Flevy Management Insights Case Study
Omni-Channel Strategy for Consumer Packaged Goods in Digital Marketplaces
     David Tang    |    Key Account Management


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TLDR A mid-size CPG company experienced a 20% drop in retail sales and struggled with e-commerce. Implementing an omni-channel strategy improved customer experience and operational efficiency, leading to a 15% increase in online sales and a 25% boost in efficiency. This underscores the need to align key account management with consumer preferences and enhance marketing for sustainability-focused products.

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Consider this scenario: A mid-size consumer packaged goods (CPG) company is struggling to optimize its key account management amidst the rapid shift to e-commerce.

Facing a 20% decline in traditional retail sales and a slow digital market penetration rate, the company is confronted with challenges both in adapting to new consumer purchasing behaviors and in managing an increasingly complex distribution network. Externally, the rise of digital marketplaces has intensified competition, leading to price wars and eroding margins. Internally, legacy systems and processes are not equipped to handle the agility required for an effective omni-channel strategy. The primary strategic objective is to transform its retail and online presence into a cohesive omni-channel strategy, thereby enhancing customer experience, increasing sales across all channels, and improving operational efficiency.



This organization, with its rich history in the consumer packaged goods industry, is at a critical juncture. The rapid changes in consumer behavior towards online shopping, coupled with the company’s slow response to digital transformation, suggests that the primary issues may stem from a lack of integrated digital strategy and an outdated approach to key account management. The organization's leaders are concerned that without a strategic shift, the company may continue to lose ground to more agile competitors.

Industry Analysis

The consumer packaged goods industry is witnessing a significant transformation, driven by the digitalization of consumer shopping habits and the increasing dominance of e-commerce platforms. This shift has not only changed how products are bought and sold but also how they are marketed and distributed.

Analyzing the competitive landscape reveals several key forces at play:

  • Internal Rivalry: High, due to the presence of numerous established players and emerging brands fighting for market share.
  • Supplier Power: Moderate, as manufacturers have multiple options for selling their products but also face pressure from large retail and e-commerce platforms.
  • Buyer Power: High, with consumers having access to a wide range of products and the ability to compare prices instantaneously.
  • Threat of New Entrants: Moderate, barriers to entry are lower in the digital space, allowing new brands to emerge rapidly.
  • Threat of Substitutes: High, especially with the rise of private label brands and alternative products.

Emerging trends include the rise of direct-to-consumer models, increased focus on sustainability, and the use of data analytics for personalized marketing. These trends are reshaping the industry, creating opportunities for brands to differentiate themselves and build direct relationships with their consumers, but also posing risks related to data privacy and security.

  • Increased use of AI and Machine Learning for customer insights presents the opportunity to enhance product development and marketing strategies, with the risk of significant investment in technology infrastructure.
  • The growing importance of sustainability in consumer choices offers the chance to innovate product lines and packaging but requires reevaluation of supply chains and potential cost increases.

A PEST analysis highlights the impact of technological advancements, changing social attitudes towards sustainability, and evolving regulatory landscapes on the industry. These external factors necessitate a strategic response to leverage opportunities and mitigate risks.

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Internal Assessment

The company boasts a diverse product portfolio and a strong brand reputation. However, its internal capabilities are not fully aligned with the demands of a rapidly digitalizing marketplace.

SWOT Analysis

Strengths include a well-established brand and a broad distribution network. Opportunities lie in leveraging digital channels to reach new customers and in using data analytics for targeted marketing. Weaknesses are evident in the company’s digital infrastructure and agility. Threats include the aggressive pricing strategies of competitors and the potential for new entrants to disrupt the market.

Distinctive Capabilities Analysis

Success in the current environment requires capabilities in digital marketing, supply chain agility, and data analytics. The company has a strong foundation in brand management but needs to develop capabilities in these areas to stay competitive.

Strategic Initiatives

  • Omni-Channel Key Account Management: This initiative aims to integrate key account management across all channels, both online and offline, to provide a seamless customer experience, thereby increasing customer loyalty and sales. The value will be created by leveraging data analytics to gain insights into customer behavior and preferences, which can inform targeted marketing strategies. Resources required include investment in digital platforms and training for the sales and marketing teams.
  • Digital Infrastructure Upgrade: Upgrading the digital infrastructure to support e-commerce, mobile applications, and data analytics will enhance operational efficiency and customer engagement. The initiative is expected to create value by reducing operational costs and enabling personalized customer interactions, leading to increased sales. This will require investments in technology systems and capabilities.
  • Sustainability-Focused Product Innovation: Developing new products and packaging that prioritize sustainability will address growing consumer demand and differentiate the brand. This initiative is expected to create value by attracting environmentally conscious consumers and potentially commanding premium pricing. Resources needed include research and development, as well as partnerships with sustainable suppliers.

Key Account Management Implementation KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.


Without data, you're just another person with an opinion.
     – W. Edwards Deming

  • Online Sales Growth: Measures the effectiveness of the omni-channel strategy in driving e-commerce sales.
  • Customer Satisfaction Score: Gauges customer experience across all purchasing channels.
  • Operational Efficiency: Tracks improvements in order processing and fulfillment times post-digital infrastructure upgrade.

These KPIs will provide insights into the success of the strategic initiatives, helping the company to adjust its strategies as needed to achieve its objectives.

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Key Account Management Deliverables

These are a selection of deliverables across all the strategic initiatives.

  • Omni-Channel Strategy Plan (PPT)
  • Digital Infrastructure Upgrade Roadmap (PPT)
  • Sustainability Product Innovation Framework (PPT)
  • Customer Satisfaction Survey Template (Excel)

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Omni-Channel Key Account Management

The organization utilized the Customer Journey Mapping framework to enhance its omni-channel Key Account Management strategy. Customer Journey Mapping allows companies to visualize the path their customers take from initial awareness to purchase and beyond, making it an invaluable tool for creating a seamless customer experience across multiple channels. This framework was chosen for its ability to identify gaps and opportunities in the customer experience, ensuring that key account management efforts are aligned with customer needs and preferences.

Following the deployment of the Customer Journey Mapping framework, the organization undertook several steps:

  • Conducted interviews and surveys with key accounts to understand their purchasing journey across different channels.
  • Mapped out the various touchpoints and channels used by key accounts, identifying critical moments that influence purchasing decisions.
  • Implemented targeted improvements at specific touchpoints identified as pain points or opportunities to enhance the customer experience.

Additionally, the Value Proposition Canvas was employed to refine the organization's understanding of key account needs and how its products and services fulfill those needs. This framework complements Customer Journey Mapping by focusing on the product-market fit from the customer's perspective, making it particularly useful for tailoring the omni-channel strategy to key accounts.

The process involved:

  • Identifying and documenting the jobs, pains, and gains of key accounts through workshops and one-on-one interviews.
  • Aligning the company's products and services with the identified customer jobs, pains, and gains to ensure a strong value proposition.
  • Adjusting marketing and sales strategies across channels to reflect the insights gained, ensuring consistency in messaging and experience.

The implementation of these frameworks resulted in a more cohesive and customer-centric omni-channel strategy. Key accounts reported higher satisfaction levels due to improved understanding and anticipation of their needs across all channels. Sales data indicated an increase in cross-channel purchasing, validating the effectiveness of the strategic initiative in enhancing the customer experience and driving sales growth.

Digital Infrastructure Upgrade

The organization applied the Capability Maturity Model Integration (CMMI) to guide its digital infrastructure upgrade. CMMI is a process level improvement training and appraisal program that helps organizations streamline process improvement and encourage productive, efficient behaviors that decrease risks in software, product, and service development. The model was instrumental in assessing the current maturity level of the organization's processes and defining a clear path for process improvement as part of the digital infrastructure upgrade.

The company undertook the following steps in implementing the CMMI framework:

  • Assessed current digital infrastructure and processes to establish a baseline maturity level.
  • Identified specific process areas for improvement that would support the strategic goals of the digital infrastructure upgrade.
  • Developed and implemented a plan for process improvement, including training for staff and the introduction of new tools and technologies.

Through the application of the CMMI framework, the organization was able to systematically upgrade its digital infrastructure, leading to enhanced operational efficiency and a more agile response to market demands. The structured approach provided by CMMI facilitated a smooth transition to the new systems and processes, minimizing disruption and ensuring that the upgrade supported the strategic objectives of the company.

Sustainability-Focused Product Innovation

For the strategic initiative centered around sustainability-focused product innovation, the organization leveraged the Life Cycle Assessment (LCA) framework. LCA is a method used to evaluate the environmental impacts associated with all the stages of a product's life from cradle to grave (i.e., from raw material extraction through materials processing, manufacture, distribution, use, repair and maintenance, and disposal or recycling). This framework was selected for its comprehensive approach to assessing the sustainability of product innovations, ensuring that new products not only meet customer needs but also minimize environmental impact.

The organization followed these steps in applying the LCA framework:

  • Evaluated the environmental impact of current product lines to establish a benchmark.
  • Identified areas for improvement and innovation that would reduce the environmental footprint of new products.
  • Integrated sustainability considerations into the product development process, from concept through to production and distribution.

The implementation of the LCA framework enabled the company to introduce several new sustainability-focused products with a significantly reduced environmental impact. These innovations not only strengthened the company's commitment to sustainability but also resonated with environmentally conscious consumers, leading to increased brand loyalty and market differentiation. The strategic initiative demonstrated the organization's ability to align product innovation with sustainability goals, creating value for both the company and its customers.

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Key Findings and Results

Here is a summary of the key results of this case study:

  • Implemented an omni-channel strategy that increased online sales by 15% and improved customer satisfaction scores by 20%.
  • Enhanced operational efficiency by 25% post-digital infrastructure upgrade, reducing order processing and fulfillment times.
  • Launched new sustainability-focused products, leading to a 10% increase in sales among environmentally conscious consumers.
  • Applied Customer Journey Mapping and Value Proposition Canvas, resulting in a more cohesive and customer-centric strategy across all channels.
  • Utilized the CMMI framework to systematically upgrade digital infrastructure, supporting strategic objectives with minimal disruption.
  • Leveraged Life Cycle Assessment (LCA) to innovate product lines with reduced environmental impact, enhancing brand loyalty.

The strategic initiatives undertaken by the company have yielded significant results, marking a successful transition towards an integrated omni-channel strategy and a stronger digital presence. The increase in online sales and customer satisfaction underscores the effectiveness of the omni-channel approach and the importance of aligning key account management strategies with customer preferences. The operational efficiencies gained through the digital infrastructure upgrade have positioned the company to respond more agilely to market demands. However, the results were not uniformly positive across all fronts. The sustainability-focused product innovations, while successful in attracting a niche market segment, have not yet translated into broad market penetration or significantly impacted the company's overall market share. This suggests a potential gap in effectively communicating the value proposition of these products to a wider audience or in the distribution strategy for these innovations.

Given the mixed results, the company should consider enhancing its marketing and communication strategies, particularly for its sustainability-focused products, to better articulate the value proposition and appeal to a broader consumer base. Additionally, further investment in data analytics could provide deeper insights into consumer behavior and preferences, enabling more targeted and effective marketing strategies. Expanding partnerships with e-commerce platforms could also improve the distribution and visibility of these products. Finally, continuous investment in digital infrastructure and training for staff will be crucial to maintaining operational efficiencies and supporting future strategic initiatives.


 
David Tang, New York

Strategy & Operations, Digital Transformation, Management Consulting

The development of this case study was overseen by David Tang. David is the CEO and Founder of Flevy. Prior to Flevy, David worked as a management consultant for 8 years, where he served clients in North America, EMEA, and APAC. He graduated from Cornell with a BS in Electrical Engineering and MEng in Management.

To cite this article, please use:

Source: Key Account Management Enhancement in D2C Apparel, Flevy Management Insights, David Tang, 2024


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