The Digital Advantage
Digital technologies are radically changing how consumer packaged goods (CPG) companies connect with consumers in diverse markets around the globe. The implications reach far beyond sales and marketing. Alex Kushnir, Partner at Accenture, provides insights into what this means for CPG sales leaders.
How are CPG firms evolving their digital strategies today?
Kushnir: The fundamental change is a realization that digital is not just a tool for supercharging sales and marketing efforts. It goes much broader than that. A new study of CPG sales and marketing leaders conducted by Forrester Consulting, on behalf of Accenture, shows that there is, of course, a huge amount happening on the sales front, from improving visibility on social media, to bringing new ways to differentiate brands in retail stores — whether via kiosks, shelf-talkers, magic mirrors or new mobile devices in the store. But leading CPG companies are going further, rethinking their whole value chain around digital. For example, they are using digital collaboration with retailers and distributors to improve retail execution as well as to share insights on how to increase consumer loyalty and wallet share. Furthermore, in developing markets, digital channels will reach consumers quicker than slower to evolve store infrastructures.
How is this affecting the CPG sales function as they explore new routes to market globally?
Kushnir: Rebuilding the business around digital has profound implications for CPG companies’ sales ambitions, especially as they expand globally. Looking ahead, our study shows a striking shift away from organizing sales around major accounts and toward regions or global market segments. But, this change will bring new challenges, as it is not sustainable for CPG companies to deploy a unique approach for each market they enter — and a one-size-fits-all approach doesn’t work either. Instead, they need to think differently about how they cluster their target markets, and the operating models that support them. Leading companies are increasingly grouping common sets of markets by specific characteristics — those with similar commercial environments and routes to market — as opposed to those which happen to be geographically near to each other. Through the market archetypes approach, CPG companies can deploy a single operating model across many similar markets, using digital as an enabler. This makes it economically viable to develop routes to market that are customized to local markets, but scalable across many.
What strategies should be employed to increase consumer loyalty and lifetime value, and bolster sales and channel management?
Kushnir: CPG brands have to embrace digital transformation across the whole value chain. Downstream, they need to look at using digital sales channels to enter new markets, and deploy capabilities appropriate for each market archetype being targeted. They also need to manage the growing convergence across channels — selling seamlessly via anything from microblogs to traditional tills. Upstream, they need to enable collaboration and quality assurance with distributors and retailers. Underpinning all this, they need to review their infrastructure to handle both the new data being captured and to ensure safeguards are in place to protect it from cyberthreats.
How are CPG firms evolving their digital strategies today?
Kushnir: The fundamental change is a realization that digital is not just a tool for supercharging sales and marketing efforts. It goes much broader than that. A new study of CPG sales and marketing leaders conducted by Forrester Consulting, on behalf of Accenture, shows that there is, of course, a huge amount happening on the sales front, from improving visibility on social media, to bringing new ways to differentiate brands in retail stores — whether via kiosks, shelf-talkers, magic mirrors or new mobile devices in the store. But leading CPG companies are going further, rethinking their whole value chain around digital. For example, they are using digital collaboration with retailers and distributors to improve retail execution as well as to share insights on how to increase consumer loyalty and wallet share. Furthermore, in developing markets, digital channels will reach consumers quicker than slower to evolve store infrastructures.
How is this affecting the CPG sales function as they explore new routes to market globally?
Kushnir: Rebuilding the business around digital has profound implications for CPG companies’ sales ambitions, especially as they expand globally. Looking ahead, our study shows a striking shift away from organizing sales around major accounts and toward regions or global market segments. But, this change will bring new challenges, as it is not sustainable for CPG companies to deploy a unique approach for each market they enter — and a one-size-fits-all approach doesn’t work either. Instead, they need to think differently about how they cluster their target markets, and the operating models that support them. Leading companies are increasingly grouping common sets of markets by specific characteristics — those with similar commercial environments and routes to market — as opposed to those which happen to be geographically near to each other. Through the market archetypes approach, CPG companies can deploy a single operating model across many similar markets, using digital as an enabler. This makes it economically viable to develop routes to market that are customized to local markets, but scalable across many.
What strategies should be employed to increase consumer loyalty and lifetime value, and bolster sales and channel management?
Kushnir: CPG brands have to embrace digital transformation across the whole value chain. Downstream, they need to look at using digital sales channels to enter new markets, and deploy capabilities appropriate for each market archetype being targeted. They also need to manage the growing convergence across channels — selling seamlessly via anything from microblogs to traditional tills. Upstream, they need to enable collaboration and quality assurance with distributors and retailers. Underpinning all this, they need to review their infrastructure to handle both the new data being captured and to ensure safeguards are in place to protect it from cyberthreats.