Reimagine your entire brand portfolio
Photograph The COVID-19 crisis has significantly affected demand for consumer packaged goods (CPG). People are doing more from home, trying new brands, and adjusting their purchases across price points and stores. And as safety concerns, economic anxiety, and a continued focus on health, wellness, and sustainability lead consumers to realize that there are many things they can do without, and a few things they can’t, there will be implications for CPG companies that should lead them to rethink their innovation strategy and brand portfolio choices.
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COVID-19 is affecting different parts of the CPG sector in different ways. Many CPG manufacturers, for example, especially in food and beverage categories, have benefited from a spike in demand due to short-term pantry loading, with a sustained bump in sales after that due to more at-home activities. At the same time, e-commerce sales have increased, for both pick-up at the store and home delivery. And for retailers and on-premise venues that were previously forced to shut their doors, they will, even as they reopen, be beleaguered We are already seeing how these changes might affect product formulations and packaging design. Concerns for health and safety will accelerate the current trend toward healthier products. Product design is also likely to become more value-focused, as frugal, sustainability-conscious consumers pressure companies to reduce product and packaging costs. And increased at-home activities will lead to less demand for “on the go” configurations. Shifts in shopping and delivery choices will further affect product and packaging requirements.
If you’re leading a CPG company, you’ll need to combine a deep knowledge of who is shopping and when, where, and why they are, with an understanding of the emotional and functional benefits of your products, while also increasing your focus on affordability and margins. As you make those connections, you’ll gain insight into the specific situations, or demand windows, in which consumers want or need to make a purchase. Demand windows create opportunities to improve targeting and deepen engagement along the path to purchase You can learn about consumers’ penchants and practices
Taken together, these trends will reward companies that foster stronger enterprise agility among their talent and business ecosystems. Companies that do a better job listening to demand signals and creating a faster feedback loop, moving quickly from insights to action, will emerge stronger from the crisis, gaining market share and higher profitability. And those with agile approaches to innovation will benefit from applying a human-centered design lens to the experiences that deliver value along the consumer’s cycle of discovering a product, buying it, owning it, and advocating for it.
Innovation should encompass not just the physical product, but the digital experiences that contribute to value wherever and however a consumer engages with your brand. In this context, you also have an opportunity to drive business model innovation Innovation should encompass not just the physical product, but the digital experiences that contribute to value wherever and however a consumer engages with your brand.
As you invest in blended digital and physical experiences, you will also benefit from a more agile approach to measuring the return on your innovation investment, along with your commercial investments in advertising, promotions, and other brand activation to drive product trial, ongoing usage, and advocacy. PwC’s return on experience (ROX) approach brings together experience data with operational KPIs and outcomes to enable a faster insights-to-action loop and more precise identification of which investments are driving the most value.
The COVID-19 pandemic presents an opportunity for you to reimagine your product portfolio and make sure your value propositions are right for tomorrow’s consumer. We believe you’ll need to take five actions to fully capitalize on this opportunity:
1. Rethink your product strategy. Understand your consumers’ new needs and preferences and the implications for your revised product strategy and associated digital experiences.
2. Reprioritize your innovation portfolio. Analyze your innovation portfolio based on updated metrics, and reposition projects to align to the product strategy.
3. Restructure your SKU assortment. Review the true health of every product in your portfolio and, to reduce complexity, make decisions on whether you’ll keep, renovate, or eliminate each one.
4. Redesign your products for value. Identify new opportunities to optimize ingredients and packaging design to drive margin and price improvements while maintaining a strong consumer experience.
5. Restructure testing and commercialization. Dramatically increase your speed to market for new products and product changes — without increasing risk — to respond rapidly to the post–COVID-19 consumer.
PwC US principal Brandy Smith also contributed to this column.