A recent report by McKinsey and Nielsen highlights how FMCG companies could drive winning performances. It is an excellent analysis of top management practices within North American companies and is worth at least skimming through. Overall, the document compares what they have explained as “winning organizations” in FMCG versus the rest of the companies. Several criteria defined the winners. The most notable were sales growth and the response rate to various marketing efforts aligned with our typical assortment, pricing and merchandising initiatives.
After analysing the key practices of the winners, McKinsey and Nielsen identify five imperatives for the sales growth and the responsiveness. This allowed the winners to identify areas where investment has the best potential to widen the gap versus competitors and drive value forward. All five are very important, but we want to focus this blog entry to the third point McKinsey and Nielsen make: Take a data-driven approach to Revenue Growth Management (RGM).
RGM is an important concept that we addressed in a previous blog. Their analysis reveals that RGM is a lot of what Middlegame talks about. To us, RGM is more than a buzzword. It integrates the capabilities to evaluate assortment, pricing and merchandising in order to “make holistic margin management decisions across these three levers.” They further explain that getting RGM right can mean immediate margin expansion of 2 to 5%. Sophisticated analytics are at the center of these outcomes.
Here are some of their findings about the winners that align well with what we do at Middlegame:
Like Middlegame professes, McKinsey and Nielsen point out that best-in-class RGM organizations optimize their assortment and then set pricing and merchandising plans. The key is that all three of these are interconnected. Since assortment is dependent on managing price tiers, then we can’t evaluate assortment without pricing. Since so much merchandising is based on price promotions, we can’t evaluate merchandising without pricing. Therefore, we can’t evaluate assortment with merchandising. That is our complete philosophy.
We hope you enjoy all five points that McKinsey and Nielsen outline and can see exactly where Middlegame fits in with winner companies.
Middlegame is the only ROMI consultancy of its kind that offers a holistic view of the implications of resource allocation and investment in the marketplace. Our approach to scenario-planning differs from other marketing analytics providers by addressing the anticipated outcome for every SKU (your portfolio and your competitors’) in every channel. Similar to the pieces in chess, each stakeholder can now evaluate the trade-offs of potential choices and collectively apply them to create win-win results.