Enabling Multifaceted Innovation: Consumer Products CEOs reaching beyond the familiar

The consumer product (CP) industry has thrived for over 100 years by introducing innovative, everyday products that provide convenience at a reasonable price. Historically, CP firms targeted the "mass market" with broad marketing and branding strategies and widespread distribution through a convenient, and often deferential, retail channel. For many years, product line extensions, new advertising campaigns and packaging changes were sufficient to sustain acceptable growth.

Today, however, many CP firms operate in slow growth categories and the ability to grow is complicated by many challenges:

• Rapidly changing consumer preferences and the emergence of multiple consumer segments with different tastes, values and shopping patterns
• Intense competition for mind, wallet, stomach and shelf space
• Pressure from investors for both top-line and bottom-line growth
• Demands from powerful retailers for new products, new services and better trade terms, in addition to competition from private labels.

So, how can CP companies find new ways to grow?

The IBM Global CEO Study 2006 reinforces that innovation is a key requirement for future success. However, many surveyed CP CEOs indicate that their current focus is primarily on products, services and markets innovation. We believe this is insufficient to achieve long-term growth objectives. CP companies need a more strategic, multifaceted approach to innovation, one that also addresses the business model (BM), operations and the regulatory environment. This new approach should consider shoppers, consumers and the increasingly influential role of retailers.

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