Summary
A super-premium cat-litter brand operating under a topline growth mandate, with leadership willing to make bold moves. With approximately $250 million in revenue, D2C still generates roughly 55% of sales and remains the most profitable channel, but retail has been designated the growth engine going forward. The brand’s current price-pack architecture was built for its D2C-first origins; a period of limited competition and minimal retail presence, conditions that no longer hold. The category has since filled with new entrants, including private-label premium litters with significant price advantages, adding competitive pressure leading to sales and market share decline. On the expansion side, Grocery and Club represent substantial whitespace, with retailer conversations already active, and a dedicated smaller pack grocery SKU has been developed to lower the trial barrier. Trade spend runs ~5–7%, and large retailers line reviews are due within the next three months. The redesign was projected to deliver +$39M in incremental annual revenue and +$16M in incremental margin.
Challenge
The core tension is structural channel conflict: D2C, the profit center, is declining under rising CPAs, subscription fatigue, and cannibalization from retail, yet its price points cap how far retail prices can fall without eroding margin. The pricing architecture no longer matches today’s market: consumers compare price-per-day and price-per-pound, subscription momentum has faded, and the absence of a MAP policy lets retailers undercut one another, leaving the brand in a “messy middle,” not cheap enough to drive volume, not premium enough for super-premium economics. Competitive pressure is accelerating. Private-label has cut shelf placement, driving an estimated 15% volume decline, and trade-down to private label is now the category’s primary growth driver. This already threatens distribution: a major retailer has rejected the initial pitch over weak velocity, just as other banners’ line reviews approach. Underpinning it all is an analytics gap: pricing strategy has been discussed for 12-18 months without an actionable decision, leaving trade spend, already below CPG benchmarks, without a robust analytical foundation.
Solution
Revenue Management Labs organized the engagement across three phases: diagnosing where the price architecture was leaking value, quantifying channel-specific price sensitivity, and rebuilding the architecture before rollout. The analysis found no meaningful cross-channel interaction, meaning each channel could be priced independently, and that D2C’s decline was driven by falling customer acquisition, not price or cannibalization. These findings shaped a redesigned price ladder that encouraged trade-up, reduced single-bag prices to drive trial, and introduced a smaller bag to capture demand at a lower price point, alongside channel-specific moves that cut prices at mass retailers while protecting price and shelf investment at specialty retailers.
Result
The redesigned pricing architecture was projected to deliver 16% overall revenue growth, reversing the downward trend the client had experienced in recent years. Optimizing the D2C price ladder accounted for the majority of the incremental revenue, while channel-specific pricing optimization contributed an additional 5%. Beyond the immediate financial impact, the engagement equipped the client with a repeatable pricing framework grounded in customer value, market dynamics, and demand patterns. It also provided deeper insights into the product’s competitive positioning, channel-specific responses to competitive pressure and value perception, and the role of each channel within the broader portfolio. These insights enable the client to make more informed decisions on product innovation, channel expansion, pricing, and marketing investment.
