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Beverage Company Improves Margins and Adjusts Prices While Increasing Market Share
Technology Category
- Analytics & Modeling - Predictive Analytics
- Analytics & Modeling - Data Mining
- Analytics & Modeling - Real Time Analytics
Applicable Industries
- Food & Beverage
Applicable Functions
- Sales & Marketing
- Business Operation
Services
- Data Science Services
- Software Design & Engineering Services
- System Integration
The Challenge
The beverage company’s challenge in one of its key business units was how to improve margins through price adjustments without sacrificing market share. What made this so challenging is the alcoholic beverage sales rules in a particular geography that prohibits special promotions. The promotional techniques that could have accomplished the objective in other geographies served by the beverage company were off the table. The business unit realized it needed to better understand all pricing mechanisms and sales levers to determine the best strategy. The company approached Antuit to analyze sales data and build an advanced and competitive pricing model that could maximize margin, revenue, sales, and market share. This model would give the opportunity to adjust the optimization strategy by brand and channel where appropriate when considering a mix of pricing changes to accomplish the goal.
About The Customer
The customer is a major beverage company operating in a highly competitive market. The company has a diverse portfolio of alcoholic beverage brands and faces unique challenges due to regional sales regulations that prohibit special promotions. The company sought to improve its margins and optimize prices to enhance market share. To achieve this, they needed a deep competitive analysis and a thorough understanding of various sales levers. The company turned to Antuit for assistance in developing a strategy that would allow them to improve sales and margins while growing market share in a competitive category.
The Solution
Antuit started by identifying the primary competition for the beverage company’s core brands through a ‘choice set’ model. This model identifies which brands, based on a number of factors, are genuine competitors and will be most influenced by price changes. This model also identified those which aren’t. Antuit then used a linear mix model to understand price sensitivity within the beverage company’s brands as well as their competitors to recommend the optimal price for each strategy for maximizing revenue, volume and margin while protecting or growing market share. Data mining of sales and using a time series approach identified lifecycle trends that exposed a huge drop in sales for a short period for key brands. This drop was the result of one factory that went offline, and without product distributed in the various supermarket chains, the affected brand lost significant market share. What had been a promising sales and market share projection for this brand went sour, as it lost share to a lower-price competitor. Using its advanced modeling IP, Antuit showed the beverage company how it could offset market share losses by adjusting prices for the low price brand to match the movement of this competitor to regain market share. This model also provided visibility for the beverage company into consumer shopping preferences for the assortment – price, pack size, private label/national brand, alcohol free, etc. – to provide insights into the influence of pricing decisions that impact their own brands vs. primary competition.
Operational Impact
Quantitative Benefit
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