R&D, advertising key to growth

16 February 2012

LONDON: Brand owners around the world believe innovation, new pricing strategies and advertising are among the key methods for driving revenue growth in the coming two years.

KPMG, the consultancy, surveyed 350 businesses across the globe, focusing on the food, beverage, consumer goods and retail sectors.

Only 35% of its sample thought sales would increase in 2012. Looking forward two years, 44% stated North America offered the greatest growth potential, reaching 25% for China, 19% for Brazil and 16% for Western Europe.

The fact North America is a mature market was seen as its main appeal by 60% of firms, ahead of economic growth on 25%. This latter reason was cited by 53% regarding China, with rising affluence on 27%.

More specifically, 47% of the panel reported that innovation would have the most pronounced impact on revenue in the coming two years, standing at 46% for expanding the sales activity for existing product lines.

This beat supply chain efficiency and price adjustments, on 43% apiece. Mergers and acquisitions logged 38%, as did print and TV ads, as well as digital and social media advertising. Mobile and online commerce hit 35%.

When assessing how long new products would take to deliver the expected return on investment, 15% of the panel pegged this period at three months when discussing existing markets, falling to 10% for new markets.

These figures stood at 30% and 23% respectively for the number of participants placing this timeframe between three and six months. A further 31% put this total at between seven months and one year on both metrics.

Some 19% of those polled reported that shopper preferences in new markets were "very different" to the outlets where they currently traded, 33% said there were "somewhat" distinctive and 35% pointed to "slight" gaps.

At least 40% of companies now adapt local products in fast-growth economies, but less than 10% are developing bespoke goods for buyers in these geographies.

In assessing the technologies that could help maximise sales in the next two years, mobile tools like apps and location-based intelligence registered 40%, customer relationship management scored 31% and social media was on 18%.

"This is a time of considerable volatility and opportunity," said Willy Kruh, KPMG's global chair, consumer markets. "To succeed in this highly dynamic, fluid environment, manufacturers and retailers must re-think their business models."

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Data sourced from KPMG; additional content by Warc staff