5 Consumer Goods Companies Harnessing Next-Gen RGM
It might sound obvious: To succeed, CPGs need to understand what consumers want. The reality, however, is anything but straightforward.
“CPG companies are facing pressures from digital commerce growth, shifting consumer expectations, and supply chain disruptions,” Shankar Viswanathan, chief commercial officer at Sigmoid, told CGT. With only a quarter of them balancing growth and margin expansion, leveraging data and AI is essential for unlocking long-term value, he added.
Pair this with juggling inflation, excess inventory, and balancing discounts and promotions, and companies have their work cut out for them when it comes to meeting goals. RGM technologies can help narrow the scope and enable companies to tailor their product portfolios to better match consumer demand.
Maintaining success in this area is table stakes for CPG leaders. According to the 2024 Sales & Marketing report, revenue growth remained the No. 1 KPI, with 71% choosing this response both this year and last year.
Here’s a closer look at five CPGs successfully harnessing RGM to stay ahead of the curve and hit a bullseye (almost) every time.
1. Kimberly-Clark
Even the largest and most experienced CPGs are being forced to regroup in a world that no longer follows traditional revenue generation rules. Personal care giant Kimberly-Clark recently announced plans to “rewire for growth” in a way that places costs, pricing, and margin squarely at the center.
Kimberly-Clark plans to establish a culture of holistic, integrated margin management, improving end-to-end visibility and moving away from working in silos. The foundation for this, the company said, is RGM.
“It starts with revenue growth management strategies. It follows on to risk management strategies on commodities and costs, as well as maintaining very strong discipline on costs across the enterprise — all at the service of driving higher gross productivity and higher margins," said CFO Nelson Urdaneta at a recent investors' conference. “Integrated margin management is not new for the world, but it is new to us.”
When it comes to quickly evolving technologies, having the right team is key. “A strong people strategy ensures alignment with RGM goals in times of economic change. Upskilling teams in RGM principles and promoting cross-functional collaboration can break down silos and enable faster execution,” said Buynomics’ founder and managing director Ingo Reinhardt.
2. Unilever
Excess and aging inventory is a time-old problem for CPGs and one of the major reasons for falling short of targets. Unilever is using a digital discounting and pricing intelligence platform to redirect discontinued products and other excess inventory to value-chain retailers.
In just ten months, the company achieved improved sales by streamlining the discount process and expediting market entry for slow-moving inventory, resulting in extended shelf life and improved cycle times across five parts of Unilever’s business: grocery, food service, professional, international, and discount channels.
3. Kraft-Heinz
To understand and respond to evolving consumer demands, said Sunny Yurasek, VP of client development NA at Decision Point Analytics, CPGs must implement a comprehensive strategy that integrates consumer insights into pricing, assortment, and product mix decisions.
“This requires moving beyond traditional pricing models to focus on shopper-centric planning, where every decision aligns with changing consumer preferences and behaviors,” Yurasek added.
Kraft Heinz has centered efforts around this approach, expanding its share of shelf and optimizing product mix with the help of a strategically-designed RGM roadmap. By upping its use of digital tools and AI, the company said it has achieved a 5% compound annual growth rate (CAGR) improvement in promotional ROI since 2019.
The company’s proprietary trade management system also churns out real-time data and recommendations to improve promotion effectiveness, allowing it to finesse product mixes to specific retail locations and regions.
More recently, this strategy has seen a real-life application in the company’s collaboration with Dollar General, with the investment in rapid data-sharing tools that allow the company to quickly provide retail partners with information on the exact type of environment shoppers want to shop in.
“We can then deploy our products directly, not just to their warehouse, but to the actual stores that they may need the product [in],” said Kraft Heinz CEO Carlos Abrams-Rivera during a recent conference call. “We can also better understand, based on what consumer patterns are doing, when in the month they need different types of products.”
As a result, Kraft Heinz's distribution with Dollar General has grown about 10% compared to last year, the company said.
Also read: Circana Finds Rising Price Sensitivity and E-Commerce Growth are Reshaping Retail
4. Colgate-Palmolive
Artificial intelligence is taking hold of pricing strategies as top CPGs strive to get the maximum impact from their investments and ensure promotion bets pay off.
Unsurprisingly, a lot of this comes down to the data, which both hastens processes and exposes the shortcomings of legacy technologies. In short, the pressure is on to make things work — and fast.
“The shift toward data-driven decision-making has highlighted the inadequacies of traditional methods and static tools. Meanwhile, increasing competition from both CPG brands and private labels pushes businesses to adopt more sophisticated, data-informed approaches,” said Reinhardt
Colgate-Palmolive is brushing up its revenue growth management practices in this way, using AI to score masses of digital content and identify optimal promotional calendars, improving deployment confidence and scaling back on more labor-intensive processes — including too much time spent on too many spreadsheets.
At its heart, RGM is about making informed predictions that benefit the bottom line. Colgate-Palmolive has been employing machine learning and prescriptive analytics to run billions of scenarios, optimizing efforts and achieving strong results with a major retailer. “As we perfect that model, we will roll it out to more retailers in more geographies around the world,” said Colgate-Palmolive CEO Noel Wallace on a recent investor’s call.
5. PepsiCo
As consumer preferences continue to shift and focus on value, PepsiCo is tapping technology to better meet their needs and compete with lower-priced options from private label offerings.
“Private labels are gaining momentum, capturing 25.5% of North American market sales in 2023, an 800-basis point increase from last year. Over 30% of consumers are now more inclined to try or switch to private label brands, intensifying competition and urging established players to innovate,” said Yurasek.
Following a comprehensive supply chain digital transformation over the last few years, the company now has a better infrastructure in place to think more strategically and specifically about pricing and promotions.
One such example, shared by the company CEO Ramon Laguarta on a recent investor call, includes more targeted messaging and promotions around its tortilla chips. The “sweet spot,” Laguarta said, is to “promote to who needs it” rather than just blanket messaging.
