Business Challenge
A commodity manufacturer, making both branded and private label products in a competitive category, was in a predicament. Commodity futures were gobbled up by their competitors, inflation was driving up their costs and they had little choice but to take price increases.
But, should they do this through direct price increases and/or altering their package sizes via new SKUs and incurring incremental slotting fees from retailers? And if they did take price increases, how much should they increase price by and what would happen to their sales? What if competition responded, how would that impact their sales? If they could get new SKUs introduced, what existing SKUs should it come at the expense of to better inform future planograms?
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After soliciting price and marketing model proposals from a variety of “blue chip” suppliers they were frustrated from very high fees and being forced to limit the model to just their brand and up to a handful of competitive brands. This restriction is not reality to their consumers - they can choose from 60 brands and over 20,000 active SKUs in this category.
After hearing about TAP Analytics from their insights team, the manufacturer invited TAP into the bid process. They were quickly impressed by TAP’s understanding of the manufacturing and retail ecosystem, experience in marketing models and most importantly, the ability to factor every SKU into a comprehensive category model.
TAP Analytics proposed its “Middle Game Simulations” solution. Borrowed from Chess, the “middle game” is when, after the opening, most pieces remain on the board and long-range planning is at a premium. The manufacturer’s situation was not a game, but the complexity mirrored a chessboard of moves and countermoves.
TAP’s proposal also stood out for speed and efficiency as it committed to completion in weeks, not months, at a fraction of competitor costs, without any compromises to the rigor of the comprehensive solution.
Based on their insights team’s confidence, the manufacturer’s leadership chose TAP Analytics over the more expensive and limited alternatives.
Data → Analysis → Insights → Action → Value
The manufacturer securely provided all necessary data, and the Middle Game model was built within days. The model incorporated the 4Ps:
Price (e.g., everyday, promoted)
Product (e.g., attributes - size, flavors, etc.)
Promotion (e.g., in-store, retail media, digital, traditional, etc.)
Place (e.g., ACV distribution, channels, key retailers, etc.)
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Within two weeks, TAP and the client reviewed model outputs, identified critical competitors and attributes, and began testing business actions. Unlike other providers who handed over software, TAP ran 40+ simulations in a highly collaborative, iterative process across five rounds of meetings. Client’s data was analyzed thoroughly by a highly sophisticated category-based market share and volumetric model which provided unparalleled insights to now take action.
TAP Approach
Impact & Results
Counting the 1 week for data preparation and 4 weeks for collaborative simulations, the entire project from start to finish lasted 5 weeks.
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The insights were clear:
Prices could be raised more substantially than initially believed, price gap to key competitor became top priority
Two new SKUs stood out among dozens considered
One particular competitor was ripe to target to make room for the 2 new SKUs they would propose to retail
Six months later, the manufacturer confirmed that marketplace performance closely matched TAP’s simulations. This alignment built confidence in the methodology and led them to extend the work to their remaining 5 categories, with a prioritization schedule and rollout plan.