How Digital Literacy is Reshaping Demand Planning for Consumer Products
Adapting to the CPG industry’s changing tide requires more than mere foresight – it calls for agility, digital acuity, and artful strategy.
Published: August 7, 2023
— Adapting to volatile consumer demand, businesses must now balance the complexity of digital literacy, innovation, and strategic agility to prosper in a fragmented market landscape, according to a panel of consumer goods executives.
The following are the main takeaways from an executive panel at aim10x live New York City.
Unprecedented Volatility in Consumer Demand
Over the past decade, companies have encountered unprecedented volatility in consumer demand. Even before the disruptions caused by COVID-19, evolving consumer preferences, product life cycle management challenges, intense competition for market share, and channel proliferation were shaping the demand landscape. Adapting to these dynamic changes has become a critical priority for businesses in consumer industries.
Deepening Consumer Understanding and Identifying Drivers
To navigate the evolving landscape, companies are diving deeper into consumer and shopper understanding. Channel proliferation has led to an array of consumer purchasing options, making it essential to grasp the fundamental drivers of demand. However, the abundance of available data poses a challenge in determining which data sources to prioritize. Unlocking consumer insights and identifying key drivers have become pivotal for effective decision-making and strategic planning.
Embracing Innovation and Holistic Propositions
Innovation is no longer limited to product features alone. Consumer businesses are now focusing on offering holistic propositions that encompass not only product innovation but also enhanced services, availability, and pricing structures. By delivering a complete experience to customers, companies can differentiate themselves in the market and create new revenue streams. This approach requires a shift in mindset and a keen understanding of consumers’ desires beyond the product itself.
Balancing Complexity and Portfolio Optimization
Managing complexity has become a significant challenge for businesses. While complexity can be a competitive advantage, it is essential to continuously review skews and portfolio offerings to identify what truly matters to consumers. This process involves eliminating unnecessary complexity and refining the value proposition. Leveraging data analytics, companies can optimize their portfolios multiple times a year, aligning consumer demands with profitability and strategic objectives.
Addressing Channel Fragmentation and Demand Volatility:
The proliferation of channels and the resulting demand fragmentation present new challenges for businesses. Companies must adapt their strategies to account for the changing landscape, including the loss of access to traditional syndicated data and the need for a consumer-centric approach. Understanding consumer behavior across various channels and leveraging data to optimize inventory management, supply chain planning, and product offerings are key factors in mitigating the negative impacts of channel fragmentation.