Cynosure on Consumer Packaged Goods Companies
The key executives always matter a lot in the company, may it be in any department of the organization. Those are creative employees of the company; they are brand managers and category managers. From product development to consumer interactions—and including advertising, strategic planning, and operations planning—they ensured that all the parts came together and that the right products made their way to the right markets. The market for CPG companies is growing rapidly and along with the same it is becoming more and more complex and complicated. CPG companies are selling more variations of products in more places to more types of customers. The number of ways customers can learn about products has exploded—including digital and social media, which aren’t directly controlled by companies. And retailers expect CPG companies to make more customized marketing. Three primary trends that will demand a place on the agendas of B2B sales organizations over the next three to five years. These trends are rapidly dominating the B2B landscape as both customers and vendors seek to maximize returns and minimize costs. First, customers have become more demanding, insisting on both off-the-shelf products and more complex, customized solutions. Second, companies servicing larger managed accounts are exploring lower-cost ways to make clients happier and to generate sales growth. Finally, organizations large and small are following the lead of business-to-consumer (B2C) retailers such as Amazon.com by making smarter use of customer data to predict behavior, drive sales, and deepen relationships. Sales representatives are critical players when it comes to building valuable relationships. Customers need information on exactly how a product or service will make a difference to their businesses. And while they may say price is one of their biggest concerns, a satisfying sales experience is ultimately more important. The insights were consistent across simple to complex products and apply readily to most business-to-business (B2B) industries, which also have complex, multi–touch point sales processes involving both end users and purchasing professionals. Consumers have always valued opinions expressed directly to them. Marketers may spend millions of dollars on elaborately conceived advertising campaigns, yet often what really makes up a consumer’s mind is not only simple but also free: a word-of-mouth recommendation from a trusted source. Word of mouth is the primary factor behind 20 to 50 percent of all purchasing decisions. Its influence is greatest when consumers are buying a product for the first time or when products are relatively expensive, factors that tend to make people conduct more research, seek more opinions, and deliberate longer than they otherwise would. And its influence will probably grow: the digital revolution has amplified and accelerated its reach to the point where word of mouth is no longer an act of intimate, one-on-one communication. Today, it also operates on a one-to-many basis: product reviews are posted online and opinions disseminated through social networks. Some customers even create Web sites or blogs to praise or punish brands. From 1985 to 2002, consumer-packaged-goods companies regularly passed on to consumers increases in the price of inputs while holding the line on prices when raw-material costs declined. In this way, these companies maintained profit margins when input costs rose and enjoyed expanding margins when they fell. In fact, we estimate that between 1996 and 2002, the strategy of passing on commodity price increases was responsible for two-thirds of net margin expansion in the sector, or roughly $10 billion in value.
"Strategic investment" brand
(1) has distinctive and strong consumer equity,
(2) is able to move into new geographies and/or new product segments,
(3) has demonstrated the ability to grow profitability and
(4) has an articulated vision and blueprint for achieving double-digit growth going forward. These brands will receive a disproportion-ate level of marketing spending, R & D and capital investment, and management attention.
Tyson Foods' senior management team spoke about furthering the evolution of the product portfolio from commodity to value-added products; continuing to innovate and lead; building equity in the Tyson brand, and supporting customer needs in branding; and furthering the development of the company's people. Many CPG companies are looking to innovate by reaching customers in more places—for example, by expanding their product presence in the workplace or targeting demographic groups like Generation Y through smart social media campaigns. Others are looking to tailor their products for local customer tastes in emerging markets.