APAC RGM Challenges

Trade Promotion Management
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UpClear has been working with major Consumer Goods brands in Asia-Pacific since 2007. Global consumer goods manufacturers partnering with UpClear across the region, Danone and Reckitt Benckiser, provide good examples of how global revenue management best practices can be deployed and scaled across very different market contexts.

Asia-Pacific presents different challenges than more mature markets, such as Europe and the United States, and thus requires a different approach when it comes to Revenue Management, Trade Spend management, and overall growth strategy. The Asia-Pacific region being extremely diverse and fragmented, where mature markets with high concentrations of modern retail market structures, such as Australia and Japan, sit side-by-side with developing markets comprised of traditional ‘mom & pop’ retail outlets, like Vietnam and Indonesia.  

In recognition of this diversity across the region, last week UpClear hosted an event in Kuala Lumpur with local technology and services partners and over 70 representatives from various consumer brands and retailers. Following the event in Malaysia, UpClear sponsored the IQPC Asia Pricing and Revenue Management Summit in Singapore.

It was noted by attendees that this was an excellent event and provided a much-needed forum for a broader discussion on Revenue Management. Bevan Webb, Client Services Director APAC at UpClear notes some key take away:

  • Commercial best practices and frameworks already embedded in CPG businesses globally must be able to scale effectively for the Asian context – going even further, with solid technology partners Asia provides an excellent testing ground for new revenue management framework innovations – in China for instance we are seeing direct system integrations with eCommerce platforms thereby enabling dynamic pricing and promotions.
  • Modern trade expansion is a growing trend in markets such as Malaysia, Indonesia, and China, however, traditional trade still represents up to 70% of the market; what this means is that building out effective distribution channels and ‘routes to market’ is just as critical as simple price and promotions when it comes to identifying new sources of growth.
  • A big chunk of the investment into the trade is still unconditional; there is a huge opportunity for manufacturers to build trade terms frameworks, drive incremental volume through a “Pay for Performance” approach and increase return on promotional investment.
  • Although online channels in markets such as China still represent less than 20% of revenue across many fast-moving consumer categories, it has proved increasingly difficult for manufacturers to develop robust pricing strategies across the various eCommerce platforms, and therefore it proves difficult to activate effective channel price corridors that generate competitive advantage
  • Extreme variation of demographic market profiles, for example between Vietnam and Japan, is often compounded by inequality of purchasing power of consumers within the same market – such variation needs to be carefully considered by CPGs when defining assortments, pricing, and promotion strategy.