Pricing conundrums in Spain
Who was our client?
Based in the US, our client has 85 leading
brands, many of which are the biggest in
their category across the world.
Why did they get in touch?
The business was losing money on three key brands in Spain due to low and inconsistent pricing. This was the result of:
- Prices being set by local and regional account managers, leading to huge variations between customers.
- The profit pool was skewed in favour of the retailers who were sometimes making the majority of the margin.
- There were too many price files to maintain due to the number of direct customers.
With the Spanish market in recession, increasing prices wasn’t an option. We needed to find other ways to make the business more profitable.
The Acumen answer
Our consultants used our app, Acumen Radar™, to paint a clear picture of the retail/list price relationships, trade terms structures and SKU profitability, identifying where they were exposed.
With this information, we could set about defining the right solution.
We simplified pricing by:
- Adopting clear pricing principles
- Introducing common discount buckets
- Re-establishing the relationship between RSP and list price
- Rebalancing margin levels across SKUs, while taking care not to damage the relationship with their customers.
We simplified the whole pricing process:
- Introducing a minimum order quantity for direct customers.
- Introducing standardised logistics terms to reward efficient practices.
More profitable pricing
Thanks to our work, our clientsaved over €1m by stopping unprofitable promotions
They increased baseline sales and made more profit on key SKUs by running fewer promotions
And we simplified the business by re-routing smaller customers through third party wholesalers