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The changing consumer products value paradigm-Innovating business models - EY - Global

The changing consumer products value paradigm

Innovating business models

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Take an entrepreneurial approach to adapting operations to local markets while leveraging global scale.

Look at how these six market challenges have triggered consumer products companies to develop new business imperatives.

    1

    The challenge: Limited volume growth in established markets

    • Growing unemployment and increasing tax burdens
    • Value-seeking consumers, polarizing preferences
    • Aging populations

    The business imperative: Differentiate to remain competitive in established markets

    • Focus on brand/category leadership positions or low cost operations
    • Innovate products to the needs of specific (multi-tiered) segments and channels and drive new usage occasions

    2

    The challenge: Strong volume opportunities in emerging markets

    • 3 billion new consumers by 2030
    • Volatile markets
    • Undeveloped categories
    • Intense competition

    The business imperative: Execute to capture the growth opportunity in emerging markets

    • Choose where you want to compete and redeploy or acquire resources proactively
    • Take an entrepreneurial approach to adapting operations to local markets while leveraging global scale

    3

    The challenge: Rising and volatile cost pressures

    • Rising input and energy costs
    • Volatile commodities and currencies
    • Increasing cost of compliance and regulation
    • Rising cost of talent

    The business imperative: Redesign operations to maximize margins

    • Build brand equity to improve pricing power with both consumers and retailers
    • Drive out cost from the end-to-end value chain

    4

    The challenge: Increasingly complex routes to market

    • Increasing power of global retailers
    • Consumers utilizing multiple channels with limited loyalty
    • Direct to consumer

    The business imperative: Collaborate with customers and supply chain partners to create shared value

    • Take a holistic approach to your supply chain by optimizing total delivered cost to ensure a win-win for all parties
    • Identify potential synergies from collaborations to create shared value

    5

    The challenge: Changing relationship with the consumer

    • Consumers looking for engagement with companies and brands
    • Declining effectiveness of traditional mass media
    • Increasing consumer savviness around promotions

    The business imperative: Digital to win the consumer/shopper

    • Innovate an approach to building and protecting brands from talking to, to engaging with, consumers and shoppers
    • Adapt your business model to ensure consistent experience at every point on the path to purchase

    6

    The challenge: Increasing pressure to demonstrate value contribution to stakeholders

    • Sustainability is a must
    • Growing regulations and tax burdens on “harmful” products
    • Transparency enabling public pressure and consumer activism

    The business imperative: Act as a good corporate citizen to secure “license to operate”

    • Engage with stakeholders to demonstrate value created and shape regulation
    • Embed sustainability into the corporate DNA and be open about both successes and failures



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