Consumer packaged goods (CPG) companies are continuously looking for sustainable growth to thrive in the highly competitive global marketplace which is being constantly disrupted by nimble online competitors. Faced with a plethora of choices, consumers in this industry are quick to shift their brand loyalty, impacting overall profitability of businesses. In such an industry, pricing agility is one of the key tools that can be used to gain a competitive edge over competitors. With various factors affecting the bottom line of a CPG brand, it can be difficult to determine the best way to price the products so that it drives profit and customer loyalty. A multinational CPG company was faced with this very issue and approached Quantzig to derive a price elasticity model for their products in the European market to enable them to increase their profit margins.
The client is a British multinational consumer packaged goods player headquartered in London. They are one of the world’s largest processors and sellers of chicken, poultry products, and meat and are the largest exporters of meat to Europe.
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Gathering and analyzing data on how the market responds to price changes enables businesses to understand whether increasing/lowering prices of their products and/or services will enable them to achieve their business objectives. The client wanted to understand their consumers’ reaction to price changes so as to be able to –
- Set optimum prices for their products taking into account the shift in demand
- Forecast sales
The other key challenge that the client was facing included –
With the European CPG market witnessing a steep surge in the number of competitors, the client wanted to use a new approach to place their products in the market so as to be able to drive product habit formations to gain loyal customers and a competitive edge over their competitors.
Quantzig’s pricing analytics experts addressed the CPG company’s concerns by deriving a price elasticity model to draw insights on price recommendations for their products in the European market, enabling the client to identify pricing opportunities and fix pricing misalignments to gain additional revenue. This model also enabled the client to create and execute marketing strategies to promote specific products, which resulted in maximized profits and increased market share for the British CPG giant.
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Quantzig’s experts were able to create a pricing strategy that took into account the various product that the client has, the demand of the products, the market in which the products need to be sold, and its competitive landscape, to drive profitability. The major business outcomes of this CPG price elasticity collaboration were –
- Increase in overall sales by 14% in a span of one year
- Optimum product pricing based on demand, market, and competition
- Savings of over €100,000 as a result of the revamped pricing strategy in a span of one year
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