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Higher margins and more effective promotions
A brand had been heavily discounted over a number of years; we were asked to review the current position and the options for the future.
Approach
Our first job was to review the history identifying the frequency and length of promotions and how they were being funded. We reviewed consumer measures, including how they were being impacted by pricing, the levels of promotions and exactly what volume was purchased at specific prices.
Outcome
The business had never looked at the history in detail and were surprised by how much additional promotional spend by the brand owner, had occurred over the previous few years. Initially this had been mainly funded by the customer but increasingly the business was funding it, leading to a significant decrease in margins. If this continued the negative impact on margins and profitability would be high, so a different approach was developed that would be margin enhancing.
Understanding the history of pricing, margins and promotions can highlight what to do and what not to do in the future.
