Can you paraphase all of these into the easier way? Optimize front-end sales spending. Com- panies have traditionally devoted a high share (from 20% to 30%) of the gap be- tween consumer price and net revenue to channel trade spend. COVID-19 creates an imperative for companies to optimize their highly fragmented, often mismanaged, trade investments. They can do this by taking the following actions: • Allocate trade investments differen- tially to win in priority spaces. The idea here is to prioritize spends across SKUs and to analyze affordability, brand strength, market share, and competition on the basis of location. Enhance effectiveness of trade spends. Companies must take a granular view of trade spend bench- marks across their industry in order to both define their starting points and identify areas of opportunity. Compa- nies must clearly define output mea- sures for their spend objectives—an increase in market share, absolute sales, or weighted reach. The effectiveness of these spends should be clearly tracked with a dashboard; returns on invest- ments should be measured and en- hanced through analytics. Plug leakages. Our analysis across multiple clients suggests that as much as 20% of trade spends is wasted through leakages. These leakages can be plugged by the effective use of technology including analytical rules to ensure the correct classification of different retail segments. A structured approach can help companies reduce the cost to serve by 200 to 300 basis points and free up capital for investments in disruptive opportunities. Explore digital partnerships. To address customers’ expectations and new behav- iors in the aftermath of the pandemic, a go-to-market approach that leverages digital technology is critical. Companies should creatively and carefully assess partnerships with logistics and delivery providers, with B2C and B2B e-commerce businesses, with technology providers, and with companies in the broader ecosystem to unlock value through disruptive ideas. (In a recent effort, we identified 20 use cases that could unlock significant value; many of them would require partnerships with traditional and unconventional players.) With reduced budgets and in- creasing cost pressures, strategic partner- ships with other companies can be benefi- cial to all parties. Companies should be asking themselves what to build, what to partner on, and what to acquire. Preparing for an Uncertain Future There is limited certainty about the imme- diate economic future in emerging mar- kets. The recovery, when it comes, will likely proceed at different speeds in different places. Responding quickly to unique and unusual market demands, building momentum ear- ly through quick wins, and demonstrating early success will be critical for sustained performance. The crisis is forcing companies to make structural changes in their go-to-market plans. They must, therefore, be- come more effective in how they respond to evolving consumer and customer needs, in navigating the competitive landscape, and in controlling the costs of doing busi- ness. Nimble organizations that can inno- vate and adapt digitally will be the ones that shape the new reality.
Can you paraphase all of these into the easier way?
Optimize front-end sales spending. Com- panies have traditionally devoted a high share (from 20% to 30%) of the gap be- tween consumer price and net revenue to channel trade spend. COVID-19 creates an imperative for companies to optimize their highly fragmented, often mismanaged, trade investments. They can do this by taking the following actions:
• Allocate trade investments differen- tially to win in priority spaces. The
idea here is to prioritize spends across SKUs and to analyze affordability, brand strength, market share, and competition on the basis of location.
-
Enhance effectiveness of trade spends. Companies must take a granular view of trade spend bench- marks across their industry in order to both define their starting points and identify areas of opportunity. Compa- nies must clearly define output mea- sures for their spend objectives—an increase in market share, absolute sales, or weighted reach. The effectiveness of these spends should be clearly tracked with a dashboard;
returns on invest - ments should be measured and en- hanced through analytics. -
Plug leakages. Our analysis across multiple clients suggests that as much as 20% of trade spends is wasted through leakages. These leakages can be plugged by the effective use of technology including analytical rules to ensure the correct classification of different retail segments.
A structured approach can help companies reduce the cost to serve by 200 to 300 basis -
points and free up capital for investments in disruptive opportunities.
Explore digital partnerships. To address customers’ expectations and new behav- iors in the aftermath of the pandemic, a go-to-market approach that leverages digital technology is critical. Companies should creatively and carefully assess partnerships with logistics and delivery providers, with B2C and B2B e-commerce businesses, with technology providers, and with companies in the broader ecosystem to unlock value through disruptive ideas. (In a recent effort, we identified 20 use cases that could unlock significant value; many of them would require partnerships with traditional and unconventional players.) With reduced budgets and in- creasing cost pressures, strategic partner- ships with other companies can be benefi- cial to all parties. Companies should be asking themselves what to build, what to partner on, and what to acquire.
Preparing for an Uncertain Future
There is limited certainty about the imme- diate economic future in emerging mar- kets. The recovery, when it comes, will likely proceed at different speeds in different places.Responding quickly to unique and unusual market demands, building momentum ear- ly through quick wins, and demonstrating early success will be critical for sustained performance. The crisis is forcing companies to make structural changes in their go-to-market plans. They must, therefore, be- come more effective in how they respond to evolving consumer and customer needs, in navigating the competitive landscape, and in controlling the costs of doing busi- ness. Nimble organizations that can inno- vate and adapt digitally will be the ones that shape the new reality.
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