---
title: "Revenue Growth Management Methodology and Practice in the New Era"
description: "In the FMCG sector, Revenue Growth Management (RGM) is a field that has only recently been professionally managed. Using Mondelez as an example, this article shares the methods and insights from Mondelez's RGM process. Shoppers and channels in the new era are different; for a company like Mondelez, succeeding in the Chinese market is complex. Geographically, China's 1.4 billion people are spread across over 2,000 cities, while India's similar population is concentrated in only 500 cities, making operations 3-4 times more complex."
author: "刘晓娟"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2023-11-12"
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# Revenue Growth Management Methodology and Practice in the New Era

> In the FMCG sector, Revenue Growth Management (RGM) is a field that has only recently been professionally managed. Using Mondelez as an example, this article shares the methods and insights from Mondelez's RGM process. Shoppers and channels in the new era are different; for a company like Mondelez, succeeding in the Chinese market is complex. Geographically, China's 1.4 billion people are spread across over 2,000 cities, while India's similar population is concentrated in only 500 cities, making operations 3-4 times more complex.

In the FMCG sector, Revenue Growth Management (RGM) is a field that has only recently been professionally managed. Today, I will use Mondelez as an example to share the methods and insights from our RGM process.

**Shoppers and Channels in the New Era**

Shoppers and channels in the new era are different. For a company like Mondelez, succeeding in the Chinese market is a complex endeavor. Geographically, China's 1.4 billion people are spread across over 2,000 cities, while India's similar population is distributed across only 500 cities. This makes operational complexity 3-4 times higher. From a channel perspective, over the past 20 years, e-commerce has contributed 40% of the business in the FMCG industry, while modern and traditional channels each held 20%-30% shares. This means we cannot afford to neglect any channel—**we must do everything, and do it well!**

**1. Regional Differences**

Compared to several Southeast Asian countries and India, their e-commerce share is very small, so they can focus their business efforts strategically. In the past, it was just hypermarkets, small stores, supermarkets, and convenience stores. But in today's China, consumers can purchase from 15 different channels. **Times are different, and complexity is different. For such a market, a large enterprise needs multi-dimensional strategies to grow and strengthen.**

China has 5 city tiers. KA cities have about 200 million people across 34 cities; these are our business barometers. Their incomes may be 1-2 times higher than other cities, and they seek convenience and quality. B-tier cities are equally important, with about 200 million people across 200+ cities. Many local retail enterprises actually develop in B-tier cities. These cities have large populations, high mobility, and a commercial atmosphere no less than KA cities. As for counties and rural areas, with 500 million people, they are territories we must cover. So to grow, we must consider regional differences.

For Mondelez, how do we focus our efforts? In KA channels, we focus on brand reinforcement and new product incubation. In B/C-tier cities, we focus on product richness and new customer management in emerging channels and customer services. In counties and townships, which are relatively traditional, the classic approach is RTM strategy breakthroughs and continuous distribution expansion.

**2. Consumer and Channel Convergence**

In the post-pandemic era, with cautious consumption, consumers have become more rational and savvy, seeking value for money. Value means two things:

> 1. **Spending the same money to get higher quality products.** We can think of the rapidly developing membership stores in recent years—they offer quality.
>
> 2. **Spending less money for the same product.** McKinsey research shows that 47% of consumers are not downgrading by not buying or buying cheaper, but by switching retailers or platforms to find the lowest price—the so-called "wool-shearing."

Multi-channel shopping, both online and offline, has become part of daily life. In the future, the integration of online and offline channels will become more natural as it evolves with consumer behavior. Currently, O2O and online ordering have surpassed the Asia-Pacific average and are globally leading. The key for enterprises is how to find opportunities in this state. From the data on consumption scenarios across several major FMCG categories, out-of-home scenarios are accelerating. People enjoy going out, entertainment, and socializing. These scenarios are increasing, meaning products must become more diversified to meet consumer needs. Diversified scenarios give rise to diversified and fragmented channels. Facing increasing channels, how to integrate and continuously utilize them is a direction for rapid enterprise development.

**3. Retail Terminal Development**

Nielsen research data shows that over the past two years, the number of terminal retail stores across different offline formats has increased significantly, but not all have grown. Hypermarket closures are still evident, with about 10% of stores closing in the past two years. Small supermarkets, large supermarkets, and convenience stores have seen double-digit growth, while traditional small stores remain unchanged and resilient. Overall, the format is moving toward smaller and more specialized operations. These two trends indicate that chain customers are increasing, **and chain customers are improving efficiency through digital supply chain capabilities.** Chain stores contribute 30% of the entire FMCG business, so capturing them is crucial for most enterprises. The other part is independent small stores. Why are they important? Because they keep pace with the times by continuously upgrading and improving the shopping environment.

**4. Building a Multi-Dimensional Offline Distribution System**

Whether it's geography, channel type, or consumers, everything is evolving. Mondelez builds an offline distribution system from different dimensions, broadly divided into city and special channels, to cover all terminal stores we want to reach offline. Strategies differ by region. For KA/B city distributors and direct-supply customers, store numbers are decreasing, and consumer demands are higher, so we focus on revitalization and renewal, covering about 300,000+ stores. In C/D-tier cities, we accelerate penetration; even for a company like Mondelez, there is still significant room in these cities. For special or category-related channels, such as snack collection stores and fresh retail, we follow the trend.

Is a multi-dimensional distribution system enough? Obviously not for enterprises, because FMCG companies now face many difficulties—the dividend has disappeared. We are in an era without dividends or new windfalls. The population is declining, fewer people are eating biscuits, consumers are smarter and more cautious, the halo of big brands is fading, small brands are rising, and internet-famous brands are everywhere. **Enterprises need to analyze data to understand customers and consumer insights, combine them, and then consider growth—not just sales growth, but more importantly profit growth, hence sustainable development. This is the essence of RGM.**

In the past growth-oriented environment, what were our goals? Growth meant high volume, low price, and thin margins. We needed a price advantage and continuous channel investment for long-term growth. Now, in the mature phase, what should we do? From an RGM perspective, there are three points:

> 1. **Volume and price together:** Meet diverse consumer needs.
>
> 2. **Balanced development:** Pursuing low prices alone is impossible; pricing strategy is always the core of RGM.
>
> 3. **Efficiency first:** In the past, investment was "better to do wrong than miss out," but now it's "better to miss out than do wrong," because it's critical.

**Revenue Growth (RGM) Toolkit**

RGM has a relatively standardized toolkit. Companies doing RGM generally follow similar content, but each chooses different focus areas. For Mondelez, these five focus areas run in parallel, with some emphasis each year. The toolkit's purpose is to clarify what to focus on when facing profit and growth bottlenecks.

**1. Optimal Pricing Strategy**

Pricing is multi-dimensional and multi-level. From a price tree perspective, different channels and products should have different price networks to maintain optimal pricing. Pricing strategy ensures the recovery of sales revenue and secures sales targets. Pricing is not about setting a single point but a chain; a reasonable value chain ensures balanced interests among three parties.

**First**, for manufacturers, product sales involve production costs and channel costs. These two determine the company's profitability and whether financial goals are met. **Second**, the attractiveness of a product to channels lies in the prices distributors and retail terminals can obtain. There must be reasonable profit distribution and resolution of price conflicts between channels—this is what pricing must address. **Finally**, there must be a price attractive to consumers. How to set the suggested retail price to maximize consumer purchases and drive trials of new products involves strategic thinking. Promotional pricing is subtle; cheaper doesn't always sell more. Finding the price point that drives consumers through price-sales data analysis is what we call promotional pricing.

Price management is a dynamic process in enterprises. After establishing the price chain, we must track implementation to ensure its reasonableness. Whether there is room for price increases, whether prices need control, or whether promotional prices are unreasonable—this is a dynamic process requiring continuous follow-up.

**2. Promotion Management**

According to Nielsen data, promotional sales contributions vary across FMCG categories like household cleaning, beverages, and milk powder, generally ranging from 40% to 50%. That means out of 100 bottles of beverage sold, 50 are sold on promotion. Promotions also require investment. For enterprises, do promotions actually make money? Data shows that only 23% of promotional products are profitable, and these profitable products account for 33% of promotional expenses. In other words, for every 100 yuan spent, only 33 yuan is profitable. This is a harsh reality for enterprises, meaning a lot of money is wasted. Often, promotions are done based on experience, with little visibility. The reason is simple: consider the granularity of promotions—the daily sales change of a product in a single store. To form an effective analysis, the granularity is very large. Without a proper platform, most enterprises cannot do this, and many customer managers rely on experience.

Mondelez is currently forming a closed loop for promotions, channels, and activities. The first step is a trade policy with pre-set rules. Then, using an investment activity calendar, we provide optimal plans, followed by execution tracking and continuous optimization. By building a visualization platform, we turn data into clickable reports, continuously track and optimize. We can analyze historical data to determine what price points, times, mechanisms, and customer types work best for which products, then implement these into trade policies for validation. This saves customer managers analysis time and increases their bargaining power with customers.

**3. Contract Terms Management**

Contract terms often outline channel investment strategies—where to invest, which channels, which levels, whether at the customer, distributor, or consumer end. This is often combined with RTM and RGM strategies, and it's the management of channel investment.

**4. Business Mix Management**

Different categories and products have different turnover, sell-through, and profitability structures. Where will future growth come from? From which products and channels? How to build your strategy determines how to invest. The core of RGM is to build this growth framework and manage the business mix.

**5. Product Portfolio Management**

This is a consumer-centric perspective. In the past, we said to capture a person, first capture their stomach. Actually, it's the reverse: to capture their stomach, you must first capture the person and understand what they want. Mondelez divides snack consumption scenarios into 8 types: home gatherings, office, outdoor socializing, etc. Different scenarios require different tastes, packaging, and purchase channels. So product portfolio management emphasizes combining consumer understanding and scenario understanding to find consumer preferences, then selling products that match those preferences in the channels where consumers most frequently buy. The goal is to connect the entire chain: what products to launch for which scenarios. Marketing should also do scenario-based marketing, and sales should sell to the right stores. It's a cross-departmental, full-chain integration.

**Manufacturer × Distributor: Win-Win Cooperation**

As a manufacturer, we must continuously upgrade our brand. We believe product strength is the foundation of success—it's the lifeblood of the manufacturer, and we must hold it tightly. At the same time, regarding the combination of distribution models, we need to build a multi-dimensional distribution system to help reach more sales terminals. The rationalization of the product price chain is the lifeline for profit, both for us and our distributor partners, and it requires joint protection. In recent years, Mondelez has been promoting visualization and digitalization, spending money where it counts, and improving investment efficiency. Why can snack collection stores sell cheaply? Because their value chain is completely different from other channels. There are many emerging channels and different customer models in the market. Mondelez looks forward to working with distributor partners to achieve diversified channel coverage, while applying RGM methods to drive sales and protect profits. We must not only strengthen distribution but also focus on sell-through, with reasonable product assortment and optimal activity execution, jointly maintaining a reasonable price system. Enhance digital capabilities, use new technologies and models to achieve scale efficiency, work together with one heart, and create the future!

_[This article is based on the keynote speech by Ms. Liu Xiaojuan, Head of National Revenue Growth Management at Mondelez, at the 5th China FMCG Conference, organized and edited for readers (with some deletions and modifications).]_


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