casestudy1imgLeading Beverage Distributor Quenches Thirst for Profits

LOCATION: Morocco

When a leading global beverage distributor faced a significant decline in profits, despite an increase in products and marketing, Middlegame used CIA® proprietary software, strategic insights and proven analytics to evaluate product assortment and, ultimately, help increase profits.

1 Situation Review


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SITUATION REVIEW

Product Assortment: When Is Too Many Too Much?

For two years, this leading beverage distributor had increased the number of SKUs it was offering in Morocco by 10.3%. But unlike the company’s proprietary carbonated concoction, unit sales remained flat. While product choices had expanded, the beverage distributor was facing a 3.3% increase in out-of-stock products. In addition, overall sales volume showed only a slight gain of 0.9 percent, despite significant increases in marketing.

2 Opportunity Assessment


Middlegame offers enterprise-wide solutions that simultaneously address the business issues of the marketing department, finance, sales force and operations team.

Middlegame offers enterprise-wide solutions that simultaneously address the business issues of the marketing department, finance, sales force and operations team.

OPPORTUNITY ASSESSMENT

Sizing Up the Best Opportunities

The commercial and operations team generated a number of channel-specific scenarios, all of which reallocated marketing efforts and investment in stock from products that failed to meet the threshold to those that were successful. The completed analysis demonstrated that the client did not need to make additional investment in stock. In fact, shoppers were better able to make purchasing decisions when retailers maintained variety but reduced redundancy. Using the analytics, retailers were able to invest at the same level with a more informed approach.

3 Scenario Definition


Middlegame evaluates the business challenge from multiple dimensions to strategically evaluate options and predict all possible outcomes.

Middlegame evaluates the business challenge from multiple dimensions to strategically evaluate options and predict all possible outcomes.

SCENARIO DEFINITION

Analyzing the Flow from Product to Profits

Middlegame experts used the CIA® modelling engine to evaluate how each SKU or type and size of beverage container contributed incrementally to the portfolio, based on unit case volume and gross profit. Results revealed that multiple SKUs failed to meet the finance team’s acceptable threshold for ROI. These under-performing products were draining much-needed resources from the SKUs that did exceed the established financial criteria.

4 Expectation Analysis


Middlegame offers an expertise in scenario planning and predictive planning with a holistic view of the implications of resource allocation and investment in today’s and tomorrow’s marketplace.

Middlegame offers an expertise in scenario planning and predictive planning with a holistic view of the implications of resource allocation and investment in today’s and tomorrow’s marketplace.

EXPECTATION ANALYSIS

The Right Formula for Success

Middlegame’s strategic data and analysis predicted that by modifying product assortment, the beverage distributor would experience a 5.8% increase in volume or unit cases and +3.2 % in gross profit for the brand. At the same time, the new allocation of resources would strengthen the company’s overall portfolio with a net impact of +2.4% in gross profit.

5 Client Actions


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CLIENT ACTIONS

Refreshing Insights. Rewarding Profits.

The beverage distributor’s senior management accepted recommendations to trim current product offerings and the commercial team performed a controlled test within a series of stores. The volume response in the testing paralleled Middlegame’s predictions, while profit gains greatly surpassed forecasts, paving the way for a national rollout of a SKU rationalization program.