The US team of a global drinks company was becoming increasingly limited in its growth options, seemingly able only to manage a profitable decline in the face of a long term drift in consumer preference. As well the investment alternative involved too much uncertainty and therefore was considered unaffordable; better to build revenue through opportunistic price increases across the brand and sku portfolio.
The creation of a demand forecasting model provided a wake up call. This model joined together the forces and factors driving demand, projected forward various scenarios of how business would likely develop in the face of these visions of demand and the analytical assessment was delivered in a way that allowed the management team to understand that not even the most optimistic scenario would deliver to future profit expectations. It became clear to all that something had to be done.
The model also cut through some of the self-limiting beliefs preventing real progress because it surfaced which parts of the company’s portfolio should become a focus for the longer-term in that they represented growing pockets of demand within an overall picture of decline; and where extra revenue could be earned in the short-term to fund new activity by adopting a differential pricing strategy rather than a universal approach to pricing.