Insight

Why Partnerships Are Key for Consumer Goods Companies

The food company MARS has been active in the lucrative pet industry for decades. The company already owns approximately 2,000 veterinary practices and clinics in the U.S., known under the names Banfield Pet Hospitals, Bluepearl and Pet Partners. In Europe, MARS expanded its footprint by acquiring Scandinavian enterprise Anicura, a firm foothold in veterinary medicine and care. The Group has also set up a $100 million risk capital fund to invest in innovative pet-related products and services. What’s more, MARS conducted a three-year study to learn more about the behavior of more than 200,000 dogs—and is using those insights to become more proactive and preventative with animal care in the future.

By expanding its core business and entering new markets, MARS has found a way to evolve from a pet food manufacturer to an animal care expert—becoming one of the world's most important partners for pet owners. The company’s ability to find relevant partners, like animal hospitals and innovative start-ups that cater to the domestic animal, plays a substantial role in this transformation process.

The shift from a product focus to a consumer experience strategy

What applies to pet food manufacturers, like MARS, is equally relevant to other product categories in the consumer goods industry. The market, formerly occupied by a small number of global companies, has become increasingly fragmented. With lower barriers to entry, agile start-ups and online retailers are entering the market—blurring the boundaries between retailers and suppliers and creating complex ecosystems with different players. This trend has far-reaching consequences, especially for traditional FMCG and CPG manufacturers. Increased competition is eroding market share and hindering growth. While current figures show a general increase in the growth rate of leading manufacturers, it is mainly due to expansion-driven mergers and acquisitions (M&A).² In complex ecosystems, however, the main objective of an acquisition should be to optimize the customer experience, which will be the only way to create a real competitive advantage. To survive in this new reality, consumer goods manufacturers must consider the entire value chain and identify which points along the customer journey  to optimize the brand experience.

Without their own sales channels, product-focused FMCG and CPG companies relied heavily on the retail trade because of its reach. Initially, this was a solid strategy. Today, however, consumer goods manufacturers are realizing they’ve lost the interface and connection to the consumer—which is essential in creating a cohesive and consistent brand experience.