Unlocking Pricing and Promotion Innovation for Today's New Consumer
Given all of today’s retail disruption, predicting the right price has become more like a game of The Price is Right. But for consumer goods companies, preserving their margins is hardly a game.
Learn how consumer goods companies are making pricing decisions — when relying upon historical data and behavior patterns is no longer a sure bet — and what the future of pricing and promotion innovation might look like.
Robert Molnar, director, predictive retail and CPG at WorldQuant Predictive, sat down with Lisa Johnston, senior editor at CGT, to discuss some of the ways companies are making these decisions after experiencing a period of prolonged disruption.
Today’s state of pricing management is still reeling from when consumer behavior shifts were simply off the charts, Molnar notes, while increased P&L pressure, primarily from rising input costs, are also complicating matters. Throw consumers’ shifting views on loyalty into the mix, and more companies are trying to find a new baseline.
It’s a question that’s top of mind for many revenue growth professionals, and becoming more analytics driven in all areas of the business is key for success, he notes. Given all of the disruption, even the conventional use of data is no longer appropriate, and so leveraging prescriptive analytics is one way consumer goods companies are setting themselves apart.
The maturity stages of predictive and prescriptive analytics vary across the industry and are often highly correlated with the size of the company; however, outliers do exist, and even those further along their journeys can still have huge gaps in usage. What’s more, the “laggards” can often reap the benefits of learning from the missteps of the larger players, earning themselves a steeper trajectory toward success.
In looking at the future of pricing and promotion innovation, Molnar points to what he describes as “interactive prescriptive analytics.” This technology is able to not only predict how certain KPIs will shape up and how category demand will behave, but also inform end users about how to optimize their KPIs and prescribe the best lever.
He also sees the adoption of third-party data as playing a key role in consumer goods pricing management moving forward, as well as the blurring of lines between first-party and third-party data.
Watch the video for the full conversation, including a breakdown of the different benefits when it comes to both predictive and prescriptive analytics; more predictions about the future of pricing and promotion management; and best practices for those with some heavy lifting to do.
