Operations

PTC – Optimization & Coherency

Pricing Terms & Conditions – Optimization & Coherency across Channels  

Priority :    0

Capability :    0

Statement

Coherent pricing structure across channel is continuously monitored and evaluated, with targeted adjustments made to optimize revenue ensuring fair and equitable trading practices. Pay for performance, terms and conditions consider end-to-end channel P&L analysis – with net profit and share goals vs competitive moves - from upstream revenue growth (revenue, discounts, allowances, COGS, profit) to downstream (sales, logistics, execution, administrative) cost-to-serve elements.

Score

Low - Basic

Medium - Advanced

High - Expert

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Market realities dictate that the PTC is static. Scanned data from providers such as Nielsen are used to support the competitive assessment process.

Investments impact overall price performance across channels are continuously monitored and optimized. Price and pack gaps vs competition are identified and tackled on a fast-reaction mode.

Price coherency across channels are set in line with competitive moves and price gaps by occasion, channel / customer and time of the year. Automated knowledge-based systems (AI) and consumer-led research methodologies are adopted to support price point targeting and price tracking.

Issues / Implications

Market realities dictate that the PTC is dynamic vs. static. Pay-for-performance levers need to be understood and optimized. Include managing coherency across customers to drive ROI and ease supply constraints.

Evidence / Clarification

Where available, scanned data from providers such as Nielsen is used to support this process.

Action It Leads To

Adoption of consumer led research methodologies to support price point targeting and price tracking.

KPI / Directions

Indicator: P&L breakdown by channel. Directions: waterfall P&L analysis and channel P&L (CHAMPS RGM Module & System Economics) Tools.

Operations

PTC – Customer Margins

Pricing Terms & Conditions - Tiered Pricing & Customer Margins  

Priority :    0

Capability :    0

Statement

Identifying new channel opportunities, customer pricing & margins - Retail / Omnichannel tiered pricing and customer margins are routinely tracked and assessed to ensure compliance and an equitable sharing of profit within the System.

Score

Low - Basic

Medium - Advanced

High - Expert

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Price terms and conditions by brand and pack across the customers are used to establish coherency in certain (e.g. Supermarkets) channels.

The PTC frameworks are used to support strategic and tactical decisions. The PTC frameworks are implemented to execute by both channel and customer to mitigate cross-channel cannibalization. PTC framework is used as a dealing tool for specific channels / customers.

Tiered pricing and margin by customer for System and competitor brands and packs are closely monitored. Waterfall P&L provides strategic profit breakdown layers and is used to support ABP decisions. Price compliance routine for stablishing the commercial & communication action for retaking the price in consumer

Issues / Implications

The System needs to ensure it is taking a leadership role in the level of returns across the whole value chain. Tracking should be measured against customer margin expectations. Customers will have different margin expectations by package role tracking should lead to actions.

Evidence / Clarification

This data is used to support strategic and tactical decisions and execution by channel and customer.

Action It Leads To

Pricing and margin tracking by customer for System and competitor brands and packs.

KPI / Directions

Indicator: P&L Breakdown by Customer. Directions: Waterfall P&L Analysis and Customer P&L (CHAMPS RGM Module & System Economics) Tools.

Operations

PS/TS – Investments & Incentives

Promotional Spend / Trade Spend – Developing Future Promo & Customer Incentives  

Priority :    0

Capability :    0

Statement

Commercial Terms vs Pay for Play Incentives and Promo Design - The System has developed a set of win / win future customer promos that directly link level of planned and paid investment to the level of planned and received support for revenue creating activities and the execution of the PicOS.

Score

Low - Basic

Medium - Advanced

High - Expert

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Customer alignment and support - adequate customer promos and trade spend processes are delivered in market.

Customer promos reflect the full range of strategic store and category-building benefits The Coca-Cola System offers and ensure cost/price is not the focus for annual negotiations.

Development of customer promos, execution and trade spend results are the basis for promo reengineering and trade spend planning. Promo spend with positive ROI is evaluated and considered on ABP. Enhanced customer promo incentives results lead to increased category shopping penetration and market share.

Issues / Implications

Without customer alignment and support, the adequate customer promos and trade spend cannot be delivered in market. Should include processes for non-compliance & impact to ROI, what is the customer ownership/review process that enables higher compliance. Need for return on ad-spend Integrated into promo evaluation tools for B2C.

Evidence / Clarification

Customer promos reflect the full range of strategic store and category-building benefits The Coca-Cola System offers and ensure cost/price is not the focus for annual negotiations. Trade spend based on overall investments across customers ensuring consistency of the trade spend vs customer value growth. Not all promos expect to turn a profit. It may therefore help to track promos against their stated objectives and then evaluate their impact on net profitability.

Action It Leads To

Review ROI of customer promos and trade spend results as basis for promo reengineering on RGM optimization.

KPI / Directions

Indicator: Promo / Trade Spend Breakdown. Directions: Promo ROI Analysis Tool.

Operations

PS/TS – Trade Spend Optimization

Trade Spend Evaluation, Promo ROI Optimization, Communication & Messaging  

Priority :    0

Capability :    0

Statement

Evaluating discounts and allowances, customer specific marketing agreements and price promotions are developed to support the agreed strategy and routinely reviewed to ensure effective investment, guided by the channel price, terms & conditions charter and predetermined promotional spend ROI guidance.

Score

Low - Basic

Medium - Advanced

High - Expert

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Targeted and effective return on investment is considered on the profit and revenue decision-making process. Discounts are given according to commercial needs

The reviews occur at least quarterly and findings are used to drive improved return from future activity. The returns to the customer as well as the System are evaluated. Total portfolio assessment is completed and integrated with ABP. Tracking tool development for understanding promo effectiveness on proposed targets

Budget analysis and review processes are based on promo ROI modeling and promo volume multipliers econometric estimation. Enable assessment of a promo’s performance vs. multiple criteria - eg shopper conversion, driving trial. Advanced tool for understanding & tracking promo/discount impact in total revenue

Issues / Implications

Targeted and effective investment heavily impacts the profitability or revenue growth. Evaluate customer promotions ROI.

Evidence / Clarification

The reviews must occur at frequency higher than annually especially for the Top 5 spend items. Need for Return on trade spend integrated into promo evaluation tools for digital channels. The returns to the Customer as well as the System are evaluated.

Action It Leads To

Development of budget, analysis and review processes.

KPI / Directions

Indicator: Promo / Trade Spend Breakdown. Directions: Promo ROI Analysis Tool.

Operations

Assortment – Management

SKU & Portfolio Management  

Priority :    0

Capability :    0

Statement

The system uses this consumer and shopper analysis to determine by channel where each of the existing System and competitor SKUs by price point fits within the market and identifies System volume and revenue opportunities.

Score

Low - Basic

Medium - Advanced

High - Expert

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SKUs are mapped and lay the foundations for identifying System brand and pack opportunities by channel.

Specific gaps in offerings versus the competition, low share for the System and over-dependence on particular occasions, packs, price points or channels are evident from frameworks for reaction and change.

Assortment optimization modeling is in place for business guidance and SKU mapping by channel, category, segment, brand, package and price point inform the ABP portfolio strategy.

Issues / Implications

Mapping SKUs in this format lays the foundation for identifying System brand and pack opportunities by channel. Needs to include SKU optimization process with selection of potential candidates for being rationalized.

Evidence / Clarification

Specific gaps in offering versus the competition, low share for the System and over-dependence on particular occasions, packs, price points or channels should become evident.

Action It Leads To

SKU mapping by channel, category, segment, brand, package and price point.

KPI / Directions

Indicator: SKU Pareto Analysis. Directions: Assortment Optimizer Tool.