Digital Transformation in a Highly Competitive Market


The consumer product industry is a leading force in vision-driven digital transformation. Around one-quarter of companies in this industry are making their investments in digitalization by leveraging analytical insights that identify priority areas for business transformation.

However, our data also suggests that many consumer product companies sit outside the vision-driven quadrant. They are yet to experience significant disruption, but the window is closing for them to adapt and transform their operations to weather the incoming digital storm.

As competitors undergo digital transformation, there will be little room for error as customer expectations are at an all-time high. For companies who approach digital transformation in a sub-optimal manner, survival will be difficult due to increasingly intense competition in the consumer products industry.

>Digital Transformation in a Highly Competitive Market

Top Concerns for CEOs in the Consumer Products Industry


CEOs in the consumer products industry are aware of the effect of digital transformation, and how it will change the operating landscape. Here are the top seven concerns of consumer product CEOs:

Accommodating Logistical Demand

ACCOMMODATING LOGISTICAL DEMAND

Product and service portfolios need to be in a state of continuous improvement and innovation to remain competitive. Supply chains also need to innovate and expand to accommodate future logistical demand in the digital realm.

More Competition

MORE COMPETITION

The global economy is more accessible than ever, but increased access applies to everyone. Companies that competed on the local regional level will experience greater competition as they expand into the global market. Similarly, global enterprises will experience more competition from emerging competitors.

Creating Customer Value

CREATING CUSTOMER VALUE

There are low levels of customer loyalty due to the similarity of products on the market. With so many similar products available, customers see pricing as the only differentiating factor. Companies must increase customer engagement, involving them throughout the experience to add value to the product chain.

Security and Compliance

SECURITY AND COMPLIANCE

Consumer product companies need to handle customer information and payment data with care to comply with regulations like PCI-DSS. They also face threats from security breaches and malware attacks, which can damage reputations and brand image.

Meeting Consumer Demand>

MEETING CONSUMER DEMAND

Highly competitive market conditions make finding a niche difficult. This necessitates a vision-driven approach: researching and developing new products in the present to meet estimated future consumer demand.

Trendsetting

TRENDSETTING

Trends are changing at a high velocity, and yesterday’s angel product can quickly become obsolete.

Developing Cross-Channel Strategies

DEVELOPING CROSS-CHANNEL STRATEGIES

Marketing teams need to develop cross-channel strategies to capture a wider audience and increase mindshare. Personalization of products will become the main differentiator, increasing customer loyalty and retention through personalized customer experiences.

The Most Successful Digital Transformations Are Powered by Analytics Capabilities


Our benchmarking services are powered by over 1.5 million data points in addition to our primary research and data collection capabilities. With access to leaders across more than 40,000 companies in various size segments, industries, and geographic locations, we can quickly gather additional data to address how your business is performing against the competition

A graph showing which industries are investing the most in digitalization.

Source: Trasers


Data analyzed in this report comes from 4,000+ responses. For the consumer products industry, data from 356 companies have been used.


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Digital-First Competitors Lead the Charge


The consumer products industry is home to numerous companies that were born digital. This makes the industry a leader in enterprise-level digital transformation, where competition necessitates continuous innovation to remain competitive. A combination of private equity and venture capital firms enable angel startups to rapidly develop and deploy products, making the industry a hotbed for rapid and agile digital innovation.

For legacy companies, falling behind these newcomers is equivalent to failure, with a loss of product momentum triggering a feedback loop of lost sales, customers, and eventual business decline. All industry players must be highly aware and sensitive to the transforming competitive landscape, leveraging technology or data-driven business models and processes to stay ahead of the pack.


Only 7% of Companies Are Delivering on Their Transformational Initiatives


Our research has shown that 30% of companies will fail to survive this decade due to an inability to evolve digitally. To address this negative trend, we have developed the Digital Enterprise Evolution Model™ (DEEM).

Digital Enterprise Evolution Model™

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DEEM allows our clients to recognize digital evolution patterns, implement benchmarking and prioritization strategies, and initiate application management protocols to satisfy stakeholder and market requirements.


Reimagining the Customer Value Proposition


The things that customers value most are changing. This calls for the reimagining of the customer value proposition, analysing new customer sentiment to guide product development decisions. Product life cycles are shortening due to rapid innovation, and mass migration to digital e-commerce is creating the ideal environment for disruptors. Additionally, manufacturers are increasingly able to adopt direct-to-consumer (D2C) sales models, which puts incumbents at risk of losing business.

Digital-first companies use technologies like the cloud, artificial intelligence (AI) and machine learning (ML), as well as automation to combat incumbency advantages enjoyed by more established competitors. They are also adopting high-risk, low-reward operating models to rapidly establish a customer base and gain market share, before shifting at a later stage to increase profitability.

Therefore, maintaining pace with industry averages is not sufficient. Instead, companies need to digitalize to remain competitive and retain leadership. This will require the creation of connected product experiences, and a transformation throughout the value chain and to all stakeholders. In response, our data shows that 56% of large enterprises are planning a total digital transformation, reinventing experiences to survive in an increasingly hostile market environment.


Vision-Driven Strategies Leave Little Room for Error


There is little room for error for consumer product companies looking to develop and implement new digital strategies. For businesses that sit outside the vision-driven quadrant, there is a lack of urgency to the value of digital transformation. These companies may undergo digital transformation in certain areas, but sub-optimal execution is holding them back. This highlights the need for a well-planned, comprehensive digital transformation strategy in all areas of the business.

Half of consumer product companies are planning significant investments in cloud technologies, transforming the underlying technical foundation to deliver improvements across all business areas. Many companies also report investing in advanced analytics functionality and robotic process automation (RPA), raising the bar for efficiency and agility in the digital era. There is still room for improvement, however, and other businesses must upgrade their own IT operations in similar fashion to remain competitive.


Research and Development is Raising the Bar for Product Quality


Our research has shown consumer products industry is rapidly catching up in terms of research and development with the high tech industry. Furthermore, research and development are set to see significant digitalization investment from consumer product companies in the context of process automation or optimization and analytical insight generation.

Given the competitive nature of the consumer products industry, it is no surprise that investments in advanced analytics and process automation outpace all other notable areas. This accentuates the requirement for vision-driven digitalization among consumer product companies and highlights potential negative outcomes for vulnerable companies who reside outside the vision-driven quadrant.

Experience the Trianz Difference

Trianz enables digital transformations through effective strategies and excellence in execution. Collaborating with business and technology leaders, we help formulate and execute operational strategies to achieve intended business outcomes by bringing the best of consulting, technology experiences and execution models.

Powered by knowledge, research, and perspectives, we enable clients to transform their business ecosystems and achieve superior performance by leveraging infrastructure, cloud, analytics, digital and security paradigms. Reach out to get in touch or learn more.

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