The drive toward consumer products company differentiation
in 2018
The ability of companies in the consumer products industry
to quickly adapt, innovate, and differentiate themselves in the marketplace is
often essential to success and driving brand growth.
According to Deloitte Insights’ United States Economic
Forecast, the US economy is likely to continue to grow at a moderate 2.0 to 2.5
percent rate in 2018. A key source of strength is consumers, who have
benefitted from strong labor, rising incomes, record low unemployment, and low
inflation. Households are enjoying growing wealth and consumer confidence
remains elevated despite uncertainty in the political and economic policymaking
areas.
Companies in the consumer products industry are developing
newer and bolder strategies to execute traditional levers against a backdrop of
a more stable US and worldwide economy. Among the latest trends are:
·
Globalization. Companies in the consumer
products industry will strive to strategically capitalize on growth in emerging
markets, and seek opportunities to acquire or partner with companies to enable
access to consumers, leverage market solutions, and in some cases, access
sources of raw material.
·
Innovation. Companies in the consumer products
industry have traditionally looked to innovate as a source of growth and will
try newer and bolder strategies in 2018. Expect many to take an agile approach
to developing, testing, and iterating innovative ideas compared to traditional,
highly structured, more time-consuming testing methods.
·
M&A activity. Companies in the consumer
products industry are often increasingly looking to expand across geographies
and reach out to markets that can drive both sales and profitability.
·
Digitization. Companies in the consumer products
industry are aligning technology in creative and efficient ways to optimize
customer engagement and influence the consumers’ path to purchase.
Achieving globalization to drive differentiation and growth
Expanding into global markets is one avenue US-based
consumer products companies can pursue to drive growth and brand differentiation.
Companies in the consumer products industry could benefit from considering ways
in which they can strategically capitalize on the growth in emerging markets
and identify opportunities to partner or acquire successful businesses in these
markets, thereby having access to their consumers.
·
Emerging markets represent an opportunity for
growth. Facing issues of weak demand and increased competition in North America
across consumer products company categories, many US companies anticipate
growth opportunities from outside the United States.
·
Achieving globalization through partnerships.
One approach is through partnerships between US companies and local brands.
Such partnerships potentially help US-based companies adapt their products to
the needs of a specific market.
·
Realizing the potential of global markets by
tapping into consumer insights. Companies in the consumer products industry
could gain a foothold in the marketplace by developing deep insights about
consumers in the emerging markets they wish to enter.
Newer, bolder paths to innovation
While many consumer products companies have looked to
innovation as a source of growth, what’s changing is how companies are pursuing
innovation. In addition to following traditional new product development cycles,
many companies in the consumer products industry are experimenting with new
approaches, such as innovation through:
·
Venture capital-styled incubators
·
Crowdsourcing and partnering with consumers
·
Renovation of previously successful products
·
Continued focus on health and
wellness/good-for-you products
M&A—An inorganic path to globalization and innovation
Looking ahead, the uptick in consumer products M&A
activity is likely to continue in 2018. The steady growth in the US economy is
driving up the jobs rate and the rise in consumer spending, albeit gradual, can
provide a conducive platform to consolidation.
Activity will likely be driven by one of the two viewpoints:
·
Acquisitions for growth and differentiation
·
Divestitures to become leaner organizations
focused on core brands and profitability
Digitization continues to drive differentiation through
efficiency and creativity
Digital technologies and applications have a wide influence
on many consumer products companies, from interacting with consumers to
operations and procurement. In some organizations, the company’s digital
strategy is increasingly becoming part of its overall business strategy.
Many could benefit from continually investing in digital
technologies to deepen customer engagement and enhance the consumers’ path to
purchase. Investing in digital technologies could also benefit companies in the
consumer products industry by driving efficiency in supply chain. Trends in
digitization—and their potential benefits include:
·
Promoting real-time customer engagement
·
Promoting e-commerce
·
Blockchain applications
Look again
In today’s rapidly evolving marketplace environment, key
business issues are converging with impacts felt across multiple industry sectors.
What are the key trends, challenges, and opportunities that may affect your
business and influence your strategy? Look for more perspectives and insights
from some of Deloitte’s forward thinkers.
To read more please click on the below Article Source: