“How to Win” Model for the Consumer Goods Industry

A recent report by McKinsey & Company highlighted twelve trends that disrupted the FMCG industry’s traditional success model, particularly amid the Covid19 crisis.

According to the report, FMCG leaders need to adopt a new model to get their brands on the right side of the trends and set a growth blueprint for the industry’s next generation.

The consumer-goods industry thrived for decades with a winning model that drove the growth of leading brands. The pillars of this model were to build mass brand equity, grow with grocers as they expand, and drive operating efficiencies. Successfully adopted just after World War II, the model has seen little change since then.
In the past decade, large brands have been struggling to find growth with this historic success model.

How consumers and brands learn about and engage with each other has been the core disruptor to large brands, granting small brands – that tend to use digital as their ONLY marketing channel – the room to explode.

While digital media is considerably disrupting the traditional mass-market brand-building, large brands are often struggling to capture the attention of younger consumers. Millennials are looking for brands that are” better or more innovative”. Conscious eating and living are becoming an increasingly important trend. During the Covid19 crisis, price sensitivity is becoming a major factor in the consumer decision-making process.
Furthermore, selling channels are experiencing tremendous changes with e-marketplace giants generating 65 percent of growth by the top 150 retailers only, putting grocers under pressure, and making them more difficult trading partners. As a result, the industry’s economic profit has been facing a serious crisis in financial stock markets.

The new model uses digital to move away from mass marketing and sales and toward targeted commercial execution.

Large-scale FMCG companies will need to adopt a new “How to Win” model to cope with the current growth challenges, this model will also help small brands scale-up more quickly. The new model uses digital to move away from mass marketing and sales and toward targeted commercial execution. Vital to the application of those shifts will be the use of new capabilities in areas such as data-driven marketing, the digital route to market, next-generation productivity, and programmatic M&A.

Find more on the 12 disruptive trends FMCG trends, and how-to-win capabilities in the below infographic.

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