By Srini Rajamani, Wipro
Ltd.
Pricing
products can be challenging in the consumer packaged goods (CPG) industry. Mitigating
pricing enables retailers to maximize profits, but that may not always be the
goal. This is especially true in a world where retailers and CPG companies
depend on each other to find and exploit “win-win” business opportunities out
of competitive necessity.
A
real-life example serves to appreciate competitive necessities. Retailers are
aware that their limited shelf space is the most precious real estate. Retailers
want to stock their shelves with products that yield the highest margins. Inversely,
CPG companies may want to build higher sales volumes to build brand loyalty or quickly
rotate their inventory to prepare for new products. Retailers and their CPG
partners need to find a balance between these diverse needs.
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A
digital world changes this balance. It is a world of endless retail aisles. This
provides online platforms that aggregate CPG products the freedom to let the
CPG partner determine pricing directly.
Amidst
this, one factor remains constant for large and small players alike: regardless
of their sales strategy or business goals, they need to use customer data to
arrive at better pricing decisions. A U.S.-based leader in the proprietary coffee
machines and coffee pods segment is revolutionizing how CPG companies are using
data for pricing products and improving relations with retail partners. Every
coffee machine generates data, helping the company develop customer
profiles, understand product usage patterns and track changes in taste and
brewing styles. These insights provide accurate guidance in pricing services
and products. The information is shared with retail partners who can use the
information to improve sales. It is a win-win situation for the manufacturer
and its retail partners.
Today,
it has become easier to identify, acquire and connect transactional and
behavioral data. Chances are the data is already being used by sales and
marketing teams to drive customer engagement. In reality, the data can also be
used to derive better pricing decisions in conjunction with pricing models and
frameworks.
The
ability of large CPG companies to act with the down-to-earth sensibilities of a
corner store is possible when data and analytics are moved to the center of
operations. Data and analytics allow large companies to provide
direct-to-consumer promotions over mobile devices, making the interaction warm,
personal and immediate. This is more easily said than done, especially in
tradition-bound CPG companies that have honed their pricing based on sourcing, manufacturing
efficiency, product demand, periodic surveys, customer feedback and market
conditions.
The
solution lies in making the case for senior executive sponsorship of data and
analytics. When senior leadership appreciates, initiates and encourages the use
of data and analytics, only then can it become the cornerstone of modern
pricing.
Srini Rajamani is Vice President & Global Head for Consumer
Packaged Goods Industries (CPG) at Wipro,
with end-to-end P&L responsibility including Delivery, Sales, Solutions,
and New Markets. This includes Food, Beverage, Retail Apparel &
Footwear, Home and Personal Care, Agriculture, and Tobacco industries across
all service lines in Wipro. Prior to taking
over this role, Rajamani was responsible for incubating and growing some of
Wipro’s largest accounts in the Financial Services space — including leading
the P&L of one of Wipro’s largest banking accounts. He has presented in
several industry forums on topics such as cognitive AI and its applicability in
critical business functions, and has also presented at Wipro strategy events on
new digital technologies and how it is transforming the service provider
market.
