As pandemic policies gradually ease and 2022 draws to a close, FMCG manufacturers still face prominent and arduous challenges. Some issues seem related to the pandemic, but most are not; they are chronic problems accumulated over time in the industry. Through conversations with many peers, it's clear that the vast majority of FMCG companies face, to varying degrees, the following five major challenges: 1. Difficulty penetrating lower-tier markets; 2. Difficulty breaking into white-space markets; 3. Difficulty launching new high-end products; 4. Difficulty implementing digital transformation; 5. Difficulty managing multiple brands.

The Five Major Pain Points of FMCG Companies

First Pain Point: Difficulty Penetrating Lower-Tier Markets! This is almost a perennial problem for most companies. Whether to surround cities from rural areas or attack rural areas from cities is an eternal puzzle in this industry. The Route-To-Market strategy for over 6 million outlets remains a key topic for senior management of every FMCG company.

Second Pain Point: Difficulty Breaking into White-Space Markets! "National expansion" is also a headache for many brand manufacturers. After years of building a dominant share in their home base, expanding to other provinces or regions often fails due to local competition. "White-space markets" (referring to markets where the company has a clear disadvantage) always look attractive, but reality is often harsh.

Third Pain Point: Difficulty Launching New High-End Products! Launching new products and selling high-end, moving the product line upward, is undoubtedly a strategic direction mentioned in every company's annual plan. New product launches are grand, and high-end pushes are heavily funded, but they often end with little result. Mid-year and year-end reviews reveal messes, and then the next year starts a new round of repetition...

Fourth Pain Point: Difficulty Implementing Digital Transformation! These days, "digital transformation" is a hot topic. If a company doesn't mention it, it seems like senior management lacks forward-thinking and urgency. However, after all the effort, aside from installing a bunch of IT systems, how many digital tools actually land in daily sales execution? After self-reflection, mid- and senior-level managers in each company know the answer.

Additional Pain Point: Difficulty Managing Multiple Brands! This pain point applies only to multi-brand companies. Nowadays, to find new growth engines and profit sources, more and more companies are trying multi-brand and multi-category development. However, brand and product development and promotion are not the hardest; the hardest is operations! Many companies have been used to single-brand and single-category operations for years, and their internal teams and external customers' operational awareness and capability systems cannot quickly adapt to multi-brand and multi-category operations. How to efficiently integrate and synergize is another new pain point for many companies in the industry.

The Five Major Opportunities for FMCG Companies

Pain points and obstacles are not scary; instead, they should be seen as opportunities to tackle. The five major obstacles correspond to five major opportunities: Go Deeper, Go Wider, Go Premium, Go Digital, and Go Multi-Brand.

1. How to Win in Lower-Tier Markets? — Go Deeper Break away from internal fixed thinking about lower-tier markets, and work backward from the terminal to design channel combinations. Using the most efficient channels is more important than using the channels you are best at. Many FMCG companies have achieved a certain scale with existing distribution and promotion strategies, but strong path dependence can easily create strategic blind spots. Channel iteration in the FMCG market is rapid and non-linear each year. How to continuously upgrade channel combinations and priority strategies in lower-tier markets will be key to winning in the future.

2. How to Achieve White-Space Breakthrough? — Go Wider This topic has stumped many FMCG manufacturers. They started by dominating their home turf; the closer to the factory and headquarters, the better the business. Once they go out, it's hard to beat local competitors and national leading brands. Achieving white-space breakthrough often requires a combination of "air and ground" — national media layout for high-profile brand building, and saturation attacks in target ground markets for distribution. At the same time, deploy the most capable and aggressive generals for targeted attacks and precision strikes. Caring only about gains and losses in one city or one pool, and not coveting leaps in big battles, is the real "shortcut" to gradually breaking through white-space markets.

3. How to Efficiently Launch New High-End Products? — Go Premium If new products and trend items don't sell well, don't always blame poor sales execution, insufficient dealer cooperation, or the bad environment causing foot traffic decline... As leaders of the manufacturer, first, put great effort into product selection. On the same track, a Ferrari runs faster than a Camry. The product's hard power is fundamental; only then come marketing and execution. If the product's "1" is missing, what's the use of many zeros behind it?

4. How to Use Digital Tools Well? — Go Digital The core of digital tool application is whether it solves the daily execution pain points of salespeople. If not, please take it off the shelf and re-optimize. Many times we don't lack digitalization; we have digitalization for show. Many problems that can be solved with phone calls and WeChat Work don't need to be forced into a mini-program. Digital tools are not about whether management thinks they are feasible; they must be tested for efficiency and pros and cons from the grassroots processes and systems. Executives should download and use them for a few days to know if they are good. Don't listen to the hype of suppliers and consulting firms. The marketing leader's personal testing and evaluation is a good start for digital tool application.

5. How to Do Multi-Brand Operations Well? — Go Multi-Brand As old brands enter decline in their life cycles, more and more FMCG manufacturers look to multi-brand to solve the problem of a weak first growth curve. The "second growth curve" supported by new and multiple brands is indeed attractive and exciting, but doing multi-brand operations well is extremely difficult. It requires not only a strong brand marketing department but also a strong customer marketing middle platform! Because the more brands, the more frequent and complex the communication from headquarters to the grassroots. Poor communication means extremely low execution rates. Once the grassroots fill in fake forms and go through the motions, your new and multiple brands are likely to die prematurely. To achieve multi-brand growth, first establish demonstration fields, run out standard methodologies and execution systems in demonstration markets, and then gradually replicate and promote. Of course, most manufacturers don't have this trouble. Therefore, compared to the first four major problems, this is a happy trouble, because companies facing this problem are generally already relatively successful in their main brand.