Background
X is a producer and distributor of fresh prepared meals. The company supplies both supermarkets and consumers through online orders. The company’s contribution margin was 20%, below the industry average. Our goal was to increase the margin to 30% within 12 months.
Step 1: Analysis of cost structure
1.1.
Grondstoffen en ingrediënten
- Analysis: Raw materials and ingredients constituted a significant portion of production costs.
X faced price volatility of seasonal ingredients. - Actions: We conducted a study on securing long-term contracts with suppliers to ensure more stable prices.
Alternatives, such as using local and seasonal ingredients, could save costs.
1.2.
Productieproces
- Analysis: The production process was labor intensive and included many manual steps, which reduced efficiency.
- Actions: investments were made in automation where possible, such as automated packaging lines and cooking processes.
We implemented lean manufacturing principles to reduce waste and increase efficiency.
1.3.
Verpakkingsmateriaal
- Analysis: Packaging costs were significant, mainly because of the high demands around freshness and aesthetics.
- Actions: We investigated cheaper but similar quality alternatives to packaging materials.
We also tried to reduce the size or weight of packaging to reduce costs.
Step 2: New pricing strategy
2.1.
Productmix optimalisatie
- Analysis: Some meals were more popular than others and had higher margins.
- Actions: We shifted the focus of our marketing efforts to the most profitable products.
We removed less profitable products from the assortment.
2.2.
Prijsverhogingen
- Analysis: Price increases and the elimination of unnecessary discounts and cash rebates could directly improve margin.
- Actions: We added premium product lines with higher margins, targeting consumers who were willing to pay more for extra quality or convenience.
2.3.
Bundeling en upselling
- Analysis: Sales strategies such as bundling and upselling could slightly increase the average order value.
- Actions: Consumers were encouraged to add side dishes, drinks or desserts at a higher total price.
Step 3: Improving operational efficiency
3.1.
Logistiek en distributie
- Analysis: We identified high logistics costs due to inefficiencies in distribution.
- Actions: We optimized routes and negotiated with logistics partners to reduce costs.
We optimized inventory management to minimize waste and cost of excess inventory.
3.2.
Energie en waterverbruik
- Analysis: The production of prepared meals was energy and water intensive.
- Actions: An energy and water audit identified conservation measures such as energy-efficient equipment and water reuse systems.
Step 4: Innovation and product development
4.1.
Productontwikkeling
- Analysis: Product innovation could open new markets and yield higher margins.
- Actions: We developed new, unique meal concepts that capitalized on trends such as health, sustainability and convenience.
That justified a higher price.
4.2.
Verpakking en duurzaamheid
- Analysis: Sustainability was a growing consumer demand, which could provide a competitive advantage.
- Actions: Eco-friendly packaging options were developed and communicated to the market.
This could help strengthen the brand and justify price increases.
Step 5: Marketing and branding
5.1.
Merkpositionering
- Analysis: A stronger brand position could reduce price sensitivity to some extent.
- Actions: We repositioned X as a premium brand with a focus on quality, freshness and sustainability.
We applied storytelling in the marketing campaigns to highlight the company’s unique value proposition.
5.2.
Klantloyaliteitsprogramma’s
- Analysis: Loyal customers were often willing to pay more and return.
- Actions: We set up loyalty programs that rewarded returning customers.
This was able to increase both sales and margins.
