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According to the 2012 Customer and Management Channel Survey released at the GMA Executive Conference, consumer packaged goods companies (CPG) winning in their category tend to outperform their peers in four key areas: bold investment in growth areas; use of analytics to fine-tune pricing and promotion; prioritization of retailer relationships; and commitment to talent development and strategic planning efforts.
Findings from “Winning Where it Matters: A Focused Approach to Capturing Growth,” a collaboration between the GMA, McKinsey & Company and Nielsen, revealed that winning CPG companies are three times more likely to invest in growth channels and the Hispanic market, 50 percent more likely to use pricing optimization tools, five times more likely to view retailer collaboration as a strategic priority, and invest twice as much time in talent development.
“Best-practice sales strategy continues to include heavy investment in emerging channels, an emphasis on customer collaboration and a focus on investing in next-generation capabilities,” said Brian Lynch, senior director, business and industry development for the Washington, D.C.-based GMA. “Specifically, focus on dollar, club and online channels, joint retailer-manufacturer initiatives and time spent nurturing high-potential sales talent all received high marks as particularly effective by survey participants.”
As consumers make more product and brand purchase decisions in-store, shelf performance becomes an area where CPG companies can gain market share, according to the “battle at the shelf” analysis, a new fixture of the annual survey. Often, performance hinges on how well companies manage assortment optimization, with many companies reporting challenges striking the right balance with their efforts in this regard.
“Using advanced analytics to drive pricing, promotion and shelf management strategies is table stakes for CPG companies who expect to lead their categories,” said Steve Matthesen, EVP, professional services for Nielsen. “Companies using analytics as a strategic tool enjoy top-line growth and share-price improvement, while their peers grapple with a flat to declining market.”
New to the study is a focus on the growing importance of the Hispanic market. “Hispanic consumers are a key growth segment, with buying power increasing 50 percent through 2015,” said Kris Licht, partner, consumer practice for global consulting firm McKinsey & Company. “CPG companies that win with Hispanics focused on tailored products and marketing, created better in-store experiences with retailers, and increased Hispanic-focused resources and capabilities.”
The results also highlight the importance of sales technology including internal systems, data sharing with retail partners, and shopper micro-targeting such as smartphone apps, mobile couponing and other interactive marketing strategies.
Nearly 220 CPG executives took part in the 2012 survey, representing many of the biggest brands in the food, beverage, and personal/home-care categories.