Strategic Priorities for Brand Innovation and Growth
At CGT’s 2021 Consumer Goods Sales and Marketing Summit (CGSM), SAP hosted a consumergoods and retail executive workshop entitled “Strategic Priorities for Brand Innovation and Growth.” The session, which was open to all CG and retailers in attendance, tackled the uber-
relevant subject of innovation and growth during times of ongoing disruption.
The event kicked off with some brief table setting from SAP’s Jon Dano, Paul Larson, and Sunny
Neely who emphasized the need for continued innovation in the consumer goods space. The trio
discussed how through the smart use of technology CGs could continue to advance their product
offerings while staying focused on front-burner disruption like the ongoing health crisis and
supply chain woes.
Following the call to order, workshop attendees were broken up into three groups to share their
thoughts and real-world experience in three key areas: New Routes to Market, New Product
Innovation, and Understanding Consumer Sentiment.
Below is a brief recap of the three closed-door, breakout conversations — all retailer and
consumer good executive names and companies have been intentionally omitted to ensure
their anonymity.
In addition, the session facilitators will be hosting a webinar on February 16th at 11 am and a podcast was recently released recapping the entire event. Be sure to check out both of these virtual events for an exploration of how your peers are setting themselves up for ongoing innovation and growth.
New Routes to Market
The New Routes to Market breakout session was facilitated by Larson, with assistance from fellow SAP executives Matt Gardner and Gary Decker.
The trio kicked off the session highlighting the accelerated rate of change the consumer goods industry has overgone and how CG companies must continue to explore innovative ways to get their products into the hands of consumers if they are going to survive and thrive in the ‘new normal.’
“If we would have talked three years ago, we would have been talking about five years of change ahead,” Larson said. “Now the change has been accelerated. Companies must have the right technology in place to manage this. They need to be open to new routes to market and new regulations.”
New routes to market aren’t going away, especially on the direct-to-consumer front, and consumer goods companies need to be creative. Your competition is going to explore these new sales channels and you need to be prepared to innovate to keep pace.
The end-users in the breakout session discussed their companies’ experiences over the past few years and how they were able to pivot to meet changing demand.
Key comments and themes from the group discussion included:
- There have been a lot of changes in e-commerce, especially on the DTC alcohol side. There are still a lot of challenges with all the regulations, but manufacturers don't have a choice. They have to adapt and embrace these challenges — and profitability has taken a back seat. The beverage industry has experienced more change in the past 18 months than in the previous 50 years. Now manufacturers and suppliers can talk to consumers directly in many cases — historically this engagement has gone through a distributor.
- A specialty cheese company executive said that they traditionally worked with distributors and retailers, but have launched their own online shop, which was a new channel for them. The company used to sell palettes; now consumers can order single units. This change has presented an integration challenge on the backend. In addition to data issues, shipping individual orders is expensive and complex in the fresh food space.
- A national footwear retailer remarked that if you look at all the companies doing DTC, a lot of them are opening stores. All brands need to be experiential in some way. That is what is going to break through.
New Product Innovation
Dano facilitated the breakout with the help of SAP’s John Buckley and Steve Phelan, concentrating on new product development. Over the past two years consumer goods companies have been less focused on product innovation and more on getting products in the hands of customers quickly — not only on the traditional shelf but through next-gen channels such as e-commerce, and last-mile delivery.
Where product innovation is still occurring and where it will ramp up in the future isn't the same. The session participants discussed how the product innovation cycle has changed to an agile model. Speed to market and responding to consumer demands is crucial — consumers expect the product to be available, product information to be clear and accurate, and pricing to be attractive.
While product innovation has been tempered, consumer goods organizations have reallocated their time and resources toward digital innovation to engage their consumers, enter new markets, and create digital products to improve customer experience.
Some of the key points and challenges discussed in the breakout session include:
- Many suppliers are not able to meet demand, or it takes too long for them to source the material. In response many manufacturers are expanding their vendor partnerships, so there is redundancy in the supplier system.
- While product innovation continues to be important, SKU reduction and simplification has been thrust to the forefront so companies can deliver with speed and decomplex the supplier environment, while keeping product quality a top priority.
- Many CP companies have captured new customers thanks to COVID-related hyper demand; now they must focus on retaining those customers. One tactic has been to introduce digital solutions to guide or train the consumer on how to use their products as a complement to product purchase and to generate brand loyalty.
- With large e-commerce customers such as Amazon and Walmart, CP companies are now using innovation for differentiation with e-commerce players and their algorithms, price matching against each other, etc.
- For one traditional brick-and-mortar apparel company, new immediate feedback tools to understand sentiment created a clearer realization that small businesses were a larger-than-expected part of their revenue and one that was in jeopardy. They needed to innovate on how to support these small businesses who were disproportionately impacted by COVID. They developed fundraising campaigns as an example to support them and help keep them going.
- There is product innovation and there is marketing innovation. The focus has been on marketing innovation with existing products. CP companies must continue to find more innovative marketing solutions to drive brand relevance
- Social listening technologies have been critical to capturing real-time consumer sentiment, making it easier to understand how a campaign or new product is performing — balancing the science and art.
- CPs must develop ways to speak directly to the consumer and implement a first-party data strategy to help with innovation, implementing light listening tools to help with consumer experiences and in speaking with consumers to drive innovation.
Understanding Consumer Sentiment
In the Understand Consumer Sentiment breakout SAP’s Neey and Franck Sarrazit led the discussion on how consumer goods companies are grappling with turning mountains of data into useful and actionable insights. This included exploring such issues as digging out from a wealth of data, modeling at scale, and brand tracking.
While it was near unanimous that there exists no shortage of the amount or types of consumer data today, significant challenges abound when it comes to collecting, sifting through it, and — most importantly — being able to act upon it quickly and intelligently.
Key topics discussed in the breakout included:
- Brands don’t understand consumers as much as they should. While marketing pros may think about their brands 70 hours a week, consumers spend about seven seconds on them. Today’s consumer goods companies and retailers not only need to understand consumers, but they need to stay one step ahead of them.
- There’s so much data available that it’s easy for brands to get overwhelmed. Determining how to stay afloat and yet be effective in the marketplace is a real challenge. CGs have lots of data —they can bury themselves in it and still not uncover a ‘Eureka’ moment.”
- For those seeking to model at scale, it’s quite easy to explain next week’s sales — but much harder to predict 3-6 months out. Everyone in modeling is trying to understand causality; if you don’t do that, you start paying attention to everything. You need an understanding of the levers you can pull to get to the goals you’ve set for yourself.
- For the companies with multiple brands, it’s also important that brands define their own ecosystem. This is a challenge given the differing branding messages and complexity of ecosystems.
- In discussing brand tracking, one large consumer goods exec noted that they put a lot of stock into the relationships they have with retailers. “The info we provide is helpful, and in some cases it gives us an opportunity to scream a little louder if we think we’re not getting our fair share based on what customer sentiment is on the demand for our product.”
- Tracking on brand equity has increased, and the willingness to pay a premium is important to understand. There’s enormous value in establishing a brand even in the short term, and short-term events are more effective if brand power is stronger when starting.
- Success really depends upon what you’re trying to do and knowing what you need. As one attendee noted, sometimes the tools that promise the world stumble at the first hurdle.