September 12, 2017
Making Marketing Expenditures More Effective at Growing Revenues
By: Rob Friedman

Over the past decade, several trends have combined that have made it increasingly difficult for consumer products companies to grow their revenues. A period of low inflation was initially dealt with by maintaining unit prices while reducing package volumes in a way that wasn’t readily apparent, thereby raising prices per pound and ultimately revenues. As inflation, however, has remained low for more than a decade, package sizes can be reduced only so far without lowering the actual price, so revenue growth is now largely possible only by increasing existing products’ unit volumes and prices or by creating new products that generate new revenues.

In addition, the Internet has provided prospective customers greater pricing transparency so they can easily identify competitive alternatives and their price without moving away from the keyboard or, more recently, the phone. This increased pricing transparency has put pressure directly on retailers and indirectly on manufacturers to offer more cost-effective products, thereby further limiting the ability of companies to achieve pricing increases with related revenue gains.

Also, while a small segment of society has seen significant income growth, most consumers have not, increasing their concern about getting the best deal. Spending has increased for the wealthy minority, but for consumer goods companies, which sell to the mass market, spending is stagnant at best.

In this difficult environment, managers and executives continue to evaluate largely based on revenue and profit growth. Fortunately, there are some new, less risky growth alternatives than simply buying up competitors through acquisitions or launching multiple new products, many of which are likely to fail.

To achieve these growth opportunities while limiting the risk, a manager can know how to focus on several areas:

  • Setting effective pricing strategy and tactics

  • Providing customers with new, high-value packaging alternatives that create revenue and profit growth opportunities

  • Focusing marketing dollars on promotions that are most effective at generating revenue

  • Maximizing the value of trade promotions designed to enhance product sales at the final retailer

How have these tactics been used historically to spur growth? Should some specific campaigns be expanded while others are reduced or eliminated? What analytics can be performed to optimize their usage in the short term? What is the appropriate measure of success or failure? How can these programs be continuously reevaluated and refined going forward? The Accenture Academy courses Creating a Competitive Pricing Approach, Overview of Price Pack Architecture (PPA) Implementation, Improving Marketing Mix Decisions, and Optimizing Trade Promotion Spending provide an understanding of four important marketing-related initiatives that can help enhance revenues and describe how to implement them.

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