Winning CPG Companies Focus on Growth Channels, Go-to-Market

November 11, 2010

The most successful CPG companies (“CPG winners”) exhibit specific strategic sales behaviors that distinguish them from other CPG companies, according to a new survey from The Nielsen Company.

CPG Winners Grow Sales, Shrink Costs

nielsencpg-winners-go-to-market-nov10.gifData from “Emerging from the Storm: How Leading Customer Organizations Reignite Growth” indicates that despite the challenging economic environment in 2008 and 2009, winning CPG companies increased sales faster than their category peers while decreasing selling costs.

Survey data indicates CPG winners achieved these sales growth and cost reduction results by focusing their resources on high-growth channels such as dollar and discount stores, as well as Wal-Mart. In dollar and discount stores 63% of current winners increased customer-facing resources in this channel while more than half of others in their categories did not. Similarly, 89% of winners increased customer-facing resources at Wal-Mart stores, compared to 64% of others.

These players also strengthened their go-to-market models (70% of winners compared to only 15% of other CPG companies surveyed), developed winning and highly capable sales leadership teams, and tailored their account teams to address the needs of priority retailers.

Lastly, survey data indicates top-performing CPG companies captured efficiencies in warehousing and transportation that lowered their overall selling costs. The companies that won in sales strategy used multiple strategies to achieve these outcomes and to realize this growth.

Future Plans Also Distinguish Winners

In addition to following similar patterns in the past couple of years, CPG companies fitting into the winner category also have similar plans for the next 12-24 months. For example, half of winners will boost field sales and merchandising resources, one-third will increase the use of brokers, and one-fourth will cover more company outlets with combined company/broker resources.

Winners Invest More in Customer-aligned Functional Experts

nielsencpg-winners-and-sales-ftes-nov10.gifLooking at the makeup of the average CPG winner sale team compared to the average sales team of other CPG companies, 30% of winners’ sales teams are composed of customer-aligned functional experts, compared to 25% of the sales teams at other CPG companies.

On average, CPG winners have 15 full-time equivalents (FTEs) per $1 billion of net sales in category management, eight FTEs per $1 billion of net sales in trade and customer marketing, three FTEs per $1 billion of net sales in shopper marketing, and two FTEs per $1 billion of net sales in pricing.

Recession Pressures Push Down CPG Price

A recent review of retail CPG prices by Nielsen found that during the four-week period ending June 12, 2010, prices were off or flat compared to a year ago, providing exceptional value to consumers, but weakening trends for retailers. Unit prices have been dropping sharply since March 2009, and the number of items on promotion has gone up. When one store slashes prices to gain competitive advantage, others follow suit. Meanwhile, brands have resorted to more promotions to stimulate sales and stem the growth of private labels.

Unfortunately for retailers, these price cuts and heightened promotions have not achieved the desired effects as both dollar and unit sales were off in each of the last three (four-week) periods leading up to June 12, 2010, according to Nielsen analysis.

About the Data: Approximately 220 CPG executives from more than 50 companies with close to $160 billion in US manufacturer sales in the food, beverage, personal care, and home care categories were surveyed in spring 2010.


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