5 Trends in the Global Consumer Goods Market in 2017
The consumer needs and behaviors are changing rapidly, making consumer goods companies rethink their strategy of capturing growth. The CPG companies who bank on low prices and services as their strategy for profit growth are facing challenges in connecting with their target audience. However, to succeed in the global market “one-size-fits-all” approach no longer works. The products and services must be tailored according to the consumer demands.
Increasing emphasis on emerging markets
Companies can accomplish growth by tailoring their products around the needs of the target audience. Maybe the most vital portfolio decision includes the share of business in developing markets. CPG companies have, in fact, focused on consolidating their position in emerging markets. For example, baby food and facial moisturizers in Indonesia and India respectively. Companies that expanded their share in developing markets normally observed an equivalent rise in portfolio force.
Simple and seamless services
Instead of focusing their efforts on targeting huge, humongous markets, consumer good companies that minimize complexity have a better chance of succeeding in today’s business scenario. In 2017 and beyond, minimizing complexity will gain traction among CPG companies.
Focusing on resource allocation
Resource allocation is witnessing increasing emphasis among consumer good companies. As digital influences consumer decisions at every level, it has become all the more important for consumer goods companies to allocate resources wisely.
Intensification of Mergers & Acquisitions
To capture more market share, the companies have increased their M&A activity, which is categorized into the ones who,
- Renounced from dealing,
- Accompanied only small deals (liable for below 10% of sales)
- Took a balanced approach by pursuing a mix of large and small targets.
Deal-making strategy undoubtedly affects company performance, the companies aiming at large and small deals accomplished more M&A transactions than those aiming at only small deals. Also, the companies pursuing both large & small deals are also expected to be carefully reassessing their portfolios and reallocate resources to high-growth areas whether urban or rural.
The report concluded that as CPG industry growing slow, companies must be more data oriented, focused on best opportunities & reallocate resources rapidly if the market seems to be unstable. This may lead to making major changes at every level of a company’s organizational structure, resulting in revenue growth.
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