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Price Inflexion Point Study for Large FMCG Brand

A non-linear Marketing Mix Modelling (MMM) engine was used to identify optimal price adjustments, minimize market share erosion, and enhance pricing agility amid rising input costs.

5% price increase implemented

Improvement

The Problem

A leading FMCG brand in South Asia faced significant margin pressures due to rising palm oil prices, necessitating a price increase. The challenge was to determine where price hikes could be executed with minimal market share loss, benchmark competitors, and safeguard revenue against erosion.

Key Challenges

  • Determining optimal price adjustments while minimizing market share loss.
  • Benchmarking against competitors to maintain relative positioning.
  • Protecting volume and revenue amidst rising input costs.
  • Safeguarding brand market share during inflationary pressures.

Our Solution

Developed a non-linear Marketing Mix Modelling (MMM) engine that incorporated elasticity, competitor benchmarking, trade promotion impact, and scenario simulations to optimize pricing strategies.

  • Marketing Mix Modelling (MMM)
  • Competitive Price Tracker
  • War Game Simulations

Implementation Approach

  1. Price Elasticity Analysis: Evaluated demand sensitivity to different price points across markets.
  2. Relative Price Sensitivity: Assessed importance of pricing against specific competitors in each region.
  3. Trade Promotion & Media Impact: Incorporated influence of promotions and advertising on price perception.
  4. Inflection Point Identification: Determined thresholds where price increases would significantly impact market share.
  5. Competitive Price Tracker: Built a real-time dashboard to monitor competitor pricing and adjust strategies dynamically.
  6. War Game Simulations: Enabled scenario testing to predict competitor reactions and optimize pricing strategies proactively.

Results & Impact

  • 5% Price Increase Implemented without significant market share loss.
  • Competitor-Specific Pricing Strategies ensured optimal relative positioning in high-impact markets.
  • Enhanced Pricing Agility through real-time tracking, competitor monitoring, and scenario simulations.