Performance in the consumer goods sector depends heavily on consumer behavior. When the economy grows the sector will see an increased demand for higher-end products. When the economy shrinks there is an increased demand for value products. While some product types, such as food, are necessary, others, such as automobiles, are considered luxury items.
The confluence of eroding brand loyalty, enduring recessionary consumer attitudes, rising digital influence on the shopping path to purchase, and cross-channel conflict create a challenging environment for CPG companies.
The consumer products industry is likely to witness more M&A activity as large CPG companies and private equity firms take advantage of sizable cash reserves, low interest rates, and easy access to credit to increase exposure to faster-growing markets, consumer segments, or product categories. On the flipside of acquisitions, CPG companies are likely to continue to divest non-core or underperforming businesses to fund acquisitions or improve growth prospects.
As consumers increasingly embrace shopping technologies, the effectiveness of digital marketing continues to improve. Consumers are more interested in using smartphones to pull up mobile coupons, identify sales, and compare prices—even for food, beverage, and household goods. CPG companies are beginning to use social media to better connect with consumers, and many are now able to measure ROI in digital media marketing.
We belief Consumer Packaged Goods companies can increase their competitiveness by adopting a more flexible and adaptable business model through Business Process Outsourcing.
With this regard, retail companies must partner with outsourcing specialists to address their business challenges with real-time, actionable information and insight. They add that outsourcing can be effective only when the principal and the service provider establish a collaborative partnership enabling continuous knowledge transfer and quality management.
Our MarketExpansion professionals believe that outsourcing can transform Trade Promotion Management (TPM). TPM eliminates non-core work and helps retail companies focus on serving consumers more effectively. According to them, TPM technology solutions can effect a business transformation by reducing budgets, forecasting and planning for lift variability and reconciling spending in a single package.