Study Looks at Sales and Marketing for Consumer Goods Manufacturers

The IDC Manufacturing Insights report "Business Strategy: Digital Transformation in Consumer Products — Sales and Marketing," is now available. This study takes another look at sales and marketing for consumer goods manufacturers.

"We know that organizations are continually adapting how they engage with consumers and serve their retail customers. This is the seventh year we've done this research and so many changes have occurred since 2010, the first year we produced the report, not only because of changing consumer expectations and customer engagement but also because of more tech-enabled interactions and capabilities," says Simon Ellis, program vice president, Supply Chain, at IDC Manufacturing Insights.

Consumer products is a dynamic subsegment of the overall manufacturing industry, and as a key consumer-facing subsegment, it is on the front lines of the omnichannel revolution. The current business environment will remain a challenge for many companies in this industry. While the regions or product lines within consumer products can look forward to positive markets, success in those markets will be dictated by organizations that are willing to transform. Consumer products companies must address challenges such as more effective new product development, trade promotion optimization, speed and resiliency, and of course, increasingly demanding customers and consumers.

The report reveals insights such as almost two-thirds of consumer goods companies now cite product quality as the most important. Omnichannel commerce, the implications of either selling or marketing directly to the consumer, and the importance of personalization and new product development remain critical to consumer product companies.

Direct to consumer as the "next great thing" appears to be off to a slow start. Only a minority of companies that did not start in life as a consumer direct business are selling a significant amount of product to the consumer (7 percent); more companies are selling some products (53 percent; but a sizable portion aren't selling to the consumer at all (38 percent). Yet, many do believe that D2C is going to be a channel of importance, so the broader question really is whether DTC is going to be a major channel for consumer goods manufacturers or not, and if so, how quickly.

Approximately 53 percent of the consumer goods companies polled are getting at least half of their downstream data in real or near real time; another 30 percent are getting somewhere between a quarter and a half. Only 17 percent are getting below 25 percent (or none). As forecasting capabilities get more sophisticated, the "burden" on the data grows, so the levels of real or near-real time data availability is real progress. According to the report, it's not just about the data, it's also about the analytics capabilities.

"When we speak with consumer goods companies, the growth in data volume and velocity is not lost on them, they get it," says Ellis. "The challenge that they articulate to us is how to ensure that the analytics capabilities keep up."

As an industry, consumer products manufacturing has wrestled with sales and operations planning (S&OP). When asked about application priority, one of the top responses, year after year, is sales and operations planning. Given the long period of time over which consumer goods companies have been implementing S&OP, it is surprising that over 50 percent are either planning an implementation or researching one. Clearly, S&OP remains a dynamic applications space for consumer goods manufacturers. In terms of competitive positioning, consumer goods companies appear to view their S&OP capabilities objectively; slightly more than 50 percent view themselves as better than competition; slightly less than 50 percent inferior to completion. Clearly, there is room for improvement for such an important business process.

For the full report click here.