The implementation of the price pack architecture approach is anticipated to result in an additional approximately $50 million in sales and around $15 million in EBIT (L.E.K.)
So, why implement Price Pack Architecture?
Integral to the framework of revenue growth management, Price Pack Architecture (PPA) stands as a strategic cornerstone. Operating with an analytical mindset, it empowers enterprises to offer a product assortment that precisely aligns with consumers’ price range they are willing to pay and their wants and needs.
Moreover, the essence of achieving optimal price realization is pivotal for fostering true and sustainable bottom-line growth, while concurrently growing customer loyalty and expanding market share within the category, which highlights the importance of the effective adoption of PPA.
In order to strategically configure your Price Pack Architecture (PPA) for optimal ROI, it is crucial to initially ascertain the benefits your business stands to gain which can include:
Enhanced Interdepartmental Collaboration:
PPA-driven integration of pricing, marketing, and innovation teams eradicates silos. Consequently, this leads to maximizing synergies to capture opportunities for margin and volume growth, fostering cross-functional alignment.
Insightful Consumer Behavior Understanding:
PPA facilitates a profound comprehension of consumer behaviors. Furthermore, it encompasses their shopping patterns, preferences, and motivations for products, thereby providing more innovative strategies in pricing and product development.
So now, let’s delve into the significant role of data analytics in the context of PPA:
Utilizing data analytics for data integration, the merging of internal and market data with market research facilitates comprehensive analysis to pinpoint revenue growth opportunities.
Historical Factors (Derived from Past Data):
Analyzing past premiums, learnings from other similar categories, and competitors’ past successes while also evaluating your existing price pack architecture in comparison to that of your competitors, holds key insights for your pricing strategies.
Experimental Research:
Experimental research offers actionable insights for effective pricing strategies as it estimates market potential, analyzes consumer demand, assesses cannibalization risks, aligns with retailers, and ensures meeting success criteria with contingency plans.
Marketeers’ Smart Value™ Platform can help businesses optimize their PPA strategies and gain a competitive edge. Request a demo to know more.
