Revenue growth management: The hummingbird effect

Philippe Marmara

Revenue growth management (RGM) is about efficiently addressing shopping occasions and consumption occasions to maximize revenue growth. For customers and consumers, it touches on 3 fundamental dimensions: Product mix, volume mix, and price mix.

But the pandemic has had a profound effect on consumer and customer behavior. In fact, we see an acceleration of already-existing trends. We have witnessed the short-term disruption and long-term impact of real behavioral change.

On the consumer side, the traditional relationship between producers and shoppers has been deeply modified. In other words, we see the realization of the “hummingbird effect” in business. Finally, the realization that shopping, consuming, has a much bigger impact on the environment (in its economic and social sense) and that each individual has a role to play in protecting it.

Choice, origin, packaging, delivery… all of this is an illustration of deeply-rooted behavior that greatly affects RGM.

In the beer industry for example, the “craft revolution” which started as a marginal trend is now becoming a major business factor. In some markets, the size of this segment is reaching more than 20% and the price differential is more than 40%, putting traditional beer producers under a lot of pressure.

According to IRI, in France, the volume growth of local products in FMCG has reached 6% in 2020/2021 compared to 2% for other products.

In a global study, 64% of shoppers declare that they prefer buying local products if available, and 34% confirm that their shopping behavior has fundamentally changed for ethical, environmental or ingredient reasons.

This change is also noticeable in e-commerce where consumer behavior is transforming as well. Local products sites are actually booming in developed economies.

Vinted, which offers second-hand clothes, has reached a value of one billion euros in just a few years.

According to the latest PWC worldwide survey, 86% of consumers will continue buying food products online even after the pandemic, 45% will do so using their mobile phone, and 43% want companies to report on their environmental footprint.

According to the same survey, 45% of consumers WW are saying that, when they can, they refuse to use plastic containers or packaging.

The survey concludes by mentioning that they have never seen such a convergence in behavior.

What is extremely powerful in this attitude transformation is that 63% of consumers expect businesses to know their expectations! (GFK-2021).

So what does this mean for RGM? It is at the same time a threat and an opportunity.

The Threat: More than ever, companies who are not capable of transforming their strategies will not survive. If the consumer attitude transforms itself into real behavior, the impact will be ferocious. Remember, this is the first element of RGM.

The Opportunity: There is room to win this battle. It is a an opportunity to plan ahead, to rethink your offer, to better understand what your consumers are expecting from your product, your category, and how much they are ready to pay for it! This is RGM.