Definitions and Concepts

Revenue Growth Management (RGM) - in Europe also called Net Revenue Management (NRM) - is a strategic approach used in the Consumer Goods industry to maximize revenue and profit. The methodology is centered on understanding shopper and trade behaviour with respect to value and pricing, then leveraging these insights to drive growth.

Core concepts of RGM

Channel Strategy
Understand which channels (e.g., supermarkets, online retailers, convenience stores) are most effective for reaching targeted consumer segments and focus on optimizing distribution and promotions for each.

Consumer Segmentation
Understand different consumer groups, their behaviors, needs, and willingness to pay. This segmentation can be based on demographics, purchase behavior, or other relevant factors.

Cost Management
Keep a close eye on costs across the supply chain to ensure that pricing decisions and revenue growth don't lead to squeezed margins.

Data Analytics and Forecasting
Use advanced analytics to forecast sales, understand market trends, and predict consumer behavior. The goal is to be proactive rather than reactive. 

Dynamic Pricing
Adopt flexible pricing strategies that respond to real-time market conditions, such as demand fluctuations, competitor moves, or seasonal trends. 

New Product Development
Introduce new products or product variants based on the insights derived from RGM analyses. Ensure that these innovations address gaps in the market or cater to emerging consumer needs. 

Lifecycle management
Understand the lifecycle stages of products (introduction, growth, maturity, decline) and implement strategies tailored to each stage to maximize revenue. 

Pack Price Architecture
Design the packaging and pricing structures in a way that maximizes revenue. This can include considering different pack sizes, price points, or even packaging designs based on the target market.

Price Elasticity
Study how demand for a product changes in response to changes in its price. In other words, how much will sales increase or decrease if the price is raised or lowered?

Product Mix Optimization
Determine the right mix of products to offer to different consumer segments. This can involve considering various pack sizes, flavors, or product variants.

Promotion Effectiveness
Evaluate which promotions drive incremental sales and profit. Not all promotions are equal; some might lead to temporary spikes in sales without long-term benefits, while others can foster customer loyalty.

Trade Spend Optimization
Assess the effectiveness of trade spend, i.e. all margins, discounts, conditions agreed with a retailer. Ensure that it is channeled in the most productive ways. This often involves negotiating conditions and discounts in return for listings, shelf space, promotional activities, and other in-store marketing efforts with retailers.

Advanced concepts

Decomposition Analysis
Breaking down historical sales data to understand the various components (like base sales, promotional uplift, seasonality) that contributed to sales, which can guide future RGM strategies.

Source of Business®
Analysis of where business results - often sales - are originating from. For instance, sales of a newly introduced product often originate from existing products selling less. An advanced form of decomposition analysis. This source of business concept is originally pioneered by Accuris.

Digital Shelf Analytics
Especially relevant for e-commerce, this involves monitoring and optimizing how products are presented online – from search ranking to reviews and ratings.

Geo-Analytics
Analyzing sales and consumer behaviors at a regional or store level to develop localized pricing and promotional strategies.

Neural Networks and Deep Learning
For complex datasets, neural networks (a subset of AI) can identify patterns and make predictions for RGM scenarios that might be too intricate for traditional models.

Omnichannel Analytics
Understanding and optimizing the consumer journey across multiple touchpoints – online, offline, mobile, etc. – to ensure consistent and effective pricing and promotional strategies.

Numeric Distribution
Measure of availability (of a product, a promotion) in stores using the number of stores where there is availability vs. the total number of stores.

Weighted Distribution
Measure of availability (of a product, a promotion) in stores using the number of stores weighted for their importance in terms of overall sales

Personalized Pricing
Offering tailored pricing to individual consumers based on their purchase history, online behavior, and predicted willingness to pay.

Predictive Analytics
Using machine learning and statistical models to forecast future sales, consumer behaviors, and market dynamics, enabling proactive decision-making.

Scenario Planning and Simulation
Using tools that allow managers to simulate the impact of different pricing, promotional, or product mix scenarios on revenue and profitability.

Sentiment Analysis
Analyzing consumer sentiment from online reviews, social media mentions, and other digital interactions to make informed pricing, promotional, and product decisions.

Trade Promotion Optimization (TPO)
Using advanced analytics to predict the most effective promotional activities with retailers, considering factors like timing, promotional type, and product combinations.