Why FMCG brands need Revenue Growth Management

Every morning, Susan starts her day by pouring herself a hot cup of coffee. However, on this particular morning, she sadly realises that she is completely out of coffee.

On her way to work, she stops by the corner shop with the intention to buy herself a coffee, but she quickly adds a few other items that grab her attention into the shopping basket: a pack of breakfast biscuits, a 1-litre bottle of water, and a few chocolate bars for snacking in between meals.

She hadn’t planned on buying these items, but since she was already in the store, she figured she will need them later on during the day, so she impulsively bought them. However, she paid more for them than if she had went to the supermarket the night before.

Susan is just an imaginary person, but we’ve all been in her shoes at some point, impulse buyers or not. Going into a store with the clear intention to only buy one item, yet leaving with a bag full of unplanned groceries, simply because the items were placed conveniently within our reach and because we found ourselves in an immediate consumption occasion.

In the FMCG industry, consumer behaviour changes significantly depending on the consumption occasion. 

As brand loyalty registers a steady decline, more and more people are starting to base their shopping decisions on occasions. They are more likely to switch brands if the occasion asks for it. For instance, Susan is more likely to buy a different brand of coffee and breakfast biscuits from the corner shop when she’s in a hurry and doesn’t have time to run to the supermarket for her weekly grocery shopping.

When they go to the store, shoppers have an occasion in mind. They may want to stock up on food items for a party, buy a few snacks for eating on the go, or get the necessary ingredients to prepare a healthy family dinner. The occasion will determine where they choose to shop, what items they will purchase, and how much money they are prepared to spend. Brands need to be able to leverage the various consumption occasions to their benefit.

 The ability to segment the market and better meet every consumption occasion with a personalised offering is essential for FMCG brands that want to set themselves apart from the competition.

Revenue growth management (RGM) helps companies increase profit and margin by targeting shopping and consumption occasions. Shopping occasions refer to the goals for a particular shopping trip, such as replenishment shopping, speedy fill-ins, or immediate consumption, while consumption occasions refer to the place and time of consumption: breakfast at home, lunch at work, work and study time, leisure time, and so on.

When implementing a consumer-centric approach, a certain brand is linked to a consumption occasion, allowing marketers to tailor their messages to specific occasions and reference groups. For instance, breakfast biscuits are linked to breakfast on the run, while nuts and dried fruit are linked to healthy snacking.

RGM makes it possible to offer certain packs at a selection of stores, adapt your promotions to each type of shopping and consumption occasion, and price your products differently depending on the time and location of the purchase. For instance, you are willing to pay more for a bottle of water at lunchtime during office hours than when you are doing your weekly grocery replenishment shopping.

By developing a deep understanding of consumers, shoppers, consumer occasions, and motivations, you are able to adapt your marketing strategies to various consumption occasions, pairing the right brand with the right packaging and pricing at every point of sale, thus increasing brand value and achieving sustainable growth.