Case Study | Bimbo Bakeries

Developing an Everyday Value Pricing Program

Using Market6, Bimbo Bakeries collaborated with its grocery client to:

  • Analyze the impact of different price points on baseline unit sales across different groups of core items and trading areas
  • Implement a new everyday value pricing initiative that reduced dependence on promotions and negative impact of returns on margins

Challenge

Bimbo Bakeries was concerned that baseline volume sales for its core commercial bakery products were falling off as consumers increasingly purchased only during promotions. The problem was growing even more pronounced as inflated “white tags” and a trend toward higher-than-recommended prices in the stores of one of Bimbo’s key grocer clients were pushing shoppers toward other brands. Weaker sales and the focus on promotions were also leading to more out of stock items in stores, higher returns and shrink.

Solution

Bimbo turned to Market6 to help implement an everyday value (EDV) pricing program for its most important promoted price groups (PPGs). Bimbo used the Market6 allocation reports to analyze sales of each PPG in each trading area of its grocery client. By studying the results of past promotions and the specific price points in different store groups, Bimbo developed a set of recommended EDV price points for each set of items and area. This information, combined with Bimbo’s internal data, was used to understand the impact of potential price changes on baseline versus promotional sales dollars, profit and returns.

Impact

Bimbo’s EDV pricing program dramatically strengthened its business in the first year it was in place.

  • Dollar sales grew 4.5% in stores using EDV pricing, versus .9% in stores not using the new pricing.
  • Unit sales grew 4.7% in stores using EDV pricing, versus. 3.5% in stores not using the new pricing.
  • Gross margin grew 3.1% in stores using EDV pricing, versus 1.3% in stores not using the new pricing.
  • Additionally, inventory turns increased from 5,100 to 11,700 in the year following the introduction of the EDV pricing program.