Foster Future Growth
In today’s market, top line trends that have resulted in a flat consumer packaged goods industry may be masking major changes across the business. Marketers take note: Changing consumer habits, twinned with digital enablement, have fundamentally disrupted the value chain from manufacturer to consumer.
Rick Hall, global head of sales effectiveness at Nielsen, explains how these shifts are shaking up the industry from top to bottom, and why companies not getting in front of those changes are jeopardizing their potential for future growth.
How are today’s changing dynamics affecting key industry players of all sizes?
Hall: All players in the CPG industry are feeling the tailwinds of today’s changing dynamics, both big and small. The recipe for success has changed — gone are the days when mega-brands were sold everywhere, supported by broad-based brand advertising and retailer trade programs.
We are now operating in an era of personalization. Consumers are looking for and choosing products that meet their individual needs. The new recipe for success includes a personalized approach that delivers on the consumer’s expectations of convenience, shopping experience and price. The small companies who started in niche markets to satisfy the needs of only a narrow slice of the population are achieving success, but struggle with how to scale.
By contrast, larger manufacturers are trying to become more nimble in order to quickly reformulate their products to meet these changing preferences. Increasingly, more companies are leveraging data and analytics technology to target the right product to the right consumer group, and to gain a foothold into where and how they shop.
Small or large, the winners will be those who can get the product right for every consumer segment and deploy digital technology to roll out an efficient value chain.
What channel trends do you see making the biggest impact on the consumer’s path to purchase in 2017?
HALL: E-commerce is at the top of the list of channels to watch in 2017. With double-digit growth, its reach has become mainstream. E-commerce will affect everyone in the industry.
But brick and mortar stores are not going away. Instead, we see growth in those small shops that meet very specific market needs. Clearly getting assortment right at the channel level is a critical component to future growth. It enables retailers to satisfy the needs of unique shoppers on the occasions when they are making purchase decisions.
Additionally, direct-to-consumer selling is now common practice within the CPG industry. The trend that started with select startups using digital media in lieu of traditional distribution channels to create compelling value to reach consumers now has big companies getting into the act. Direct-to-consumer selling will become central to the path to purchase in 2017.
Why will efficient programs be a game-changing growth strategy in 2017?
HALL: Research clearly shows that traditional marketing and trade programs targeting mass audiences are no longer delivering the results that they once did. Consequently, we expect that every sales and marketing program in 2017 will center on the individual consumer.
While shopper and loyalty programs have been focused on individual consumers for some time, the added pervasiveness of digital capabilities (increasingly linked to the consumer’s location) will drive dramatic future growth.