2016 Ten Revenue Growth Ideas

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Cassandra Booker
6 years ago
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1 Ten Revenue Growth Ideas for 2016

2 2016 Ten Revenue Growth Ideas Thoughts to Spur Growth this Year Our Industry is at a crossroads. The simplest way to define it is companies either get busy growing, or risk being rolled up within financial groups. At the Seurat Group, we believe in real revenue growth in CPG. We see pockets across categories every day and are passionate about working with our clients to unlock it. Unlocking that growth often requires rethinking ways of doing business and adapting quickly to new models. In line with our passion, we publish our annual Ten Revenue Growth Ideas as we work to answer the defining question facing our industry today Where s the Growth? The ability to fuel revenue growth remains a priceless commodity in an environment where price is difficult to take, organic growth is at a premium and demand generation and capture is tremendously fragmented. We are pleased to share our 2016 installment of Ten Revenue Growth Ideas. You will see a continuum of Ideas that are closer in, while others require the strength of conviction, agility and internal collaboration to overcome misalignment that often holds companies back. All Ideas have one thing in common attainable, proven vehicles for Revenue Growth. The Seurat Group s Ten Revenue Growth Ideas for Define the Consumer s Frame of Reference for Your Category 2. Blanket Demand 3. Instill the Capability to Lower Gross to Net Sales Gap 4. Expand Your Competitive Set 5. Leverage Over-Investment of Online Against Offline 6. Continuous Insight Fuels Continuous Improvement 7. Redefine Category Value in the Value Channel 8. Aisle Redesign Capability 9. Smart Mainstreaming 10. Go Small today or Pay a Premium for Growth tomorrow All of us at the Seurat Group wish you the best this year as you get busy growing, and would be pleased to discuss any of the following Ideas that can help you accomplish that goal.

3 The Seurat Group s Ten Revenue Growth Ideas for 2016: 1. Define the Consumer s Frame of Reference for Your Category. The opposite of category management a definition based on the SKUs carried in the planogram today is reframing the category s potential in terms of consumer needs served by the products in the category. This is proven to lead to breakthrough revenue growth by expanding the frame of reference for the category to include needs that are not being well served today and redefining where segments of the category can play. The approach enables brands to re-wire their strategies to win versus choices consumers are making outside of the traditionally defined category. An important outcome is the ability to compete for an expanded share of consumer needs vs. being constrained to battle for market share within a category. For example, the retail coffee category has driven significant dollar growth for years by redefining where to play (with away from home café options) and how to win (with compelling on demand options). Manufacturers that do this well are able to plan their brands to the best future vision of their categories, using their brands and innovation to close the gaps between today s category and tomorrow s potential. 2. Blanket Demand. We urge our clients to not limit targeting opportunities, but to participate as broadly as possible to fulfill potential within a category. It is a change in mindset from winning with a tightly defined brand target to covering multiple consumer swim lanes within a category, blanketing demand with multiple offers of a portfolio of brands. For example, Hormel s acquisition of Applegate enabled the company to aggressively blanket demand within the packaged meat case across swim lanes that ranged from mainstream to naturally inclined to dedicated organic. 3. Instill the Capability to Lower Gross to Net Sales Gap. Trade promotion still represents the lion s share of the marketing mix, increasing faster than revenue at most companies and causing a distressing spread in the gap between Gross to Net Sales. Until you can disintermediate the retailer from your commercial relationship with your consumers (not realistic for most), the next best thing is to instill the capability to lower Gross to Net by increasing trade effectiveness and accelerating topline growth. Best practice is an annual Trade promotion plan, grounded in the quantification of four sources of Trade return: (1) impact on the base business, (2) optimization of the promotion mix, (3) shift of investment to winning products and retailers, and (4) reduction of non-working investment. Understanding each driver and related size of the prize provides the insight to fuel multiple levers that form a trade productivity loop that requires lower trade investment to drive increased sales. 4. Expand Your Competitive Set. As mentioned earlier, don t be defined by the category definition in your syndicated database. Think as broadly as you have consumer permission to do so about your competitive set. The shopper s consideration set is typically much broader and provides inspiration for identifying white space and messaging. This is a strategy for growth for many Challenger brands. As KIND founder Daniel Lubetsky noted, for someone choosing an apple or yogurt, KIND is an acceptable substitute for that occasion, too. By moving beyond the common approach of asking consumers to react to today s category, this approach allows manufacturers to disrupt category convention before emerging brands do.

4 5. Leverage Over-Investment of Online Against Offline. What would a Top 10 revenue generation list be without ecommerce? While there is no doubt ecommerce is the most disruptive force in our industry and where most clients will disproportionally invest, the real revenue opportunity near-term is to leverage online investment to fuel offline sales. With the explosion in ways to connect with, and purchase, products, the path to purchase is more difficult to follow as the lines between consumer and shopper blur. In order to build relevant insight, research should be omni-channel in scope to understand the consumer/shopper connection across all channels, including talking to them in authentic ways online. One beauty care company that has embraced the realities of an omni-channel world launches innovation online first and then successfully uses online performance insight to persuade retail customers to embrace the innovation prominently in the POG and in the Ad. 6. Continuous Insight Fuels Continuous Improvement. Engage in ongoing conversations with your most engaged or early adopter consumers, in order to harness new, real time insights for quick reaction and brand growth. Be with your consumers and shoppers to understand their motivations, desires and preferences in every way as they interact with or are inspired by your products across platforms (social media, research communities, video diaries, geo-fenced mobile surveys, etc.). Use these new insights to create the products your consumers want and messaging they will respond to in order to drive demand generation. Successful smaller brands do this out of necessity and are increasingly threatening larger brands who aren t as nimble. Julep, an emerging Beauty care brand, has enjoyed great revenue growth by embracing this approach. As their founder says, we re not telling customers what they want. We re responding to what they want. 7. Redefine Category Value in the Value Channel. This channel is large, growing and on trend, and still relatively untapped by many manufacturers. There are more Dollar stores nationwide than Drugstores. Dollar General s same store sales increased nearly 3% and they added 700 stores alone in Trends such as lower gas prices, increased government safetynet program spending and an aging population highlight the considerable growth potential. Importantly, this growth does not have to occur with price points between $1-$4. For example, Starbucks is leading the way with premium equity expansion behind a permanent, branded end cap of shelf stable drinks. The cough and cold category has 30% of its assortment above $10 because it is more expensive for consumers to miss a day of work, and P&G uses its premium PODS innovation to provide better value to consumers who prefer this form at the laundry mat over the inconvenience of taking a large bottle or buying an expensive single load pack. 8. Aisle Redesign Capability. Retail is the #1 marketing medium, increasingly valuable in a fragmented consumer marketing environment. We mentioned earlier the importance of having a future vision for the category to lead brand planning. To capitalize on this vision, ensure you have the capability to bring a compelling category vision to life in the aisle and work in partnership with retail partners on the merchandising design of the future. Gillette did this successfully when it went from a Shaving business for both genders to a separate Male and Female grooming business with distinct shelf merchandising strategies that allowed it to increase space and consumer engagement at shelf. The Man Cave is a shelf vision that has slowly come to life in a handful of banners, but striving for this vision brought more change to retail than would have been possible without it.

5 9. Smart Mainstreaming. Building brands and product offerings in retail environments that most authentically connect with target consumers is a leading driver of revenue growth. It s also about using each channel to play a strategic and coordinated role to scale to a Mainstream audience, while holding true to your brand s identify and core consumer in its incubator channels. Smart Mainstreaming is an essential go-to market philosophy for marketers that embrace the liberalized marketplace for an array of choices that consumers prefer to discover in their outlet of choice. As an example, Clif Bar is over-investing at incubator channels like Bike Stores while cascading innovation and building the word of mouth needed to make it one of the largest snack bar brands in Walmart. 10. Go Small Today or Pay a Premium for Growth Tomorrow. Millennial consumers are choosing brands that are a reflection of their values, and are less influenced by traditional, big brand building levers. Many manufacturers are missing out on future growth pockets because of strategic misalignment to the need to go small, despite the majority of industry growth coming from emerging Challenger Brands. Creating a separate hub for accelerating emerging brands, unencumbered by traditional big brand financial expectations and the culture of Big CPG is an effective strategy for bringing innovation to market and tapping into incremental demand. About us: As a data-driven consultancy, Seurat Group merges a multitude of data sources to turn conventional wisdom on its head and unlock unique insights essential to inspire growth ideas that help clients sell more, more profitably, in more places, to more people. We pride ourselves on being a partner that can generate Big Ideas, arm our clients to connect those Ideas to overcome internal misalignment, and adapt and change to realize real revenue growth. To find out more, please visit our website: Contact us at: info@seuratgroup.com (203) Connecticut Office: 41 North Main Street, Norwalk CT New York Office: 560 Lexington Ave, 10 th Floor, New York, NY For more information about Seurat group visit SeuratGroup.com

Our History in Industry Research

Our History in Industry Research Who We Are Cadent Consulting Group, established by the founders and senior leadership team from Cannondale Associates and Kantar Retail, is a marketing and sales management consulting firm serving the