How will retailers and CPGs build their brands now?

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By: Wise Marketer Staff |

Posted on October 3, 2005

To stay competitive in the coming years CPG and retail companies will need to create brands that strike a "lifestyle chord", revitalise their product lines, and lower their supply chain costs, according to a report from the Economist Intelligence Unit.

The 'Courting the Consumer' report (sponsored by market information firm Information Resources Inc.) was based on a global survey of 123 retail and CPG executives, and concluded that retailers and CPG manufacturers must significantly increase collaboration to meet rising consumer expectations.

According to Information Resources' CEO, Scott W. Klein, "Today's CPG manufacturers and retailers are fighting competition on multiple fronts, each requiring unique and highly-differentiated strategies to be successful and grow in today's complex marketplace."

Growth strategies
According to the retail and CPG survey, current growth strategies were led by four main ideas (brand building, loyalty building, new product development, and improving operational efficiencies), while other strategies trailed significantly:

Growth strategy % rating it as critical
Brand building 44%
Loyalty building/increasing share of wallet 41%
New product development 38%
Improved operational efficiencies 37%
Geographical expansion 23%
Improved collaboration with suppliers 22%
Range/brand extensions 18%
Sales channel expansion 18%
Retail outlet expansion 14%

Table 1: 2005's key growth strategies for CPG and retail
Source: The Economist Intelligence Unit

New focus
The survey indicates that CPG manufacturers and retailers will focus on three inter-related growth strategies:

  1. They will strengthen brands so they resonate on a multinational scale and make them relevant enough to break through the noise of advertising that consumers face.
  2. They will introduce frequent new products that reinforce and extend the brand concept, as well as respond to the accelerating pace of change in consumer demand.
  3. Manufacturers and retailers will reduce cost in order to both fund the investment needed for brand and new product development, as well as to respond to heightened competition from hard discounters.

Other findings
Other key findings of the report include the following:

  • Brand as competitive weapon.
    CPG companies and retailers will increasingly rely on the power and importance of their brand to attract and retain customers, as 84% of manufacturers and 60% of retailers rate brand building as a crucial marketing strategy. Three-quarters of all respondents said that brands will be a highly significant or significant source of competitive advantage during the next three years. Brand-building strategies will focus on making a lifestyle connection with the consumer.
  • Responding rapidly to new customer needs.
    Retailers and consumer goods companies will mine data to ensure they are at the leading edge of change in consumer lifestyles and the values that underlie them. In order to nurture the consumer's emotional bond to the brand, manufacturers will frequently renew the product line, and retailers will deepen loyalty programmes and constantly refresh in-store promotions. As product lifecycles continue to shorten, speed to market will increasingly differentiate competitors.
  • Supply chain optimisation.
    When presented with 11 challenges, 62% of retailers and 43% of manufacturers chose "reducing costs and maximising efficiencies" as their single greatest concern. The clear target for cost reduction is waste and inefficiency in the supply chain. More than half (57%) of companies said that supply chain and inventory management solutions will be among the top two most critical technologies that will support their business goals during the next three years.

"As this research emphasises, competition for the consumer has never been more intense," said Daniel Franklin, editorial director for the Economist Intelligence Unit. "To survive, retailers and consumer goods companies will need to work closely together to create powerful brands and speed innovative products to the market."

The study's full findings can be obtained online from Information Resources - click here.

For additional information:
·  Visit The Economist at
·  Visit Information Resources at