Next up: portfolio. Brands and products perform differently in different places, so your aim here is to find the right mix of products across different channels, retailers and locations to maximize profits and growth.

You’ll need to look across all the retailers and channels where you sell products, and assess if you have the right lineup of brands and the right variety of sizes to appeal to all kinds of shoppers. To see what we’re getting at here, let’s think about detergents again…

Now, this is a category with many different sizes and forms available, but with so much variety on offer, suppliers can struggle to manage all this complexity - and do it profitably. Net revenue management can help you manage the wide variety of SKUs available, with an eye towards efficiency and profits. With the right understanding - and a good deal of planning - you’ll be able to identify which mix of SKUs will be most profitable for you and then execute the best possible assortment at different retailers.

An effective mix plan will help you find the right balance of different products on shelves. For instance, you might find that you can stock products with strong consumer benefits like ‘extra whitening’ detergent, alongside products with excellent technical performance, like laundry pods, and then sell these at a premium, alongside more basic products like standard washing powder.

The sizes, forms and price points of products in any given channel can strongly dictate the type of shopper retailers will attract, so the right portfolio mix can have a significant impact on a brand’s P&L, or ‘profit and loss’.

Different sizes and forms of products come with different cost structures, and developing and maintaining a vast portfolio with lots of variety can be costly for suppliers. However, it's this variety that appeals hugely to both shoppers and retailers, so this cost is often justified by the profitability that can come from having a smart mix of SKUs available to shoppers.

Once you’ve reviewed your portfolio mix, you should also take your retail partners into account. Portfolio choices will need to demonstrate category growth - and of course brand growth - and if your brand is unable to drive this growth, then retailers will struggle to support you.

New portfolio choices also need to create incremental trade margin - or increased profitability - to ensure retailer support. This is often where new brands fail, as retail partners are less likely to support new items that don’t help drive category margin expansion.

So, it’s important to consistently demonstrate new value for your consumers and retailers. In fact, a net revenue management approach can help you put together a ‘retail value creation strategy’. This is where key brand, consumer and retailer needs are understood and leveraged to drive an expanded and competitive portfolio, all whilst delivering incremental sales and profit growth for you and your partners.

Portfolio Mix