Consumer products companies have recently sought to attain profitable growth by extending business scale and scope while simultaneously rationalizing operations. Although each sector — durables, consumables, apparel, specialty goods, etc. — has faced its own unique issues, there are some common challenges for consumer business leaders.
Innovation continues to be the top management priority as companies strive to create new products and brands, or at least news, to drive revenue growth. Deal making and integration skill are critical as companies push consolidation and globalization to the next level through acquisitions. At the same time, most companies have to contend with a consolidating customer base. Many respond by rationalizing brand portfolios and leveraging marketing investments better. New questions are being raised about the right operating model and supply footprint as companies explore ways to raise profitability.
Across consumer markets, growth has become a greater challenge, particularly for incumbent market leaders. Growth resulting from increasing wealth, population growth, and opening markets has largely played out for many. Competition among companies, brands, products, and marketing messages has become even more intense, limiting pricing power, raising promotion budgets, and decreasing the time before "me too" products appear, which quickly erodes the advantage of the rare true innovation. Consumers' attitudes, needs, and shopping behaviors are increasingly diverse, forcing a fundamental reconsideration of product management, communications, and marketing investments. Retail consolidation, along with the rise of such new channels as mass merchants, discounters, and warehouse clubs, has expanded the meaning (and demands) of supplier partnerships and the role of the sales force.
As a consequence, channel management, from both product supply and sales perspectives, has become a more critical part of the strategic agenda. Sophisticated technology and systems investments are being deployed to deliver step-change improvements in effectiveness. In addition, the Internet is firmly established as part of the shopping cycle, if not for purchase, then for information gathering and price research.
As one of the leading management consultants to the consumer goods industry, PwC’s strategy consulting team Strategy& has extensive experience helping clients achieve profitable and sustainable growth. Strategy& brings a unique, integrated set of skills, which complement those of our clients: A global network of consumer products consultants with broad experience addressing strategic, operations, and technology issues, as well as deep expertise in such critical areas as business and brand strategy, distribution and supply chain management, sales force optimization, trade promotion and marketing effectiveness, cost base transformation, and working capital reduction.