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Arс case: Minimum Effort, Maximum Transparency

This case will tell you how the MSRP is monitored in the Consumer Goods division of the ARС company, how the work is done, why it is needed and what results it gives.

About the Company

The Arc company was founded in 1825 in the north of France in the city of Arc. By 2000, Arc had become an international corporation with manufacturing facilities across 5 continents.

Arc sells its products under 5 main brands: Luminarc®, Arcopal™, Cristal d'Arques® Paris, Arcoroc®, Chef & Sommelier®, as well as under the brands of its customers. Its products are sold in almost all countries.

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Subdivision for Monitoring

This case is about how price monitoring is carried out in the Consumer Goods division.
Consumer Goods is one of the channels that work with customers in the direction of "Consumer Goods.

The Consumer Goods division sells products through a network of distributors who work with large chains, marketplaces or have their own retail network.

Maria Sobko, an operational support specialist in the sales department, helped us to prepare the case. One of Maria's responsibilities is price monitoring. We discussed with her what goals the monitoring pursuit, how the work is carried out and what results it gives.

Why Monitor MSRP at Retail

Price monitoring is carried out mainly for the Luminarc ® trademark.
The purpose of monitoring is to monitor the level of compliance with the recommended retail price (MSRP) in specific end sales channels: retail networks and marketplaces.

The company develops recommended retail prices and considers it important to monitor how well they are observed by end customers.

There are a lot of customers that need to be controlled, as well as positions for monitoring in the Consumer Goods direction. It was impossible to carry out this task manually on a regular basis. Managing the MSRP happened sporadically. Issues were resolved only following complaints from one network against another due to non-compliance with the MSRP or lowering of prices. And that happened precisely because there was no systematic control, it became clear that it was necessary to introduce it.

At the beginning of 2021, the heads of marketing and sales departments made a joint decision to introduce regular automated price monitoring. The key objective: to have reliable data on the current situation with the MSRP and to give prompt feedback to distributors if the control reveals deviations from the optimal parameter.

How a Price Monitoring Service was Chosen

The process of selecting a contractor was handled by an employee of the marketing department. The selection scheme was classic.

1. First, the company conducted a search on the Internet for keywords. The results were then analyzed and after that the company sent out messages to the most relevant candidate.

The Priceva website was marked as appropriate by all the criteria. During the selection, the following parameters were taken into account:

  • accuracy of the data provided;
  • data presentation format (an important condition was the ability to generate and upload monitoring results to Excel);
  • company reputation;
  • and reasonable prices.

2. The second point in favor of Priceva was the positive impression the company got from the first consultation. The Priceva manager explained in detail how the service sets up and carries out its activities, covered all the settings of the personal account step by step and explained how the monitoring setup will take place.

Since the service met all expectations, it was decided not to conduct further searches.

The partnership launched in March 2021. The monitoring setup was carried out in three weeks, and by the end of the month the relevant results were already collected in an Excel report.

How is the Monitoring Process Going?

At the moment there are 315 SKUs under monitoring. In the near future, the number will be increased by several dozen more positions. The final list has not yet been determined.

The prices for these SKUs are checked on 20 sites (or online stores), the lists of those who should be monitored are determined by the sales department managers.

Maria Sobko:
“There are two people registered in Priceva's personal account: myself and my colleague from trade marketing, who transferred all the cases to me at the initial stage.

I log into my personal account every Tuesday. I upload a report for two weeks according to a pre-configured report template, I modify the downloaded Excel file for our tasks and send it to my colleagues in the sales department.

They analyze the information sent and, if necessary, contact their distributor customers with a reminder to stick to the recommended prices. And those, in turn, transmit information to their end customers — networks or marketplaces, so that they adjust prices to the optimal level.”

Usually, customer feedback is collected once a month, but the employees themselves analyze the situation once every 2 weeks, it is easier to see which customers' prices exactly require adjustments when comparing only two reports. This is because the client could have some kind of system failure or a promotion with a special price. If both reports show unacceptable deviations from the MSRP, send a message to distributors and customers.

How Much Time is Spent on MSRP Monitoring

All companies have different needs for monitoring frequency. Doing this once every two weeks is enough for the ARC company.

Maria Sobko:
“The tableware market is quite conservative in terms of price volatility. Naturally, there is a periodic revision of final prices associated with an increase in expenses. This year is quite stressful for the entire global economy.

The cost of production in Europe, China and other countries is growing significantly. Factories are forced to revise selling prices, but compared to other markets, they do not do this often. Price increases occur at most twice a year. But since this happens at different factories in different time periods, we review the general price list more often. The process is a little time-stretched.”

This feature of the market leads to the fact that analyzing the monitoring results once every two weeks is more than enough. The process of monitoring the MSRP after automation takes only a few minutes.

Maria Sobko:
“Twice a week I go to the service account. Forming the report takes less than a minute, you just need to press the button to download it.

And then I conduct an independent analysis, I count the number of positions:
which exceed the MSRP,
which are below the MSRP,
and those that correspond to the recommended prices.

Then I take an indicator known as MSRP-10%, since this is an acceptable level of price spread for us, and I look at how many positions are in that range (base MSRP— MSRP-10%). I do other planned calculations. And then I send a ready-made report to my colleagues in the sales department.”

Subtotals

If we sum up the interim results after six months of monitoring, we can see positive results. Due to the fact that the actions of customers on pricing have become transparent and controlled, the percentage of deviation from the MSRP has decreased by 10%.

What is the ultimate goal of working with MSRP

Maria Sobko:
“Our goal, ideally, is the absence of any violation of the MSRP at all. Now we are working in this direction. Gradually, distributors are beginning to understand the importance of observing the rules of the game by all market players. They adjust their prices according to our recommendations. As a result, the whole market benefits.”

MSRP control is an important strategic task for the vendor. This is an opportunity to create a favorable situation for all players when they compete in a clearly defined price range. Clear rules help to keep the market from price swings and do not lead to the depreciation of the goods in the eyes of the buyer.

Retailers also benefit: they can safely carry out sales. They will not have to worry that they will fall victim to the dumping of competitors, or that the purchased batch of goods will end up collecting dust in their warehouse or they will have to sell it at a loss.

Automated control of the MSRP can make the rules of the game as transparent and manageable as possible, and the Priceva service knows how to achieve this with minimal effort.

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