 

Steps to build a trade promotion optimization model 

Building a trade promotion optimization model might seem daunting but breaking it down into manageable steps can make the process much smoother. Here’s how you can get started: 

Step 1: Define objectives and KPIs 

First, you need to be clear about what success looks like. Start by defining your objectives and key performance indicators (KPIs). Are you aiming to increase sales volume, boost profitability, or rather gain market share? For example, if your goal is to increase sales volume, you might measure the promotion’s impact in terms of units sold. Having clear objectives helps you stay focused and measure the effectiveness of your promotions accurately. 

Step 2: Collect and clean data 

Next, gather all the necessary data. This includes historical sales data, promotion outcomes, and consumer insights. Reliable and complete data is crucial for accurate model outputs. Think of it like cooking a meal—the better the ingredients, the better the dish. Clean and harmonize your data to remove any inaccuracies or inconsistencies. This step ensures that your model has a solid foundation to work from. 

Step 3: Choose the right tools and software 

Selecting the right tools and software is also essential for building an effective model. TPx software like Visualfabriq offers scalable, AI-driven optimization and accurate forecasting. Such a tool can handle large datasets and provide the advanced analytics needed for your model. Make sure the software you choose aligns with your specific needs and market conditions. 

Step 4: Leverage predictive models 

Now, it’s time to put your data to work. Utilize AI-powered prediction models in your chosen software, or test, refine, and validate your own models. These models help forecast promotion outcomes with high accuracy. For instance, you can predict the sales lift from a discount campaign and adjust your strategy accordingly. 

Step 5: Implement and monitor 

Finally, implement your model and continuously monitor its performance. Ongoing monitoring and refinement are key to continuous improvement. This step ensures that your model adapts to changing market conditions and remains effective over time. For example, if a promotion isn’t performing as expected, you can take away learnings and make the necessary adjustments to improve future results. 

Day-to-day impact on commercial teams 

Implementing a trade promotion optimization model can significantly change daily workflows for commercial teams. By automating forecasts and insights, the model allows teams to allocate their time and resources more effectively. This means less time spent on manual data analysis and more time focusing on strategic decision-making. 

How to evaluate the effectiveness of your optimization model 

Once you’ve built and implemented your trade promotion optimization model, it’s crucial to evaluate its effectiveness. This ensures that your model is delivering the desired results and helps identify areas for improvement. 

Start by tracking key performance indicators (KPIs). These are metrics that help you measure the success of your promotions. Common KPIs include forecast accuracy, sales lift, and return on investment (ROI). For example, you might compare the predicted sales lift from your model to the actual sales lift achieved. If the numbers are close, it indicates that your model is accurate. 

Another important aspect is continuous improvement. AI models are self-learning, meaning they get better over time as they process more data. Regularly review your model’s performance and adjust as needed. This helps ensure that your model stays aligned with changing market trends and consumer behaviors. For instance, if you notice a drop in forecast accuracy, it might be time to update your data or tweak your model. 

It’s also helpful to track performance against human estimation. When starting out, compare your model’s predictions with those made by your team. This can provide valuable insights into the model’s accuracy and highlight any areas where it might need improvement. Over time, as the model learns and improves, you should see its performance consistently surpass human estimations. 

Lastly, remember that market shocks can impact on your model’s performance. Events like economic downturns or pandemics can disrupt market conditions and affect your model’s accuracy. Be prepared to make significant adjustments during such times to ensure your model remains effective. 

By regularly evaluating your model using these methods, you can ensure it continues to deliver accurate and valuable insights, helping you optimize your trade promotions and achieve better results. 

Real-world examples with Visualfabriq 

Dutch multinational brewing company Heineken has successfully leveraged Visualfabriq’s AI prediction models in the Netherlands to enhance their trade promotion strategies. One of the standout features of Visualfabriq’s software is its flexibility, allowing customers to build, train, and adjust their own prediction models. This adaptability has enabled Heineken to tailor their models to specific needs and market conditions, significantly improving the accuracy of their trade promotion forecasts. 

By filtering data per retailer and SKU and creating submodels that consider factors like promotion price elasticity and seasonality, Heineken has seen better decision-making and increased profitability. As Victor de Graaff, a freelance Data Scientist involved with the Heineken promotion optimization effort, notes, “(AI) predictions are better than manual predictions.” 

For more details on Heineken’s experience with Visualfabriq, you can read the case study and watch a video. 

Takeaways 

In today’s competitive CPG landscape, building a trade promotion optimization model is not just a nice-to-have—it’s a necessity. By leveraging advanced analytics and predictive modeling, companies can improve forecasting accuracy and drive profitable revenue growth. 

A well-built optimization model supports you to make data-driven decisions. This will help maximize your promotional performance and allow you to gain a competitive edge. From defining clear objectives and collecting reliable data to choosing the right tools and continuously monitoring performance, each step is crucial for success. Real-world examples, like Heineken’s use of Visualfabriq’s flexible AI prediction models, demonstrate the tangible benefits of this approach. 

Implementing an optimization model can lead to long-term gains in trade promotion efficiency and profitability. It empowers commercial teams to allocate their time and resources more effectively, ultimately driving better business outcomes. 

Ready to see the impact of a trade promotion optimization model for yourself? Book a demo with Visualfabriq today and discover how our AI-driven solutions can transform your promotional strategies. 

Unconstrained demand forecasting: A key to success for CPG companies

In the fast-paced world of consumer-packaged goods (CPG), accurately predicting market demand is crucial for maintaining a competitive edge. Unconstrained demand forecasting is a powerful approach that helps CPG companies anticipate customer needs in a supply-neutral and unbiased way. This article explores what unconstrained demand forecasting is, why it is important for CPG companies, and how Visualfabriq supports this essential practice.

What is unconstrained demand forecasting?

Unconstrained demand forecasting predicts demand without considering supply-side constraints. In other words, it captures the total sales potential without any limitations from supply or operational capacity. 

Why generate unconstrained demand forecasts?

At first glance, these forecasts might seem unrealistic and unachievable due to real-world constraints. However, there is a significant benefit to understanding your potential demand without supply-side limitations, as it reveals your true growth potential.

By providing a clear picture of true market needs, unconstrained demand forecasting enables companies to make more informed decisions about production, inventory, and trade promotions. This approach helps maintain optimal inventory levels, reducing the risk of overstocking or stockouts. Additionally, consistently meeting customer demand leads to higher satisfaction and greater leverage in negotiations with retailers. Accurate forecasts also aid in better financial planning and resource allocation, ultimately boosting profitability.

Unconstrained metrics: volume and value in demand planning

Unconstrained volume refers to the total quantity of products that could be sold if there were no supply constraints. It provides an estimate of the maximum demand for a product in the market, without considering whether orders can be fulfilled. Similarly, unconstrained value represents the total revenue that could be generated from these sales. Together, these metrics offer a comprehensive view of the potential market demand and the financial impact of meeting that demand. 

By analyzing unconstrained volume and value metrics over a 12-18-month horizon, companies can gain valuable insights for proactive planning. This mid-term perspective helps in anticipating market trends and aligning strategies and investment decisions accordingly. By understanding the maximum sales potential, companies can: 

• Identify market opportunities: Unconstrained metrics help identify areas where demand is high, allowing companies to focus their efforts on the most promising opportunities. 

• Optimize inventory levels: By knowing the maximum demand, companies can better plan their inventory levels, balancing the risk of stockouts vs. overstocks. 

• Enhance financial planning: Understanding the potential revenue from unconstrained demand helps in better financial planning and budgeting. 

• Improve resource allocation: Companies can allocate resources more effectively by focusing on areas with the highest demand potential. 

Visualfabriq demand forecast software translates sales volume into a detailed P&L, offering critical insights into sales volume and value. This ensures that businesses are well-prepared to meet future demands and capitalize on emerging opportunities. 

Optimizing volume-to-value forecasting 

Visualfabriq connects demand planning and finance, ensuring aligned decision-making across the organization. By creating a central hub for data from various departments, it fosters a cohesive understanding of demand drivers, which in turn supports the supply planning department.  

This integration enhances visibility, allowing teams to quickly adjust to changing market conditions. The centralized data hub also ensures that all departments are aligned, making it easier to respond to fluctuations in demand and supply. 

The insights provided by Visualfabriq empower teams to respond promptly to market shifts, improving overall operational efficiency. With a unified view of the data, teams can make decisions with confidence and keep the organization agile and responsive to market changes. 

Aligning unconstrained demand with supply chain capacity  

Despite the appeal of unconstrained demand, real-world constraints inevitably come into play. Supply-side constraints not only include production capacity limitations, but also logistical challenges like transportation bottlenecks, and other supply chain disruptions, all of which can hinder the ability to meet high demand and deliver products on time.  

Balancing ambitious sales forecasts with realistic supply constraints is crucial for CPG companies. While unconstrained demand forecasting provides a clear picture of market opportunities, it is essential to recognize when forecasted demand exceeds supply capabilities. Failing to do so can lead to out-of-stocks, where demand outstrips supply, or to inefficiencies in other areas of the supply chain. 

To effectively balance demand and supply, companies should leverage data-driven insights to refine their demand plans and optimize supply chain operations. Here are some practical tips: 

1. Regularly review and adjust forecasts

Continuously monitor and update demand forecasts based on real-world data. This helps in identifying any discrepancies between forecasted demand and actual supply capacity, allowing for timely adjustments. 

2. Collaborate closely with supply chain partners

Foster strong communication and collaboration with suppliers and logistics partners. Sharing demand forecasts and supply constraints ensures that all parties are aligned and can work together to address potential issues. 

3. Leverage technology for enhanced visibility

Utilize advanced software solutions like Visualfabriq to integrate data from various sources, including historical sales and market analytics. This comprehensive view enables companies to make informed decisions and adjust demand plans accordingly. 

4. Simulate and anticipate

Create and test various demand scenarios to understand the potential impact of different supply constraints. This proactive approach helps in developing contingency plans and mitigating risks associated with supply chain disruptions. 

5. Optimize inventory management

Use data-driven insights to maintain optimal inventory levels. By understanding the true demand and aligning it with supply capabilities, companies can reduce the risk of both excess supply and out-of-stocks. 

How Visualfabriq supports unconstrained demand forecasting 

Visualfabriq offers a robust software suite that empowers CPG companies to excel in unconstrained demand forecasting. Here’s how: 

• Advanced data integration: Visualfabriq integrates data from various sources, including historical sales, market trends, and customer insights. This comprehensive data collection ensures that forecasts are based on a wide range of relevant information. 

• Smart algorithms: The AI-powered software utilizes self-learning algorithms that continuously improve their accuracy over time. These algorithms analyze past and current data to predict future demand with high granularity and precision. 

• Delivery- and consumption-based predictions: Visualfabriq allows companies to create and test various demand scenarios. This feature is particularly valuable during peak seasons, such as the holidays, where accurate forecasting is critical. Our models can use both sell-in (shipments) and sell-out (consumption) data. 

• Collaboration and transparency: The software facilitates transparent communication between different departments and with retail partners. By sharing detailed insights and forecasts, companies can align their strategies and ensure everyone is on the same page. This enhanced collaboration and transparency significantly improve the accuracy and reliability of the demand forecasting process. 

User-friendly interface: Visualfabriq’s intuitive interface makes it easy for demand planning teams to generate and analyze forecasts without requiring extensive technical expertise or analytical skills. 

Conclusion 

If done the right way, unconstrained demand forecasting has significant added value for CPG companies, as it provides a clear view of market needs and enables better decision-making. Visualfabriq’s advanced software solution supports this approach by offering comprehensive data integration, smart algorithms, scenario planning, and transparent collaboration. By leveraging Visualfabriq, CPG companies can master the art of data-driven demand forecasting and achieve greater success in a competitive market. 

Interested in learning more? Download our Demand Forecast brochure and request a demo to see the software in action and get answers to any questions you may have.  

7 effective trade promotion strategies for 2025: best practices to drive success

Trade promotions are a cornerstone of the consumer-packaged goods (CPG) industry. But are you getting the most out of your promotional efforts? In an industry where profitable revenue growth is key, optimizing trade promotions can make a significant difference in your top and bottom line. By adopting effective trade promotion strategies and following best practices, you can reduce waste, enhance efficiency, and drive better returns on investment (ROI). 

In this blog post, we’ll break down essential strategies and best practices for trade promotion success. From setting clear goals to leveraging data and technology, we’ll cover everything you need to know to maximize the impact of your promotional activities. Whether you’re looking to increase sales, gain market share, or launch a new product, these strategies will help you achieve your objectives and drive success. 

Ready to take your trade promotions to the next level? Let’s dive into the best practices and explore the seven effective trade promotion strategies that will set you on the path to success. 

Trade promotion strategies best practices

1. Treat promotions as part of the total annual investment 

Trade promotions should be viewed as an integral part of your overall budget and commercial strategy, not just one-off tactics. Why is this a best practice? Promotions are often value dilutive, but they can be crucial for keeping competitors at bay, generating trials, and maintaining market share. In the CPG industry, promotions have become a staple, and there’s no turning back. 

Consider why promotional spend should be regarded as part of the total annual investment. Ultimately, what matters is that the total sales are profitable. You can only spend your money once, so if you overinvest in the trade contract, there will be fewer promotions, and vice versa. When aligned with broader business objectives, promotions contribute to the long-term financial health of the brand. 

For example, imagine a CPG brand allocating 25% of their trade funds to promotions and tracking it as part of their overall growth strategy. This approach ensures that trade promotions are seen as long-term investments, driving sustainable growth. 

2. Set clear and specific goals for each promotion 

Every trade promotion should have one focused objective—whether it’s boosting sales, increasing market share, or launching a new product. Why is this a best practice? Trying to achieve multiple goals, such as sales and brand awareness, can dilute effectiveness and make performance hard to measure. 

For instance, imagine a seasonal promotion targeting a 300% sales uplift for a specific product SKU. By having a clear and specific goal, you can better target your efforts and evaluate the promotion’s success afterwards. 

In other words, setting a clear objective ensures better targeting and post-promotion evaluation. It allows you to measure the promotion’s impact accurately and make data-driven decisions for future campaigns. 

3. Conduct thorough pre-promotion planning and forecasting 

Planning ahead is crucial for the success of any trade promotion. By using AI and machine learning to analyze current and historical data, you can forecast the potential outcomes of your promotions. This ensures you don’t run into stock issues, overspend, or miss performance targets. 

Why is this a best practice? Thorough planning helps you select the optimal mechanism for the goal assigned to the promotion. For example, predictive analytics can help a CPG manufacturer forecast higher demand for an in-store promotion, avoiding stockouts and ensuring that the promotion runs smoothly. 

Careful planning reduces risks and sets realistic expectations for success. It allows you to make informed decisions and adjust your trade promotion strategies based on data-driven insights and best practices. 

“46% of CPG companies will deploy what-if promotion evaluation capabilities” — POI 2024 State of the Industry Peer-Benchmarking Report

4. Always pre- and post-evaluate promotions 

Evaluating promotions both before and after they run is essential for assessing their potential and actual performance. Pre-evaluation helps fine-tune your approach, ensuring that the promotion is set up for success. Post-evaluation, on the other hand, assesses whether the promotion met its objectives and provides valuable insights for future trade promotion strategies. 

Why is this a best practice? Pre-evaluation allows you to make necessary adjustments before the promotion goes live, increasing the chances of achieving your goals. Post-evaluation helps you understand what worked and what didn’t, enabling continuous improvement and data-driven decision-making. 

For instance, using TPM/TPO software like Visualfabriq to measure ROI after a large promotion unlocks valuable data insights that can inform future campaigns. By systematically evaluating your promotions, you gain a deeper understanding of the drivers of impact, allowing  you to optimize your strategies for greater success. 

5. Leverage data and technology to optimize trade promotions 

In today’s digital age, using advanced tools and data analytics is essential for optimizing trade promotions. CPG teams can no longer afford to work with fragmented, disconnected, and unfit-for-analysis data assets. By combining data sources and utilizing AI-powered analytics, you can significantly enhance the overall effectiveness of your promotional efforts. 

Why is this a best practice? Data-driven insights allow for better targeting, more precise budgeting, and ongoing improvement. Advanced tools can integrate and harmonize data from various sources, making it ‘analysis ready.’ This means you can model different scenarios and predict outcomes more accurately. 

For example, a CPG manufacturer might use AI-driven software to analyze historical sales data, trade investment, and promotional mechanisms. This analysis can help forecast the potential impact of a promotion, allowing the team to plan more effectively. By modeling different scenarios, a CPG firm can identify the most effective promotional strategies and allocate resources accordingly. 

In summary, using technology and data insights drives smarter decisions and more profitable promotions. It allows you to stay agile and responsive to market changes and opportunities, ensuring that your promotional strategies are always optimized for success. 

What sets Visualfabriq software apart is its ability to combine multiple steps into a single, efficient action. By leveraging extensive data and analytics during promotion pre-evaluation, it allows CPG teams to optimize as they plan. This approach provides a rapid understanding of the drivers of success before a promotion even begins, establishing a ‘first time right’ standard. 

6. Collaborate closely with retail partners 

Aligning trade promotions with retail partners is crucial for better execution and higher impact. Retailers play a key role in delivering the promotion to the consumer, so collaborating towards win-win outcomes maximizes success. 

Why is this a best practice? Retailers are essential in ensuring that promotions reach the target audience effectively. By collaborating closely, you can coordinate efforts, share insights, and create a seamless experience for the consumer. 

For example, imagine a CPG manufacturer working with a retailer to coordinate in-store displays and digital advertising during a major product launch. This collaboration ensures that the promotion is visible and engaging, driving higher consumer engagement and sales. 

Close collaboration with retail partners enhances the reach and effectiveness of your promotions. It allows you to leverage their expertise and resources, ensuring that your promotional strategies are executed flawlessly. 

7. Monitor and learn from competitor promotions 

Staying informed about competitor activities is essential for benchmarking and improving your own strategies. By keeping an eye on what your competitors are doing, you can identify gaps, react to new market trends, and refine your promotion timing and messaging. 

Why is this a best practice? Competitor insights help you stay agile and responsive in a dynamic market. By understanding what works for your competitors, you can adapt and enhance your own promotional strategies to stay ahead. 

For example, imagine a CPG brand adjusting its discounting strategy after observing a competitor’s successful holiday promotion. By analyzing the competitor’s approach, the brand can identify effective tactics and incorporate them into their own plans. 

In short, competitive intelligence sharpens your promotional edge and keeps you agile in the market. It allows you to learn from others’ successes and mistakes, ensuring that your promotional strategies are always evolving and improving. 

Trade promotion strategies & best practices: in conclusion 

To recap, running successful trade promotions in the CPG industry requires a strategic approach and adherence to best practices. By treating promotions as part of the total annual investment, setting clear and specific goals, conducting thorough pre-promotion planning and forecasting, and always pre- and post-evaluating promotions, you can optimize your efforts and drive better results. Leveraging data and technology, collaborating closely with retail partners, and monitoring and learning from competitor promotions further enhance your promotional strategies. 

By following these best practices, you can ensure that your trade promotions are not only effective but also contribute to the long-term financial goals of your company. Ready to take your trade promotions to the next level? Download our TPM brochure and book a demo today to see how our solutions can help you achieve your goals.  

How to implement an effective CPG pricing strategy for holiday assortments 

When it comes to consumer-packaged goods (CPG), your pricing strategy can make or break your sales and profitability. If your prices are too low, you’re leaving money on the table and could even end up losing money on each sale. On the other hand, if they’re too high, you might lose customers and valuable shelf space to your competitors. Knowing which products are selling, where they’re selling, and at what price is crucial for success. 

During a holiday season, special assortments play a crucial role. These curated product selections, tailored for specific occasions, differ from regular offerings through unique packaging, themed products, and limited-time availability. They attract consumer interest and drive seasonal sales, which can give a huge boost to revenues. 

In this blog post, we’ll explore how to implement an effective CPG pricing strategy for holiday assortments and measure their success during key seasonal events. We’ll cover everything from understanding special assortments to key pricing strategies and how tools like Visualfabriq can help you optimize your approach. 

Understanding special assortments in CPG 

Special assortments in the CPG industry are specifically designed for occasions like holidays. These assortments stand out due to their unique features. For example, during the holiday season, you might find products with special designs, exclusive flavors, or bundled gift sets that aren’t available at other times of the year. 

These assortments are not just about adding a holiday touch; they are strategic tools to capture the increased consumer interest and spending that occur during these times. By offering something exclusive and timely, companies can create a sense of urgency and excitement, encouraging consumers to make a purchase. 

Understanding the importance of these assortments is key. They not only boost sales during the holiday season but also enhance brand visibility and foster customer loyalty. When executed well, special assortments can leave a lasting impression on consumers, making them more likely to return for future purchases. 

Factors influencing CPG pricing strategies for holiday assortments 

When it comes to pricing holiday assortments, several factors come into play. Understanding these factors can help you set prices that maximize sales and profitability. 

First, consider consumer demand trends. During holidays, demand for certain products can skyrocket. For example, festive-themed items or gift sets often fly off the shelves. Additionally, ‘regular’ products that are associated strongly with specific consumption moments (e.g., Christmas dinner) are often positioned as premium during holiday periods. By analyzing past sales data and current market trends, you can anticipate which products will be in high demand and adjust your pricing strategy accordingly. 

Next, take into account cost considerations. Producing and sourcing seasonal products can be more expensive due to factors like limited-time production runs, special packaging, and increased logistics costs. It’s essential to factor these costs into your pricing to ensure you maintain healthy profit margins. 

The competitive landscape is another critical factor. Keep an eye on your competitors’ pricing strategies. If they are offering similar products at lower prices, you may need to adjust your prices to stay competitive. Conversely, if your products offer unique value or superior quality, you might be able to justify higher prices. 

By carefully considering these factors, you can develop a pricing strategy that not only attracts customers but also ensures your holiday assortments are profitable. 

Key CPG pricing strategies for holiday assortments 

What approach is best suited to maximize sales and profits when pricing holiday assortments? 

A very common pricing model is cost-based pricing. Here, you calculate your production costs for a holiday product and then add a pre-determined markup for the sales price.  

A more sophisticated approach is value-based pricing. This involves setting prices based on the perceived value of your holiday assortments to consumers. By understanding what your customers value most about your products, you can set prices that align with their expectations and willingness to pay. For example, if your holiday assortment includes premium items or exclusive designs, you can justify a higher price point. 

Promotional pricing is another powerful strategy. This includes tactics such as discounts, bundle offers, and limited-time pricing designed to stimulate demand and boost sales during peak holiday shopping periods. For instance, offering a discount on a bundled gift set can encourage customers to buy more, increasing your overall sales volume. 

Psychological pricing is also worth considering. This strategy taps into consumer behavior by pricing items just below a whole number (e.g., $19.99 instead of $20) to create a perception of better value. This small difference can make a big impact on consumer purchasing decisions, making your products seem more affordable and attractive. 

By leveraging these pricing strategies, you can effectively capture consumer interest and drive sales during the holiday season. 

Implementing an effective CPG pricing strategy with Visualfabriq and measuring success 

During holiday seasons, the stakes are high for CPG companies and implementing an effective pricing strategy is crucial. Software tools like Visualfabriq can make this process much smoother. Visualfabriq provides visibility on various aspects of a CPG’s pricing strategy, such as profitability, retailer margins, and portfolio pricing. This comprehensive view helps you make informed decisions and optimize your pricing approach. 

For instance, if your strategy is promotion-driven, Visualfabriq can predict the optimal promotional mechanisms to use. This means you can identify which discounts or bundle offers will generate the most sales and maximize your profits. By leveraging data and predictive analytics, you can fine-tune your pricing strategies to align with consumer behavior and market trends. 

Measuring the success of your pricing strategies is equally important. After the holiday season, it’s essential to analyze sales data and gather consumer feedback. This analysis will help you understand what worked well and what could be improved. By continuously refining your approach based on these insights, you can enhance your pricing strategies for future holiday assortments. 

Takeaways 

In this blog post, we’ve explored the importance of an effective CPG pricing strategy for holiday assortments. We’ve discussed how special assortments, tailored for specific occasions, can significantly boost sales and enhance brand visibility. By understanding consumer demand trends, cost considerations, and the competitive landscape, you can develop pricing strategies that maximize profitability. 

We also covered key pricing strategies such as cost- and value-based pricing, promotional pricing, and psychological pricing. These approaches can help you capture consumer interest and drive sales during the holiday season. Additionally, tools like Visualfabriq can assist in implementing these strategies and measuring their success. 

As you plan your holiday assortments, consider how these pricing strategies can be adapted to your specific products and market conditions. By leveraging data and continuously refining your approach, you can optimize your pricing strategy and achieve better results. 

Interested in learning more? Check out our TPM brochure and book a demo to see how Visualfabriq can help you implement effective pricing strategies. 

Maximizing value across all trade promotion management phases

Trade promotion management (TPM) is a crucial aspect of any consumer-packaged goods (CPG) company’s strategy. It not only involves planning and execution, but also analyzing promotional activities to boost sales and market share. But how can you ensure that you deliver maximum value across all phases of trade promotion management? 

TPM isn’t just about running promotions; it’s about integrating these activities into your overall (trade) marketing strategy. This not only means setting clear objectives that align with business goals, but also continuously improving processes. By understanding and optimizing each phase of TPM, you can drive greater efficiency and effectiveness. 

In this blog post, we’ll explore the key phases of trade promotion management and highlight how Visualfabriq can enhance each stage. From planning and approval to governance, negotiation, execution, and evaluation, we’ll show you how to get the most out of your TPM efforts. 

Essential phases of trade promotion management  

1. Planning 

The journey begins with planning. This is where you set your goals and determine the key performance indicators (KPIs) that will measure success. Identifying target markets and trade partners is crucial at this stage. So is leveraging data analytics as it can significantly enhance your ability to forecast outcomes and make informed decisions. For instance, analyzing past promotions can provide insights into which  promotion strategies are likely to be effective. This phase is not just about planning though. We believe that optimization is an integral part of it, ensuring that every decision is fine-tuned for maximum effectiveness. 

2. Approval 

Once the plan is in place, it’s time to secure buy-in from stakeholders. This next phase involves aligning your promotional activities with broader business objectives and ensuring everyone is on board. Automation tools can streamline the approval process, providing a clear audit trail and ensuring that all necessary approvals are obtained efficiently. 

3. Governance 

Governance involves setting up the rules and policies that will guide your trade promotions. This includes compliance with trade regulations and internal guidelines, such as maintaining a floor price. A centralized dashboard can offer continuous monitoring of compliance, while principles like the 4-eye rule help maintain high standards and prevent errors. 

4. Negotiation 

Negotiation is where you finalize the details of your trade deals with partners. It’s important to realize that effective negotiation requires a balance between achieving your business goals and fostering strong relationships with partners. Data-driven insights can strengthen your negotiation position, while scenario analysis helps you prepare for various outcomes, ensuring you can adapt and succeed regardless of how negotiations unfold. 

5. Execution 

This phase is all about rolling out your trade promotions. When you’ve made it this far, effective communication with sales teams and trade partners is essential to ensure smooth execution. Utilizing technology can streamline this process, making it much easier to coordinate activities and track progress in real-time. 

6. Evaluation 

The final phase involves measuring the success of your trade promotions. By analyzing results against your initial objectives and KPIs, you can determine what worked and what didn’t. Combining data from various sources and using advanced analytics can provide valuable insights that inform future promotions, creating a continuous improvement loop. 

How Visualfabriq enhances all trade promotion management phases 

Visualfabriq’s award-winning software suite offers a robust Trade Promotion module that significantly enhances all phases of trade promotion management through its configurable workflow. This workflow guides the progress of promotions, ensuring that CPG teams complete each step efficiently and effectively. 

Planning 

Visualfabriq’s data analytics capabilities allow you to set clear objectives and define KPIs with greater accuracy. By analyzing historical data and market trends, you can also identify target markets and trade partners more effectively. Additionally, the software’s forecasting tools help you predict potential outcomes, enabling you to make informed decisions and optimize your planning process and results. 

Approval 

The approval phase is streamlined with Visualfabriq’s automated workflows. These workflows not only enforce approval processes but also provide audit-proof logging, ensuring that all promotions align with business goals and are thoroughly vetted. The configurable workflow statuses and requirements ensure that promotions can only progress when specific conditions are met, such as obtaining necessary approvals or passing key dates. 

Governance 

Visualfabriq helps establish and maintain guidelines and policies for TPM. The software supports compliance with trade regulations, standards, and internal rules, such as setting a floor price. A centralized dashboard provides ongoing monitoring of compliance, while the four-eyes principle and enforced rules help maintain high standards and prevent errors. 

Negotiation 

Visualfabriq enhances the negotiation phase by providing data-driven insights that strengthen your negotiation positions. The software’s scenario analysis tools allow you to prepare for different negotiation outcomes, ensuring you can deliver results regardless of the negotiation’s direction. This data-driven approach helps you build stronger relationships with trade partners and achieve more favorable terms. 

Execution 

Visualfabriq’s technology also makes the execution phase more efficient. The software facilitates seamless coordination of trade promotions, ensuring effective communication with sales teams and trade partners. Moreover, Visualfabriq’s tools help track orders to ensure the promotion is going well and accrue based on actual sales.  

Evaluation 

Visualfabriq’s advanced analytics capabilities enable you to measure the effectiveness of trade promotions accurately. By combining disparate data sources, the software connects the dots, providing actionable insights that help you analyze results against initial objectives and KPIs. This continuous improvement loop allows you to refine your TPM efforts and drive better results in future promotions. 

The Visualfabriq workflow, a logical sequence of steps across all trade promotion management phases

The Visualfabriq Blueprint Workflow is a key feature that enhances the entire TPM process. This workflow is a logical sequence of steps that guide the progress of promotions, with several steps acting as gates that can only be passed when conditions are met. The workflow statuses and requirements for progressing to the next status are configurable per database, allowing for adaptability to meet the specific needs of each client. 

Takeaways

Trade promotion management is a vital component of any CPG company’s strategy. By understanding and optimizing each phase—planning, approval, governance, negotiation, execution, and evaluation—you can drive greater efficiency and effectiveness in your promotional activities. 

Visualfabriq’s Trade Promotion Master enhances all phases of trade promotion management through its configurable workflow, data-driven insights, and advanced analytics. By leveraging these tools, you can ensure that your trade promotions are not only well-planned and executed but also continuously improved. 

Moreover, Visualfabriq’s Trade Promotion module doesn’t stop at trade promotion management. It also offers advanced forecasting and optimization, making it a comprehensive solution for maximizing the value of your trade promotions. As part of a larger revenue management solution suite, Visualfabriq provides a holistic approach to managing and optimizing your revenue streams. 

Incorporating Visualfabriq into your TPM process means more accurate planning, streamlined approvals, robust governance, stronger negotiation positions, seamless execution, as well as insightful evaluation. This comprehensive approach helps you maximize the value of your trade promotions, ultimately driving better results for your business. 

Are you ready to take your trade promotion management to the next level? Visualfabriq is here to help you every step of the way. Download our TPM brochure and book a demo today to see how Visualfabriq can help you transform your promotional strategies.  

Are you in CPG? Here’s how you can bring your revenue growth management strategy to life

Why a revenue growth management strategy? 

In the competitive landscape of the consumer-packaged goods (CPG) industry, a well-defined revenue growth management strategy is essential for driving sustainable growth and enhancing profitability. However, achieving organic growth has long been a persistent challenge for CPG companies. Siloed approaches and misaligned priorities across sales, marketing, and finance further complicate matters, leading to conflicting strategies and suboptimal decisions. To address these obstacles, CPG companies can adopt revenue growth management (RGM).  

RGM is a strategic approach that leverages data-driven insights to optimize pricing, promotions, trade spend, assortment, and price-pack architecture. This structured approach enables companies to identify and capitalize on revenue growth opportunities. It ensures that every decision contributes to the bottom line. 

However, one of the biggest challenges companies face is translating this strategy into actionable, measurable goals. Bridging the gap between overarching revenue growth objectives and practical, day-to-day sales actions is crucial for driving performance and accountability. This involves not only setting clear targets but also ensuring that every team member understands their role in achieving these goals. 

Translating your revenue growth management strategy into action 

Translating a revenue growth management strategy into actionable steps is crucial for achieving tangible results. RGM impacts various aspects of CPG business operations, including account negotiations, promotions, and pricing. By aligning these elements with the overall strategy, companies can drive cross-functional success and ensure that their efforts are focused on activities that contribute to revenue objectives. 

One effective way to translate a revenue growth management strategy into action is by aligning sales incentives with RGM objectives. By tying sales incentives directly to these objectives, organizations can motivate their sales teams to concentrate on activities that drive revenue growth. This alignment ensures that every action taken by the sales team is in sync with the company’s strategic goals, fostering a culture of accountability and performance. Education and development programs for sales teams should also be in place to further reinforce correct understanding and behaviors. This will counteract a return to short-term tactics and help strategic RGM actions to take hold. 

Additionally, an RGM strategy influences how companies approach account negotiations and promotions. Manufacturers should engage in ongoing, growth-focused dialogues with retailers, emphasizing how collaborative efforts can drive sales and margins for both parties. By leveraging data-driven insights, businesses can optimize their pricing strategies and promotional activities to maximize revenue and achieve win-win outcomes. This involves setting clear, data-driven revenue goals for specific customer segments and ensuring effective communication and collaboration between sales and marketing teams to execute the plan efficiently. 

Key components of an effective CPG RGM strategy 

An effective revenue growth management strategy hinges on several key components. These elements work together to drive steady revenue growth and enhance profitability. 

First and foremost, leveraging data analytics for informed decision-making is crucial. By analyzing all available data, companies can gain valuable insights into consumer behavior, market trends, and competitive dynamics. This information enables businesses to make strategic decisions that optimize promotions, pricing, and product placement. 

Implementing robust pricing strategies and optimizing promotions is another critical component. Robust pricing strategies take into account expected cost of goods sold (COGS) trends, assortment pricing, and retailer margin potential, allowing companies to set prices that are competitive and sustainable. Promotion optimization, on the other hand, focuses on identifying the best promotional mechanisms for retailers. This ensures that marketing efforts are aligned with retailer needs and maximizes the return on investment. 

Efficiently managing trade spend is also essential. Trade spend, which includes discounts, allowances, and promotional expenses, represents a significant portion of a CPG company’s budget. By optimizing trade spend, companies can ensure that their promotional activities are cost-effective and aligned with their overall revenue growth objectives. 

Lastly, segmenting customers based on their market positioning and shopper behaviors is vital. By categorizing channels and sales accounts according to factors such as location, shopper demographics, and purchasing patterns, companies can tailor their marketing and sales strategies to better meet the needs of each segment. This targeted approach not only strengthens retailer relations but also drives higher sales and profitability. 

Together, these components are essential pillars of a robust RGM strategy that empowers CPG companies to achieve their revenue growth goals. 

Implementing a revenue growth management strategy to achieve sales targets 

Translating a revenue growth management strategy into actionable steps is essential for achieving sales targets. This process involves setting clear, data-driven revenue goals for specific customer segments and aligning trade promotion strategies with those targets. By doing so, companies can ensure that their efforts are focused on high-impact activities that directly contribute to revenue growth. 

To begin with, it’s crucial to establish well-defined revenue goals based on comprehensive data analysis. This includes understanding market trends, consumer behaviors, and competitive dynamics. By leveraging these insights, companies can set realistic and achievable sales targets for different channels and sales accounts. These targets should be specific, measurable, and aligned with the overall RGM strategy. 

Next, aligning promotional strategies with revenue goals is key. This involves designing shelf-based or digital promotions that not only attract customers but also drive sales in line with the set targets. For example, targeted discounts, special offers, and loyalty programs can be tailored to specific sales accounts or customer segments to maximize their impact. It’s important to continuously monitor the effectiveness of these promotions. And to adjust them as needed to ensure they are contributing to the desired revenue outcomes. 

Effective communication and collaboration between finance, sales and marketing teams are also vital. These teams need to work together to execute the RGM strategy efficiently. This includes sharing insights, coordinating efforts, and ensuring that everyone is aligned with common goals. Regular meetings and updates can help keep everyone on the same page and address any challenges that may arise. 

Additionally, leveraging technology and tools can significantly enhance the implementation of an RGM strategy. Advanced analytics, AI-driven insights, and automated processes can provide near-real-time visibility into performance and help identify areas for improvement. By utilizing these tools, companies can make data-driven decisions and optimize their strategies for better results. 

In summary, implementing an RGM strategy to achieve sales targets involves setting clear, data-driven goals, aligning promotional strategies, fostering collaboration between teams, and leveraging technology. This structured approach enables companies to focus on high-impact activities that drive revenue growth and achieve their sales objectives. 

“80% of RGM leaders believe they do not have the capability to implement precision RGM, mainly driven by data issues, lack of resources, and skill shortage” – The strategic operating model, strategy&, part of the PwC network

How Visualfabriq supports your RGM strategy 

Visualfabriq plays a pivotal role in supporting and enhancing CPG revenue growth management strategies. By leveraging advanced technology and data-driven insights, Visualfabriq helps consumer goods companies optimize their pricing, promotions, and trade spend to drive sustainable revenue growth. 

One of the ways Visualfabriq supports key levers of RGM is through its comprehensive data analytics capabilities. The platform integrates and harmonizes all internal and external data sources, creating a single source of truth. This holistic view enables commercial leaders and finance teams to gain a complete outlook on their profit and loss (P&L) from both volume and value perspectives. With accurate, AI-enhanced predictions and continuous visibility on performance drivers, companies can make informed decisions that align with their RGM objectives. 

Visualfabriq also excels in implementing robust pricing strategies and optimizing promotions. The software enables companies to set prices that consider expected cost of goods sold (COGS) trends, assortment pricing, and retailer margin potential. This ensures that pricing strategies remain competitive and sustainable, maximizing revenue. One particular strength of Visualfabriq is its ability to ‘optimize as you plan’. The software suggests alternative promotion mechanisms and scenarios, predicting outcomes to help companies make informed decisions. This feature ensures that promotional efforts are aligned with retailer needs and maximize the return on investment.  

Effective trade spend management is another area where Visualfabriq shines. The platform provides tools to monitor and optimize trade spend, ensuring that promotional activities are cost-effective and aligned with overall revenue growth goals. By managing trade spend efficiently, companies can maximize the return on their promotional investments. 

In summary, Visualfabriq empowers CPG companies to implement and execute their RGM strategies effectively. By providing advanced analytics, robust pricing strategies, promotion optimization, and efficient trade spend management, Visualfabriq helps businesses navigate market complexities and achieve their revenue growth objectives. 

Maximizing relationships through data and analytics 

In today’s data-driven world, leveraging analytics is essential for maximizing relationships with retail partners and driving revenue growth. By proactively using data, companies can make informed adjustments to promotions and pricing, ensuring their strategies remain effective and aligned with market dynamics. 

Continuously monitoring sales data, market trends, and shopper behaviors allows businesses to identify opportunities for optimization. This approach enables companies to respond quickly to market changes, keeping their promotions and pricing competitive and effective. 

Predictive analytics also plays a crucial role in guiding retail-specific strategies. By analyzing historical data and identifying patterns, predictive analytics can forecast future trends and behaviors. This enables companies to anticipate market changes and adjust their strategies accordingly. For example, predictive analytics can help identify which products are likely to perform well in specific retail outlets, allowing companies to tailor their marketing and sales efforts to maximize impact. 

Furthermore, predictive analytics can guide retail-specific strategies by providing insights into shopper behaviors and preferences. By leveraging these insights, companies can develop optimized promotional mechanisms that align with retailer needs. This approach ensures that promotional efforts are effective and tailored to the retailer’s context, ultimately driving higher sales and profitability.  

In summary, leveraging data and analytics is essential for maximizing relationships with retail partners and driving revenue growth. By making proactive adjustments in promotions and pricing and using predictive analytics to guide retail-specific strategies, companies can ensure that their efforts are aligned with market dynamics and consumer preferences. 

RGM strategy: key takeaways 

In summary, an aligned revenue growth management strategy is essential for empowering sales teams to achieve profitable growth. By leveraging data-driven insights, optimizing pricing and promotions, and efficiently managing trade spend, companies can ensure that their efforts are focused on high-impact activities that drive long-term revenue and margins. Aligning sales incentives with RGM objectives fosters a culture of accountability and performance. This ensures that every action taken by the sales team contributes to the company’s strategic goals. 

Visualfabriq plays a crucial role in enhancing the effectiveness of an RGM strategy. With its advanced analytics, strategic price setting, trade promotion optimization, efficient trade spend management, and sales account segmentation capabilities, Visualfabriq provides the tools and insights needed to navigate market complexities and achieve revenue growth objectives. By integrating and harmonizing data from various sources, Visualfabriq creates a single source of truth that enables informed decision-making and continuous visibility into performance drivers. 

In conclusion, a well-implemented RGM strategy, supported by Visualfabriq’s innovative solutions, empowers CPG companies to actively shape their commercial future.  

Want to learn more about Visualfabriq’s AI-powered software and how it revolutionizes the world of CPGs? Schedule a personalized demo. 

Five stages of digital transformation in CPG revenue growth management

In this blog post, we’ll discuss digital transformation in CPG revenue growth management and how it evolves based on current technologies. We’ll break this down into several stages that companies typically go through before achieving full maturity.  

Few will disagree that digitalization is a huge topic today. In fact, digital transformation is happening all around us, revolutionizing consumer experience and how we do business across the globe. While it is disrupting entire industries (just think about the evolution of your mobile phone), we hear a lot about the necessity to implement rapid digitalization. Although this may be true, it’s important to realize that digital transformation is a multi-stage journey; not all firms can or should move up the digitalization maturity curve all at once. However, there are substantial benefits to be gained at each stage. This is certainly true in the CPG landscape, which trails other industries in digital transformation (Deloitte, From chaos to insights: Digital transformation trends for CPG). 

As a CPG firm, where are you on your digital transformation journey? 

As CPG companies navigate this multi-stage journey, they typically progress from using basic spreadsheets and standalone tools to adopting more integrated software and advanced analytics, eventually incorporating AI into their operations. This journey not only enhances efficiency and decision-making but also positions companies to thrive in an increasingly competitive market. Understanding the key stages of digital transformation is crucial for mid-senior management in CPG companies, as it provides a roadmap for leveraging technology to drive collaboration, revenue growth and innovation. 

CPG digital transformation, stage 1: Spreadsheets & basic tools 

This initial stage of digital transformation marks a significant step up from manual, paper-based data management. At this stage, companies rely heavily on fragmented tools like spreadsheets and other basic software to manage their data and operations. This approach, while familiar and relatively easy to implement, often results in siloed information and manual processes that can be time-consuming and prone to errors. 

Data is typically stored in multiple locations, making it difficult to get a comprehensive view of the business. Decision-makers may find themselves spending a significant amount of time consolidating data from various sources, which can lead to delays and inaccuracies. Additionally, the lack of integration between different tools can hinder collaboration and efficiency, as teams may struggle to access and share information, and coordinate their efforts effectively. 

Despite these challenges, spreadsheets and basic tools do offer some advantages. They are generally low-cost and accessible, allowing companies to get started with digitalization without a significant upfront investment. For smaller organizations or those just beginning their digital transformation journey, these tools can provide a valuable foundation for more advanced solutions in the future. 

However, as companies grow and their operations become more complex, the limitations of spreadsheets and standalone tools become increasingly apparent. To achieve greater efficiency and accuracy, CPG companies need to move beyond this stage and adopt more integrated and sophisticated solutions. 

Stage 2: Unified solutions 

After the initial stage of relying on spreadsheets and basic tools, the next step in the digital transformation journey is implementing a centralized platform that integrates all data into one system, creating a single source of truth. This stage is crucial for eliminating data silos and ensuring that all departments have access to consistent and accurate information. 

By adopting a unified solution, CPG companies can streamline their data management and improve collaboration across teams. A centralized platform allows for real-time data updates, which means that decision-makers can access the most current information without having to manually consolidate data from multiple sources. This not only saves time but also reduces the risk of errors and inconsistencies. 

Moreover, a unified solution provides a holistic view of the business, enabling companies to make better-informed decisions. With all data integrated into one system, it becomes easier to monitor performance and uncover insights that can drive improvements. For example, marketing teams can better understand consumer behavior, while key account managers are better armed for price and contract negotiations. 

Implementing a centralized platform also sets the stage for more advanced technologies, such as automation and AI. By having a solid foundation of integrated data, companies can more easily adopt and leverage these technologies to further enhance their operations and drive growth. 

Stage 3: Automation & streamlined operations 

With a unified solution in place, CPG companies can begin to streamline their planning and operations, leading to significant efficiency gains. This stage is characterized by the automation of routine tasks and processes, which frees up valuable time and resources for more strategic activities. 

Automation plays a crucial role in this stage by reducing manual intervention and minimizing the risk of human error. For example, tasks such as data entry, order processing, and inventory management can be automated. This allows employees to focus on higher-value tasks that require critical thinking and creativity. It not only improves productivity but also enhances the overall accuracy and reliability of operations. 

Moreover, streamlined operations enable better coordination and collaboration across different departments. With automated workflows and real-time data sharing, teams can work more efficiently and make faster, more informed decisions. This leads to improved alignment and a more agile organization that can quickly respond to market changes and customer demands. 

AI also begins to play a more prominent role in this stage, helping companies achieve faster alignment and more precise planning. Simple AI solutions can be integrated into various processes to provide insights and recommendations, further enhancing operational efficiency. For instance, AI can be used to forecast demand, and identify potential issues before they become critical problems. 

By embracing automation and streamlined operations, CPG companies can achieve a more cohesive and efficient workflow. This sets the stage for even more advanced technologies and strategies in the subsequent stages of their digital transformation journey. 

Stage 4: Optimization with user-friendly analytics and AI 

As the digital transformation journey progresses and the system matures, the focus shifts to optimizing various aspects of the business using user-friendly analytics and AI. This stage is all about leveraging advanced tools to gain deeper insights, improve forecasting accuracy, and make more informed decisions. 

One of the key areas of optimization is trade spend. By using sophisticated analytics, CPG companies can better understand the effectiveness of their trade promotions and allocate resources more efficiently. This involves analyzing historical data, identifying patterns, and predicting the outcomes of different promotional strategies. AI can play a significant role here by providing insights for single events, helping companies to fine-tune their trade spend and maximize ROI.  

Watch our webinar: AI for Promotions: Innovative modeling techniques for effective CPG campaigns 

Forecasting is another critical area where optimization can have a significant impact. With the help of AI and advanced analytics, companies can create more accurate and reliable forecasts. This includes not only predicting demand but also building and evaluating various scenarios to understand potential outcomes. By doing so, companies can better prepare themselves for different market conditions. It also enables them to make proactive decisions to stay ahead of the competition. 

Understanding the real drivers behind performance is also essential at this stage. User-friendly analytics tools can help decision-makers identify the factors that are truly influencing their business outcomes. This could include anything from customer behavior and market trends to internal processes and operational efficiencies. By gaining a clearer understanding of these drivers, companies can make more targeted improvements and drive continuous growth. 

Overall, the optimization stage is about harnessing the power of AI and analytics to enhance decision-making and achieve better business outcomes. By focusing on trade spend, forecasting, and performance drivers, CPG companies can unlock new opportunities for growth and innovation. 

Stage 5: Long-term strategy & AI’s transformative power 

In the final stage of digital transformation, CPG companies fully embrace AI for long-term planning, predictive analytics, and decision-making. This stage represents the culmination of the digital transformation journey. AI now gets deeply integrated into the company’s strategic revenue growth management framework, maximizing the value of their digital initiatives. 

At this stage, AI-powered tools and technologies are used to analyze vast amounts of data, uncovering patterns and trends that inform long-term strategies. Predictive analytics play a crucial role in this process. It enables companies to forecast future market conditions, consumer behaviors, and operational needs with a high degree of accuracy. 

AI also enhances decision-making by providing real-time recommendations and insights. For example, AI algorithms can analyze historical sales data, market trends, and external factors to suggest optimal pricing strategies, product launches, and marketing campaigns. This allows decision-makers to respond quickly to changing market dynamics and capitalize on new opportunities. 

Furthermore, AI-driven long-term strategies help companies optimize their supply chains, reduce costs, and improve overall efficiency. By predicting demand fluctuations and identifying potential disruptions, companies can better manage their inventory, production schedules, and logistics. This not only ensures a smoother operation but also enhances customer satisfaction by meeting demand more effectively. 

Incorporating AI into long-term planning also fosters a culture of continuous improvement and innovation. As AI technologies evolve, companies can continuously refine their strategies and processes, staying ahead of the competition and adapting to new challenges. This ongoing evolution is essential for maintaining a competitive edge in the rapidly changing CPG landscape. 

How Visualfabriq supports CPG firms with digital transformation to boost RGM 

Visualfabriq is a leading solution provider that supports consumer-packaged goods (CPG) firms in their digital transformation journey, specifically aimed at boosting revenue growth management (RGM). Whether your company is currently working with spreadsheets or is already leveraging advanced AI technologies, Visualfabriq’s flexible and modular approach can guide you through each stage of digital transformation. By providing tailored solutions that meet your unique needs, Visualfabriq ensures that you achieve your strategic goals efficiently and effectively, no matter where you are on the digitalization maturity curve.

Journey into AI-enhanced analytics 

One of Visualfabriq’s key strengths is its ability to offer a smooth transition into the world of AI-enhanced analytics. Companies can adopt AI at their own pace, ensuring that they are comfortable with the technology and can fully leverage its benefits. Visualfabriq’s AI tools are user-friendly and intuitive, making it easier for companies to integrate them into their existing workflows. 

Boosting revenue growth management 

By supporting CPG firms through their digital transformation journey, Visualfabriq helps them revolutionize their revenue forecasting and optimization. The company’s award-winning solutions enable data-driven decision-making, enhanced forecasting accuracy, and optimized trade spend, ultimately leading to increased revenue and profitability. In conclusion, Visualfabriq is a trusted partner for CPG firms looking to embark on or advance their digital transformation journey. 

To learn more and see Visualfabriq in action, booking a demo is a great next step.  

Big Data in the CPG industry: Unlocking insights and driving growth

Profit margins of CPG companies are under pressure. Staying competitive, therefore, requires leveraging every available advantage. One of the most significant and promising advancements in recent years is the use of big data. In the CPG industry, the ability to process vast amounts of data from diverse sources is crucial. It allows to generate valuable insights that drive strategic decision-making and operational efficiency. This capability lays the groundwork for advanced analytics and AI applications. More importantly, it also enables the creation of detailed revenue plans that enhance decision-making precision. 

The sheer scale of this data surpasses human processing abilities. This makes advanced tools essential for unlocking insights and driving decision-making. By integrating big data, AI, and analytics, CPG companies are now able to generate more reliable forecasts. They can also simulate and compare multiple scenarios, and make better-informed decisions. This integration is crucial for staying ahead in this fast-paced industry. After all, the ability to quickly adapt to market changes and consumer preferences can make all the difference here. 

The role of big data in revenue growth management (RGM) 

For consumer products manufacturers, revenue growth management (RGM) is all about optimizing trade spend, pricing strategies, demand forecasting, promotions, and product assortment. Big data plays a crucial role in this process by enabling precise analysis and optimization. 

Imagine having access to detailed sales data, market trends, and consumer behavior patterns all in one place. With big data analytics, CPG companies can uncover valuable insights from these large volumes of granular data. For example, by analyzing sales data by product, area, SKU and banner, companies can identify which products and channels are performing well and which ones need adjustments. They can also optimize pricing strategies by understanding how different price points impact sales and profitability. 

Promotions are another area where big data shines. By analyzing past promotion performance and consumer response, consumer goods companies can design more effective promotional campaigns. Additionally, big data provides the facts, numbers, and trends that enable commercial teams to identify the right mix of products to meet consumer demand and maximize revenue. 

Overall, the integration of big data in RGM enables companies to uncover patterns and insights that drive revenue growth, enhance profitability, and improve market positioning. It’s a game-changer for the CPG industry, providing the tools needed to gain an edge in this hypercompetitive market. 

The intersection of AI and big data in CPG 

In the world of consumer-packaged goods, the sheer volume of data generated daily is staggering. Processing this vast amount of data is a challenge for humans, often leading to simplifications and cognitive biases. This is where Artificial Intelligence (AI) comes into play. Because AI technologies can leverage big data to generate actionable insights and drive strategic decisions. 

It is important to realize that AI can analyze sales data, customer feedback, and market trends at a scale and speed that far surpasses human capabilities. This allows companies to create more reliable forecasts, run multiple scenarios to optimize sales results, and free up time from commercial teams to focus on higher-value work. 

By integrating big data and AI, CPGs can unlock the full potential of their data. For example, AI-driven analytics can identify trends that would be impossible for humans to detect, providing a competitive edge in the market. 

In summary, the intersection of AI and big data is transforming the CPG sector by enabling companies to analyze vast amounts of data and get super granular with this data. Above all, this capability allows for reliable predictions of baselines and promotion scenarios, ensuring that all stakeholders have access to high-quality information.  

How Visualfabriq software supports big data in CPG 

Visualfabriq software is designed to handle large data volumes and multiple data sources. This makes it an essential tool for the CPG industry. Its capabilities streamline data gathering, data harmonization, analysis, and visualization, allowing companies to leverage big data effectively. 

One of the key features of Visualfabriq is its ability to enhance demand forecasting. By integrating with frameworks like Bifrost, Visualfabriq can reliably process and analyze big data. The software also supports AI-powered big data analytics, enabling CPG companies to uncover patterns that would be impossible to detect manually. This capability is crucial for reliably predicting baselines and promotion scenarios, leading to more accurate and informed decision-making. 

In summary, Visualfabriq software leverages big data and AI to enhance forecasting and overall business intelligence, making it an invaluable tool for CPG companies looking to stay ahead in a rapidly evolving market. 

Understanding Bifrost: the foundation of advanced analytics 

Bifrost is a powerful framework designed to integrate and analyze big datasets, providing a robust foundation for advanced analytics. Moreover, it transforms the data integration process from a manual, development-controlled activity into a real-time, self-service configuration interface. This transformation not only allows companies to manage their data more efficiently. It also enables them to gain valuable insights without the need for extensive development resources. 

One of the key features of Bifrost is its ability to support detailed revenue planning and other critical business processes. Fully integrated with Visualfabriq software, Bifrost enables companies to process and analyze vast amounts of data in real-time, providing accurate, timely, and actionable insights. 

Bifrost also enhances data management by providing a centralized platform for data integration, storage, and analysis. In addition, it supports various data formats and techniques, making it a versatile tool for handling different types of data. With Bifrost, companies can, therefore, streamline their data workflows, reduce manual intervention, and ensure data consistency and accuracy. 

In summary, Bifrost is a crucial component of advanced analytics. It unlocks big data for analysis, providing CPG companies with the ability to manage vast amounts of information and make smarter decisions. 

Harnessing big data for success in the CPG industry 

Integrating big data, AI, and advanced analytics has become crucial for CPG companies to stay at the top of their game. Scalable SaaS software such as Visualfabriq that comes with embedded AI and big data management capabilities, enables companies to unlock new insights. By leveraging these technologies, CPG companies can improve forecasting and drive profitable revenue growth based on a reliable outlook. 

Interested in seeing how Visualfabriq can transform your big data management and analytics?

Visualfabriq awarded 4 best-in-class category distinctions by POI

Visualfabriq, a global revenue management solutions provider for consumer-packaged goods (CPG) companies, has been recognized as a quadruple best-in-class category distinction recipient in the Enterprise Planning Vendor Panorama published on September 30, 2024, by the Promotion Optimization Institute (POI). 

“We are thrilled to see our deep CPG expertise, commitment to growth, and drive for innovation recognized by POI in this year’s Vendor Panorama,” said Koen Matthijs, CEO at Visualfabriq. “Our team is passionately working to realize our vision of revolutionizing revenue forecasting and optimization in the CPG industry. We equip manufacturers with integrated tools designed to drive revenue growth by unlocking data sources and gaining actionable insights enhanced by AI. This is why we are trusted by global CPG leaders and our partners and are currently ramping up our solutions delivery in North America and other geographies.” 

Visualfabriq’s software suite has been acknowledged by POI in the following best-in-class category distinctions. Below, Visualfabriq describes how their successes have shaped enterprise planning. 

• RGM for Tier 2 & 3 Organizations and/or Other Tier 1 International Geographies: Visualfabriq’s solution supports the key levers of revenue growth management (RGM) to customers ranging from global to local players. It provides tools to tools to leverage on promotion optimization, robust pricing and investment strategies to drive overall revenue optimization. The software is tailored for rapid implementation through its flexible configuration capabilities, ensuring each market can use the software to fit its unique characteristics. 
   

• Enterprise Planning IBP/S&OP Capabilities: Visualfabriq enables teams to collaboratively build plans from the bottom up, feeding into a central enterprise forecast with a full outlook on the P&L, from a volume and value perspective. Sales planning inputs flow into the demand planning, forecasting, and Integrated Business Planning (IBP) process. The software also supports the incorporation of building blocks and assumptions, facilitating the seamless flow of HQ inputs into the sales plan and vice versa. This includes visibility into risks and opportunities. 
   

•  TPx Analytics, Dashboarding & Reporting: Visualfabriq’s analytics, dashboarding, and reporting tools are designed to enable effective decision-making. The software helps users quickly gain insights into the most effective mechanisms and translate these into actionable initiatives, ensuring timely responses. It delivers an exceptional user experience with a cohesive interface that integrates ergonomic and graphical elements. The dashboards are structured for data comprehension at the required level of granularity, highlighting the most relevant KPIs and levers.  
   

• Global Deployment: Visualfabriq has selected world class partners to deploy its software. The solution offers configurability and flexibility, enabling clients to establish a common template of standardized processes across multiple markets. This includes promotion types, workflows, interfaces, and RGM KPIs, while also allowing for local configurations to address specific complexities. 

Furthermore, the independent analysis of POI highlights that Visualfabriq’s “platform’s trade management tools, including price management, promotion simulation, and volume forecasting, are enhanced by AI integration, allowing for both model-driven and manual inputs. This flexibility is crucial for customers to build trust in the system, especially those with limited historical data.”  

Additionally, POI notes underscore “Visualfabriq’s commitment to growth is evident through steady investment in people, products, and partnerships… With solid growth and continual UX enhancements based on client feedback, we expect Visualfabriq to continue to be a strong option for manufacturers.” This is evidenced by Visualfabriq’s recent expansions in the US and other geographies.  

To read more about Visualfabriq’s capabilities, download the Enterprise Planning excerpt for Visualfabriq. 

To access the full POI 2024 Enterprise Planning Vendor Panorama report, click below: 

https://poinstitute.com/membership

Membership includes complimentary passes to upcoming POI events including the POI Fall Hybrid Summit, November 13-15, 2024, having access to the quarterly POI Manufacturer Connect Share Group and much more.  For company/team membership, please contact Joanie Malin  ( [email protected] ).