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Secret To CPG Success? Retailer Collaboration

September 5, 2012
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 A new study from the Grocery Manufacturers Association, McKinsey & Co., and Nielsen says successful consumer packaged good companies are five times more likely to view retailer collaboration as a strategic priority than those than do not.

The report, “2012 Customer and Channel Management Survey,” shows the blurring line in successful businesses between national brand companies and the retailers heading up private label competition.

“Tellingly, winning CPG companies are five times more likely than their lower-performing peers to invest in customer collaboration, or joint manufacturer-retailer initiatives with shared accountability and targets, which go above and beyond the normal course of business,” the report says. “Winners drive collaboration on multiple fronts. They share data and ideas to develop “win-win” growth opportunities, take into account retailer profitability when designing pricing and category strategies, and tap into their own consumer expertise to help retailers cater to new consumer segments.”

More than 50 companies with nearly $160 billion in annual sales participated in the survey, the report says. It says successful companies were six times more likely to share new-product ideas with retailers at least 18 months before launch, and three times more likely to focus on implications to retailer profit to sell in price increases.

“In their sell-in stories, winners focus on the distinct positions of their brands, noting their advantages over competitors and calling attention to favorable product attributes – such as positive margin impact or the ability to drive store traffic – that are of interest to retailers,” the report says. “By crafting persuasive arguments, winners are more likely than others to sell in the full price increase desired, even with retailers that typically push back.”

The report also details success for companies who targeted the Hispanic market. It says winning companies were three times more likely to invest in emerging channels and the Hispanic market.

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