Today’s consumers no longer simply want to buy products. They want to be inspired and educated by brands that share their values. They expect a convenient experience that makes their lives easier and helps them achieve personal objectives. And they expect seamless engagements where the technology is invisible, trustworthy, and secure.
For consumer products companies, the days of growing by simply getting great products on a store’s shelves at a fair price are behind us. Now, companies must redefine their processes, revenue models, and the way employees work. Powered by insight, brand leaders need to build sustainable relationships with consumers by moving beyond transactions to delivering valuable experiences and outcomes.
To lead in this new era, consumer products companies must become intelligent enterprises that embrace the experience economy, elevating customer experiences over products. The following three strategic priorities are helping companies move forward:
Enabling new business models
The traditional consumer-products business model – building scale and share under the banner of well-known brands – no longer delivers reliable growth. Instead, market leaders carve out share by looking at business models with a fresh eye.
The goal is to find new ways to earn revenue and maximize profits – such as monetizing content or data, pursuing innovative partnerships, or selling excess capacity. To move forward, companies must agree on the innovations to pursue. Possibilities include services, channels, partners, manufacturing, and beyond – alone as well as in combination.
The next step is to build plans that include ownership, resources required, metrics, and accountability. And when it comes time to execute, each innovation must be evaluated against agreed-upon business metrics to determine whether the program should be maintained, expanded, or, if needed, terminated.
Delivering personalized outcomes
Throughout many years of sustained growth in the consumer products industry, the prevailing model has been “one product fits all.” Today, however, empowered consumers are demanding more personalized products and outcomes.
In response, leading companies are now focusing on delivering personalized consumer experiences – such as health, security, and happiness – that go well beyond the traditional product focus. These companies continuously gather and mine real-time consumer data for relevant insight, which is then delivered back to consumers as high-value, service-based products. This approach yields higher revenues as well as more lucrative, long-term consumer relationships.
Competing as an ecosystem
In a traditional consumer-products value chain, the ecosystem is largely static. Today, as the industry seeks to become more diversified, consumer products companies need to look at their ecosystem as a more dynamic set of relationships – one that can be used to deliver new types and sources of value to consumers.
The aim is to expand the boundaries of consumer products by teaming with nontraditional, innovative ecosystem partners to deliver higher value at no or low incremental cost. To successfully realize this vision, consumer products companies are focusing on the following key steps:
- Optimizing collaboration processes with existing partners. This means putting in place the latest and smartest collaboration approaches, such as state-of-the-art procurement processes with materials suppliers and joint planning tools for sales and marketing.
- Deepening the level of collaboration with existing strategic partners. This means teaming together to collectively identify and build plans to pursue additional sources of value.
- Aggressively pursuing new ecosystem partners who can provide additional differentiation. For example, this might involve engaging new providers of raw materials because they are embracing sustainable practices, or embracing new transport partners because they are can fulfill orders in a more agile, localized manner.
The future is bright
To thrive moving forward, consumer products companies need to fundamentally change the way products are sourced, manufactured, and delivered. Yes, the pressures on the industry are undeniable, but so are the opportunities. There is a place in consumers’ lives beyond the transaction for trusted brands that can help them attain their ambitions. The companies that relentlessly put the consumer first will remake themselves and pioneer the next era of consumer products.
Learn more: Join our virtual event
Want to find out more about the latest trends and innovations in today’s global consumer products business? Register today to join our flagship 60-minute virtual industry event:
SAP Industries Forum 2020: Consumer Products
Experience the Intelligent Enterprise
Wednesday, March 25, 2020
8:00 a.m. PDT | 11:00 a.m. EDT | 4:00 p.m. CET