Consumer products companies cover a vast array of product categories, and come in many shapes and sizes. Strategic decision-making is often made challenging due to the complexity of these businesses, which can have multiple brands or divisions, target consumer groups, geographies, channels of distribution, and so on. Consider the following market dynamics:
- The marketplace is facing channel disruption on a dramatic scale, growing ecommerce penetration and the continued strengthening of Amazon, new and disruptive business models, demographic shifts and renewed spending priorities, highly informed and empowered consumers, and rapidly evolving technologies.
- The changing channel landscape is forcing many consumer brands to restructure their go-to-market strategies to drive more productivity from fewer points of distribution, and to build direct-to-consumer strategies that require capabilities and expertise that don’t typically reside in-house today.
- The role and influence of brands have also evolved. Today, consumers are increasingly looking for “specialty” brands that deliver on precise needs, and thus grant brands less “permission” to expand beyond their core. The appeal of power brands has eroded, and the prevalence of private label and other value brand alternatives gives consumers many choices when they’re trading down, particularly in an hourglass economy. This makes it paramount for any branded consumer products company to take a hard look at its brand proposition and ensure it is sufficiently relevant and compelling.
L.E.K. combines deep industry expertise, fact-based insights and sophisticated analytics to identify solutions to complex issues and build confidence among management teams to take informed strategic action. Consumer product companies partner with us to deliver strategies that drive growth, create competitive advantage, unlock profit and value creation opportunities, and mitigate risk. Our approach is highly objective and fact-based, but we also take extraordinary care to involve management teams throughout the process, as appropriate, to ensure full alignment.
How We Help
Consumer products companies, from small emerging brands to large global enterprises, engage us to:
- Accelerate growth: Our core focus is growth strategy, with a track record of guiding consumer products companies to prioritize the right growth vectors and align on how to activate the strategies necessary to realize tangible results. We can address this challenge by applying different lenses: for example, evaluating opportunities based on Edge Strategy® and Strategic Market Position principles, and grounding strategic options in deep consumer understanding — both psychographic and behavioral — and brand position to clearly define “permission” areas of highest strategic value, rigorous market evolution framing, and business case and scenario analysis.
- Define brand position and strategy: We believe that strategy should be consumer-driven — it must be grounded in a sound view of your core target consumer segments, what they value, how they behave along the purchase path, what motivates them to make decisions, etc. Positioning your brand squarely against the right consumers and in the right way follows from this. Deep analytics and years of expertise allow us to bring the right strategic frameworks and guidance to clients to focus their brands appropriately and allow them to unlock superior value.
- Define the right channel strategy: We help clients navigate this very complex issue, by clearly defining the roles, rules and related strategies for each channel segment. In doing so, we assist clients with many aspects of channel strategy, including where and where not to participate, how to grow sales and profit productivity across points of distribution, restructuring distribution in light of legacy and digital channel evolution, refining distributor and marketplace strategies, building or recalibrating DTC strategies, defining holistic digital and ecommerce strategies, and others.
- Execute value-creating deals: We support our clients at every stage of the deal life cycle — from evaluation to diligence to integration to growth planning. We have helped our consumer products clients execute billions of dollars’ worth of transactions, including mergers and acquisitions, joint ventures, other partnerships, and divestitures.
We have helped companies achieve profitable growth and outsized returns.
- Transformative growth strategy: A small gluten-free food manufacturer needed strategic insight into its true market opportunity, and how to maximize growth and value creation. L.E.K. combined fact-based analysis and deep industry expertise to frame the addressable market opportunity and to build a strategy that pushed the organization to pursue growth opportunities outside of what its historical mindset had considered. The growth path we defined unlocked substantial, yet fully practical and rational, growth that existed in new categories and channel expansion (transitioning beyond the natural channel and into large conventional channels). The approach was nuanced and precise, given the inherent complexities and risks, and ultimately led to an increase of the company’s valuation by 500% and the brand becoming the fastest-growing food brand in the U.S.
- Product innovation: A leading specialty mattress manufacturer needed to regain market share by developing a compelling “pull” brand among consumers. L.E.K. conducted an extensive consumer-driven exploration of expectations and needs, grounded in rigorous consumer research spanning extensive consumer surveys, interviews, focus groups and conjoint analysis. We worked collaboratively with our client to build a new product concept. We further collaborated with an ad agency to create a distinct brand promise and associated branding strategy and campaign. We also critically modeled the economic benefits to dealers in the marketplace, which directly informed rollout prioritization and channel negotiations for the new product. The newly created product has been touted as a major “market winner” across the industry.
- Consumer-led growth strategy: A mature global footwear company asked L.E.K. to assist in defining the growth strategy for its flagship brand. At issue was whether the brand had reached its peak and should thus be “milked,” or whether substantial runway still existed and should be aggressively funded. We conducted deep consumer research to define relevant consumer segments in the marketplace and precisely determine how our client’s brand was positioned against key segments, where there was misalignment that could be corrected, and ultimately where and how much growth opportunity remained with key segments. We also prioritized the key growth levers that should be pursued. Our work established a universal understanding of the consumer throughout the entire company and paved the way for a growth plan that drove further investment that propelled the brand to one of the top growth brands in the industry.
- Pricing and promotion strategy: A leading vitamin, mineral and supplement company needed to rethink its pricing and trade promotion strategy. Their existing pricing strategy was inconsistent at best, and there was no clear linkage between the company’s overall strategy and its go-to-market pricing approach. Further, the marketplace was highly promotional and lacked clear messaging to the consumer. L.E.K. worked closely with a cross-functional client team and applied deep data analytics and competitive and channel analysis to address a range of pricing issues. We delivered a sophisticated, best-in-class pricing framework and associated rules that generated approximately $20 million in direct contribution dollars.
The Personalization of Healthy Living
Personalization in the healthy living category has a whole new life. Going beyond just nutritional supplements, personalized solutions include meal kits, personal care products and beauty treatments.
Wayfair follows Amazon With its Own Shopping Holiday #WayDay
Last year, we said get “Prime-Inspired” and leading brands are creating a reason to buy in a big way.
Survival of the Specialist Retailer: Lessons From Toys “R” Us
What does the decline of Toys “R” Us mean for how a specialty retailer should survive and thrive in 21st-century retail?
Day One: What Australia should take away from Amazon’s launch so far
Although the initial launch in Australia was underwhelming, it should not be interpreted as a sign reduced potential on the part of Amazon.
How will Private Label Evolve in the Beauty and Personal Care Category?
While private label brands are increasingly common on retailers’ shelves, their penetration in the beauty and personal care category remains low.