By Shady Ghattas, Global Vice President and Head of Consumer Products Business Unit, SAP
The consumer products industry has reached a breaking point. After years of rising prices and shrinking product sizes, consumers are frustrated with paying more for less and seek smarter, more cost-effective alternatives.
The pricing strategies that once fueled significant growth are now backfiring, forcing midsize consumer products companies to rethink their approach before falling behind in an increasingly competitive landscape. According to research from Oxford Economics, their investments should focus more on distributing in-demand products quickly and on time and building efficient, cost-effective, and risk-resilient supply chain capabilities.
The key to unlocking these competitive must-haves lies in end-to-end integration strategies.
Oxford Economics notes in its report, “Establishing end-to-end integration will help consumer packaged goods companies act on insights in real time and avoid supply chain pitfalls. The efficiency boosts that visibility enables will help consumer products companies target problems faster and present executives with the evidence they need to act.”
Moving beyond price hikes
One trend eroding the growth potential of midsize consumer products companies is the growing appeal of private-label brands. For increasingly cost-conscious consumers, these lower-priced alternatives offer compelling value and similar quality.
To drive customer loyalty and growth, midsize companies must find ways to differentiate themselves. One approach is through product innovation that enhances a product’s technical capabilities or recipe formulation, improves performance or user experiences, or provides inventive packaging.
To uncover the full potential of these strategies and learn how your business can lead this charge, dive deeper into the insights provided in the SAP-sponsored Oxford Economics report, “Driving Growth in CPG Companies.”
Take, for example, the simple yet effective design of flip-top ketchup bottles. This seemingly modest innovation revolutionized how consumers use the product and, more important, solved the age-old problem of getting the ketchup out of the bottle.
End-to-end integration facilitates this innovation by ensuring continuous communication between different parts of the organization. From R&D to marketing, businesses must ensure that all their departments are aligned and working in sync to bring innovative products to market efficiently.
Clearing the path to growth
Integrating systems allows companies to drive innovations that respond quickly to consumer needs and preferences.
It’s no secret that efficiency has become a critical factor for success. Midsize consumer products companies must not only produce units but do so more effectively and at a lower cost with streamlined operations, optimized resource utilization, and minimal waste.
Yet the quality and frequency of innovation are just as crucial as efficiency. The right decisions can mean the difference between competitiveness and diminished value, especially as the consumer behavior of younger generations continues to evolve. For instance, digital commerce channels, such as TikTok and Amazon Marketplace, have changed how products are discovered and purchased—making it essential for midsize companies to bring these platforms into their overall innovation strategy.
In both cases, establishing a strong technology foundation with end-to-end integration must come first. The combination of advanced data analytics and AI can give executives and employees the insights needed to gain an edge over the competition. In addition, the ability to build an audience through creative social media and digital strategy can lead to profitable growth when the entire innovation-to-consumption process is unified.
This integration allows companies to provide consumers with frictionless shopping experiences in stores and online. By offering multiple channels for purchasing, companies can reach a broader audience and drive revenue growth without resorting to price cuts. Additionally, digital commerce provides valuable data that can inform future product development and marketing strategies.
The business-wide data that emerges from full integration is highly valuable in this context. Every participant—from internal operations staff to third-party suppliers, partners, and logistics providers—can identify areas for improvement, anticipate market trends, and make informed decisions that enhance efficiency and profitability. The ability to harness data effectively is no longer a luxury but a necessity for midsize companies aiming to compete with more prominent players.
Moving the industry forward
The status quo is no longer enough to stay competitive in an industry undergoing rapid transformation. Midsize consumer products companies must move away from outdated pricing strategies and embrace end-to-end integration to drive innovation, enhance efficiency, and anticipate consumer needs before they arise.
The future belongs to those that innovate and connect across operations. By leveraging advanced technologies, such as data analytics and AI, businesses can not only remain competitive but also thrive in a marketplace that rewards agility and creativity.
To uncover the full potential of these strategies and learn how your business can lead this charge, dive deeper into the insights provided in the SAP-sponsored Oxford Economics report, “Driving Growth in CPG Companies.”
