In one of our recent FMCG Issues videos we discussed the problem of incumbency facing manufacturers in our industry today. Where once, presence on shelf in grocery stores globally was a virtual guarantee of revenue continuity, the competitive environment is changing so fast now, with chronic slow growth, intensifying competition from agile new entrants and discounters/private label and increasingly complex technology that, having a large-scale, established business may well mean inherent rigidities create a kind of straightjacket that can lead to decline if not addressed. Typically, it is supply chain exibility and cost-to-serve that is the albatross – manufacturing and distribution geared solely for larg escale grocery and superstores. The new step-out innovators that are rede ning category performance have no supply chains – it’s all contracted – rendering them very agile and cost effective.

After decades of striving for standardisation and scale advantage, large manufacturers are facing competitive threats from agile locals, from private label and from discounters. At the same time, most of the major retailers are poorly differentiated and struggling to grow in the face of sluggish economic conditions, changing consumer expectations and competition from online and discoun- ters. But they remain powerful and are turning up the heat on manufacturers to prop up their profitability, with threats of SKU rationalisation and increased demands for promo funding and COGS reductions.

In these tough conditions, shareholder activists and Wall Street predators are putting corporate boards under intense pressure to return their companies to pro table growth. Little wonder that so many companies have embarked on revenue management initiatives that challenge their organisations to make sharper choices about how resources are utilised to drive growth. So, revenue growth management or net revenue management (for simplicity here, we will call it RGM) have now entered the common industry lexicon. But what do these terms mean and how are companies using these programmes to ratchet up performance? 

In this paper, we examine how manufacturers are shaping RGM initiatives, what is in scope and how this effort is being organised, resourced and supported. For success, many companies have recognised that this effort extends well beyond the reallocation of trade promotional investment.