Marketing leaders at consumer packaged goods (CPG) firms are facing fundamental shifts in the global commercial environment. To meet these challenges, they have an opportunity to accelerate their adoption of digital—and rethink both their marketing models and their routes to consumer engagement.
So what are these shifts? A key one is the rebalancing of global markets. The relative importance of core markets in Europe and North America is declining, while competition is tougher than ever. To defend their turf, CPG companies will likely speed up the introduction of new products: in a new commissioned study conducted by Forrester Consulting on behalf of Accenture, 66% of senior marketing leaders polled expect the rate of new product introductions to accelerate significantly in the years ahead. Digital transformation represents a fundamental enabler.
Next, as the Forrester study highlights, there is a prominent shift away from organizing by country segment towards organizing by global market segment. More than two-fifths (43%) of respondents expect their company’s marketing to be organized by global market segment in the next five years, compared to just nine% that are organized this way today. This will allow CPG companies to customize their interactions for specific groups of consumers, such as working mothers or the health-conscious over-50s.
Replacing today’s analog marketing and sales model with a new combination of direct marketing, digitally enabled product innovation and multichannel selling will enable CPG companies to better serve these specific groups of consumers. By recognizing that certain sets of individuals share fundamentally similar needs and preferences that transcend geography, they will be able to more easily customize consumer experiences.
Digital is also shaking up the channels to market. Over the next five years, revenue growth from e-commerce channels is expected to far outstrip the growth of traditional channels. CPG marketers also expect more sales will come via their own digital channels versus e-retailers: nearly half (49%) expect to derive at least 11% of revenues from their own digital channels in five years’ time.
All of these changes make the case for digital transformation stronger than ever. Digital engagement complements the traditional sales channel, media and trade spend, enabling CPG firms to market directly to consumers, engaging them in their chosen channels, shortening the time and path to purchase and simplifying fulfillment and consumer service.
Of course, there are challenges too, such as fostering a new mindset around digital and breaking old ways of working. The overwhelming majority of those polled in our study (94%) feel that local cultural attitudes to online purchasing makes selling directly through digital channels difficult. In addition, 91% believe that local privacy and consumer promotion legislation challenges the adoption of digital direct-to-consumer initiatives.
Marketers might consider adapting in several ways:
Most CPG marketers are acutely aware of the need for digital investment in order to remain competitive. But this also means reshaping the way they operate as they build new capabilities for a digital world.