Executive Briefings

Consumer Goods Companies Must Focus on Their Brand

Analyst Insight: Consumers want the same experience regardless of what supply chain is in play. Consumers' expectations are growing and now the brands must be more cognizant of their supply chains and how it supports the brand. The dynamics between CPG - retail - consumer has changed drastically. Consumers no longer distinguish between channels and therefore CPGs themselves must be more proactive to manage their role in this ecosystem. - Guy F. Courtin, Vice President & Principal Analyst Constellation Research

Consumer Goods Companies Must Focus on Their Brand

CPG firms are under mounting consumer pressure. The number of consumers that are interacting directly with brands is on the rise. Digital is impacting the purchase of in-store products; by some accounts, close to 64 percent of in-store sales will be digitally influenced. Consumers have no qualms about going directly to Procter & Gamble's Crest web site to learn about the 41 different types of toothpastes that are available, prior to making a purchase in a traditional outlet. This digital shift has reached further up the supply chain and is now impacting CPG firms and how they deal with consumers, retailers and their own products.

CPG assuming greater ownership of their digital brand. Consumers no longer distinguish which channel they are using when it comes to commerce. This has changed the dynamic with retail, but also placed CPG firms in a new environment. CPG firms now must be capable of nurturing their relationships with the end consumer. As more consumers are leveraging digital assets prior to making purchasing decisions, it is up to the CPGs to ensure they are controlling, as much as they can, this interaction.

Constantly assess their role within the supply chain. With a growing number of retailers offering their own branded products - think Kirkland with Costco or CVS branded items - the relationship between CPG firms and the retail outlets is changing. Of course CPG and retail will always be linked, but that marriage is undergoing some changes. CPG firms must look at resolving a number of issues - who owns the customer data, can they go direct to consumer and who takes lead role when it comes to driving the customer experience? These are questions that each CPG must focus on as their supply chains evolve.

Pressure on their supply chain for product variation and introduction. The world economy, for all its ups and downs, continues to be a growing and vibrant organism. This insatiable appetite for new and varied products is a result of the constant evolution of this organism. All one has to do is look at the likes of firms such as McCain foods which manufactures over a dozen variations of french fries. Or beverage brand Tropicana which produces 20 different types of juices, over 3 times as many as they produced 10 years ago. The CPG supply chain will need to continually look for new products, variations and even quantity. They will also have to put in place the systems and processes to react at an increasingly rapid pace with regard to change. Long life cycles, lead times and manufacturing processes are a thing of the past. CPG firms may soon be expected to produce items for one - customization at scale to meet consumer expectations.

The Outlook

Focus on business processes and not simply technology. Consumer packaged goods firms are facing an environment where the end consumer is no longer distinguishing between brand and retail outlet. CPGs must meet this disruption, brought on by the growth in digital, head on. For CPG firms it’s not only about enhanced technologies but also looking at their business processes. They will need to disrupt some of these processes; otherwise they will find themselves as laggards in the space.

CPG firms are under mounting consumer pressure. The number of consumers that are interacting directly with brands is on the rise. Digital is impacting the purchase of in-store products; by some accounts, close to 64 percent of in-store sales will be digitally influenced. Consumers have no qualms about going directly to Procter & Gamble's Crest web site to learn about the 41 different types of toothpastes that are available, prior to making a purchase in a traditional outlet. This digital shift has reached further up the supply chain and is now impacting CPG firms and how they deal with consumers, retailers and their own products.

CPG assuming greater ownership of their digital brand. Consumers no longer distinguish which channel they are using when it comes to commerce. This has changed the dynamic with retail, but also placed CPG firms in a new environment. CPG firms now must be capable of nurturing their relationships with the end consumer. As more consumers are leveraging digital assets prior to making purchasing decisions, it is up to the CPGs to ensure they are controlling, as much as they can, this interaction.

Constantly assess their role within the supply chain. With a growing number of retailers offering their own branded products - think Kirkland with Costco or CVS branded items - the relationship between CPG firms and the retail outlets is changing. Of course CPG and retail will always be linked, but that marriage is undergoing some changes. CPG firms must look at resolving a number of issues - who owns the customer data, can they go direct to consumer and who takes lead role when it comes to driving the customer experience? These are questions that each CPG must focus on as their supply chains evolve.

Pressure on their supply chain for product variation and introduction. The world economy, for all its ups and downs, continues to be a growing and vibrant organism. This insatiable appetite for new and varied products is a result of the constant evolution of this organism. All one has to do is look at the likes of firms such as McCain foods which manufactures over a dozen variations of french fries. Or beverage brand Tropicana which produces 20 different types of juices, over 3 times as many as they produced 10 years ago. The CPG supply chain will need to continually look for new products, variations and even quantity. They will also have to put in place the systems and processes to react at an increasingly rapid pace with regard to change. Long life cycles, lead times and manufacturing processes are a thing of the past. CPG firms may soon be expected to produce items for one - customization at scale to meet consumer expectations.

The Outlook

Focus on business processes and not simply technology. Consumer packaged goods firms are facing an environment where the end consumer is no longer distinguishing between brand and retail outlet. CPGs must meet this disruption, brought on by the growth in digital, head on. For CPG firms it’s not only about enhanced technologies but also looking at their business processes. They will need to disrupt some of these processes; otherwise they will find themselves as laggards in the space.

Consumer Goods Companies Must Focus on Their Brand