PriceGain taps into higher profits for bottled water company.
PriceGain often gets involved in product planning decisions. In many cases, a new pricing model may require modifications to existing products or introductions of new products to make a new strategy succeed.
Situation: Sales eroded by competition with retailers own brands of water.
Our client experienced lower growth and eroding margins on products sold through grocery stores mainly due to private labels and a focus on procurement costs. How should the current portfolio of products and potential new items be priced to maximize profits without sacrificing market share? Could new price plans be developed that would benefit both our client and the retailers?
Solution: New products recommended and pricing plans created for all products.
We evaluated consumers willingness to pay for bottled water based on competitive and new products, various sizes and prices, and in different types of grocery stores. We analyzed several new product ideas and made recommendations for new product introductions in the context of recommended price changes for all current products. We also modified the wholesale pricing and rebates available to retailers based on their size and location.
Result: 56% potential profit increase and improved revenue levels for retailers.
Our analysis revealed that our client could increase their profits by 56%, while maintaining their targeted market share. The new price plan included recommended price changes, several product introductions and maintaining traffic-generating products at constant prices. The new prices also improved retail margins for the grocery chains which greatly facilitated price and volume negotiations.