CPG manufacturers are losing the influence they once had over a critical component of their brand image and value proposition: the price shoppers pay for their products. As many large retailers grow their own pricing capabilities, compliance to manufacturer suggested prices continues to erode. Unfortunately, if price isn’t used strategically, it can lead to isolated goals and inconsistent price positions among major brands.
Happily, many of these same retailers recognize the value manufacturers can bring, providing insights into how categories are performing and developing outside of their four walls. Taking advantage of manufacturers’ expertise can translate to significant rewards for the retailer. A 1 percent improvement in price realization at a manufacturer or retailer can deliver $10 million in increased profits for every $1 billion of annual sales, far surpassing the impact of a 1 percent improvement in COGS, merchandising and other costs.
This report, “Drive Margin Growth of 1 to 3 Percent with Collaborative Pricing Strategies,” explores the multiple challenges facing manufacturers with pricing and how they can become trusted advisors to their retailer partners, bringing more value to retailers while also achieving their own margin goals.
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