Perspectives on revenue management

Over the course of the pandemic, we’ve witnessed a trend among manufacturers as they’ve shifted from planning to reacting, in order to overcome some of the immediate challenges they’ve faced.

Let me give a concrete example: in some cases, we have seen a shift away from investment in understanding and planning pricing and promotion strategies, to deal with urgent issues in supply chain and assortment. 

Clearly it is important to examine and respond to such current issues; and the importance of optimising supply chain and assortment should not be under-estimated. But there is significant risk for manufacturers who put pricing and promotion optimization on hold, or move to a more reactive planning approach.

In a recent joint article with Bain & Company and Advantage, we explained that nearly 60% of all promotions fail to deliver incremental value, and that manufacturers and retailers need to work collaboratively with retailers to grow a joint profit pool — a strategy of incredible importance to not only strengthen your relationship, but to make your relationship mutually beneficial.

Manufacturers need a data-driven plan that demonstrates to their retailers how their brand will help that retailer grow the category. Without this collaboration, they risk losing their seat at the table with the retailer during joint business planning, and potentially also risk the ability to influence how their brand is priced and promoted at the shelf. 

To avoid the pitfalls that many others are experiencing, and especially now during the pandemic, manufacturers need to harness the value of the broadest data relevant to their business – which means thinking about data and analytics in a whole new way. We see ourselves as uniquely positioned with our open technology Connect Platform and our incredibly rich product and store referential data to identify, link and create meaningful outcomes from the most disparate data sources.

To win, manufacturers need to reexamine their current trade promotion plans to maximize their ROI and efficiency.  As the second largest investment manufacturers make, trade promotion plans are also one of the most critical and impactful levers that a manufacturer can pull to influence their revenue and profitability. 

Our proven, predictive data analytics leverage an open platform and machine learning. This allows manufacturers to go straight to the optimal modelled solution and recommended action. So, instead of spending precious people time on sifting through and simulating 1000s of modelled outputs, the system delivers a recommended action.

In short, the algorithm our data scientists have developed will not only predict with a high degree of accuracy the outcome of different promotional and pricing scenarios, it will also help you have confidence that you are driving further sales and profit.

And to thrive, manufacturers need to do this fast. While it’s true that many  manufacturers have had to divert some of their revenue management spending to solve for other immediate issues, this hasn’t been a limiting factor for all. We’ve seen first-hand that quite a few players have successfully refocused their revenue management strategies to gain traction with retailers, while also gaining ROI and market share.  In fact, since the pandemic began, our Intelligent Analytics team has built 23 million models in 29 countries, helping manufacturers maximize their revenue both today and in the future. 

It is time for manufacturers to take the necessary steps to come out of this pandemic as stronger, healthier companies. We at NielsenIQ support you with quality data analytics to help you plan and act now.