Revenue growth management (RGM) — the holistic management of pricing, price pack architecture (PPA), trade, and mix management to grow revenue and margin — has increasingly been a focus of many leading consumer packaged goods companies (CPGs) in recent years, with some estimates suggesting that as much as 70% of organic CPG growth and a substantial portion of margin improvement have been driven by RGM initiatives (see Figure 1).

Figure 1. Source of CPG organic growth (Promotion Optimization Institute)

But while CPGs that have invested in these critical levers are outperforming their peers, leaders in the space believe there is still plenty of room to grow further, and that continued investment and optimization in these areas will only widen the gap between high-performing and underperforming CPGs.

By not effectively leveraging RGM — making mistakes when price-setting, designing, and running promotions as well as when managing the sales mix/portfolio — underperforming CPGs are leaving money on the table in the form of lower growth and thinner margins. Meanwhile, supply chain disruptions and a rapid inflationary environment have led to disruptions in even otherwise disciplined businesses. A large number of CPGs express anxiety about their RGM investment and capabilities:

  • Around 72% of promotions are estimated to be value destroying
  • Almost 60% of CPGs believe they do not have full coverage and support for key RGM analyses
  • Approximately 50% identify RGM as a key area of investment in coming years
  • About 40% admit they are still relying on manual processes for RGM

Common pitfalls

CPGs that don’t effectively leverage RGM fall prey to a number of common pitfalls (see Figure 2): 

Figure 2. Common pitfalls of RGM underperformers

Sophisticated CPGs, on the other hand, use RGM to drive topline growth and improve margins. Indeed, management teams at CPGs of all sizes say that professionalizing the key functions of RGM has led to 10%-15% revenue growth and net margin expansion of anywhere from 50 to 200 basis points.  

 

“Pricing growth was 3.1% in the quarter, as we continue to execute against our revenue growth management strategy to deliver positive pricing even with lower levels of underlying inflation.”

— Colgate Earnings Call

 

“Pricing increased 40 basis points due to certain price pack architecture adjustments to be better positioned in the marketplace.”

— UTZ Earnings Call

 

“Key strategies to improve return on invested capital include periodic SKU rationalization processes, management of promotion intensity, and passing through added value in pricing.”

— Shiseido Earnings Call

 

“Strong revenue growth management delivered favorable price and mix benefits. Pricing … more than offset the impacts of input costs.”

— Kimberly-Clark

 

“The ROI has continued to improve …. And part of that is us creating ownable agile revenue management tools that actually allow us to improve the returns of our promotions.”

— Kraft Heinz

 

Successful CPGs have driven results via their RGM organization by focusing on the following high-priority areas:

  • Revenue levers
    • Ensuring the overall trade budget is in line with the organization’s strategic goals and comparable to those of its competitors  
    • More effectively using trade dollars by analyzing and optimizing promotional effectiveness
    • Evaluating channel and volume price curves to identify areas of opportunity for driving volume, taking price, and ensuring disciplined channel management
    • Leveraging consumer and market research to identify white space and determine consumer willingness to pay, all while driving incremental innovation to drive profitable growth
  • Profit levers
    • Coordinating with operational and supply chain teams to identify difficult-to-produce SKUs, then developing a framework to identify SKUs that produce “good complexity” (i.e., important commercially, profitable) or “bad complexity”  
    • Employing mix management and SKU rationalization that target poor-performing, unprofitable and “bad complexity” SKUs in order to increase operational efficiency and profitability
    • Optimizing the end-to-end supply chain, including procurement, warehousing, and fulfillment and network optimization, in order to unlock greater growth potential (via capacity improvements) and improve margin
  • RGM people, processes and technology
    • Systematically linking commercial and operational teams through an established process and rhythm to ensure that decisions are being made with both a consumer and a customer focus, as well as a rigorous understanding of how innovation will impact operations
    • Instilling well-defined organizational structure (e.g., stand-alone, embedded within business units, hybrid), RGM functional roles, and related governance to ensure RGM recommendations are standardized and successfully implemented throughout the organization  
    • Selecting and implementing best-in-class trade optimization and promotion management software to enable ongoing analysis and optimization

While many CPGs have some degree of formal pricing, trade and mix management, PPA is often an underdeveloped muscle. PPA has historically been focused on price-per-ounce optimization; a common “trick” was to reduce ounces while keeping pack sizes the same. But consumers have gotten savvier (even Cookie Monster is upset with “shrinkflation”!), so that trick doesn’t work anymore. Rather, the next generation of PPA capabilities requires a holistic review of:

  • The product features/attributes that matter to consumers — and for which they are willing to pay  
  • The relative demand for innovative items compared to the market supply  
  • How core-range innovation items fit into existing price curves and shelf sets
  • Competitor successes and failures, and the lessons that can be learned from both

L.E.K. Consulting has developed a holistic approach to PPA that incorporates consumer, market and retailer feedback and allows CPGs to place high-confidence, high-ROI bets on both short- and long-term innovation — all while ensuring price curves limit channel conflict. 

Further reading and steps to take to get started

A first step toward optimizing RGM often involves ensuring that the right processes and team are in place within the organization. CPGs then need to share their codified best practices, and to conduct a strategic review of key RGM levers (e.g., trade and price pack architecture). From there, they can refine and replicate their successes across the organization.

At L.E.K., we have significant experience assisting organizations of all sizes throughout their RGM journey, from diagnostics and infrastructure development to specific strategies/assessments for pricing, trade, portfolio management and PPA. Be sure to read our insights to better understand how we have assisted CPGs with their most pressing RGM challenges, or reach out to us directly to learn more about how we can help.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2025 L.E.K. Consulting LLC

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