Growth in Uncertain Times
The road to growth in the consumer products (CP) market has taken a detour in recent years. This month, Mark Osborn, Global Lead, Consumer Products Industry Marketing for SAP, provides direction for grasping new opportunities in uncertain times. What challenges do CP companies face in 2013 and beyond?
Osborn: The biggest challenge for CP companies is persistent uncertainty. Economic stability and a return to predictable GDP growth generally continue to elude mature economies in North America and Europe. At the same time, emerging economies in Central and South Asia, Africa and South America are enabling new growth opportunities while testing enterprise capacity and straining traditional operating models. Combined with growing global demand for increasingly scarce resources, commodity price volatility, social, mobile and fickle consumers, and highly demanding channels, growing and sustaining profitable revenue and volume in line with market expectations will remain the single greatest challenge facing CP companies for some time to come.
Are there new and different growth opportunities to consider?
Osborn: Sustaining profitable growth is no longer just about winning new consumers, expanding into new markets or extending product lines. Of course, these remain critically important, but, increasingly, growth is also about finding innovative ways to capitalize on previously unknown opportunities that might be readily available and easy to act on — provided you have the tools and capabilities to identify them.
Recent technology innovations enabled a confluence of data, analytics and business process capabilities that will empower CP professionals to monitor business outcomes in the moment and quickly leverage past experience to discover hidden opportunities and predict future outcomes. These opportunities can range from identifying new global strategies to sharpening existing tactics, but it’s the latter that represents the most interesting opportunity. New capabilities to incorporate downstream data into predictive modeling and analytics embedded directly into business processes will enable CP companies to look both deeper and more broadly at market dynamics as they happen, and respond faster than ever to capitalize on them to drive near-term growth.
For example, the ability to assess actual consumer sell-through and measure promotion effectiveness at a product and customer level might yield insights into shopper-specific price sensitivity, enabling pricing strategies tailored to individual retailers and their shoppers, which can dramatically improve spend efficiency. Or, monitoring demand as it happens might not only validate forecast accuracy but also improve forecast models for go-forward planning, improving on-shelf availability and maximizing consumer sell-through. Or, in another example, aligning consumer sentiment analysis from social media with marketing campaign and promotion results may reveal how consumer perceptions of messaging, packaging, pricing or other factors correlate with quantitative demand providing an entirely new feedback channel for improving brand equity. These examples of opportunities would have been extremely challenging to enable just a few years ago, but now are readily available given combined advances in data, analytics and business process capabilities.
What are key considerations for the IT organization as it aligns to support opportunities for strategic growth?
Osborn: In many ways, the role of IT has also become increasingly uncertain given recent imperatives to cut costs to preserve margins and profitability. With this uncertainty, it’s been especially challenging to transform IT from a cost center to a contributor to strategic growth. And, as software deployment options expand with cloud-based solutions and software as a service delivery, business units have more opportunities to work with solution providers directly, even bypassing IT altogether.
In this environment, it’s increasingly important for IT organizations to align with stakeholder teams, not only to understand their business requirements but to also to enable complementary business process with common data elements. This notion of “enterprising” downstream data is critical for IT teams to establish cost-effective, efficient and compliant data management and governance that essentially becomes a utility for the business, enabling any stakeholder group to “plug in” business process solutions and analytics to the underlying pool of internal and external data. This common view of enterprise data enables business teams to manage complexity by embedding analytics into business processes and enabling mobile delivery, and exploring opportunities to deliver strategic value through various deployment options without sacrificing coordination or control.