SOURCE: Clarkston Consulting

April 18, 2007 11:59 ET

Biggest Challenge Facing Consumer Products Companies Is Product Development & Innovation, According to Clarkston Consulting Study

CP Companies Moving Away From Cost-Cutting to Adopt Top-Line Growth Strategies

DURHAM, NC -- (MARKET WIRE) -- April 18, 2007 -- Clarkston Consulting today released a study revealing what executives in the Consumer Products (CP) industry say are the top market challenges facing their companies in the next 12 to 24 months. The study, "Consumer Products: Major Market Challenges," indicated the top five challenges concerning CP executives are:

--  Product Development and Innovation
--  Customer Intimacy
--  Cost Pressure
--  Human Capital
--  Operational Efficiency
    
CP companies are renewing their focus on profitable growth as the primary means of creating shareholder value, rather than strongly focusing on cost savings to build profitability. New products that meet ever more discerning consumer tastes are driving profitable growth, based largely on accelerated project life cycles. To keep pace, companies say they are under intense pressure to continually innovate, adapt, and reevaluate their business models. Indeed, 20 percent of the executives surveyed identified Product Development & Innovation as their No. 1 challenge, and said they are addressing this by executing with speed, analyzing product portfolio selection, and making organizational and human capital changes to foster innovation.

"After concentrating on increasing operational efficiency for more than a decade, CP companies are now returning their focus to driving profitable top-line growth," said Thomas Bornemann, managing partner of Consumer Products at Clarkston Consulting. "We believe that the keys to creating long-term profitability include new product selection, an effective portfolio management strategy, and balanced investment in both existing and emerging category leaders. Effectively getting these new products to market with excellent operations and creative marketing and sales methods will define the winners of tomorrow."

The Clarkston Consulting study also drew the following conclusions:

--  Customer Intimacy ranked as the second highest concern, identified by
    18 percent of study participants. Respondents ranked managing relationships
    as the most demanding aspect (34 percent), followed by improving customer
    insight (16 percent).
    
--  Attracting and retaining talent emerged as the leading Human Capital
    concern for 14 percent of business leaders.
    
--  Operational Efficiency (15 percent) and Cost Pressure (9 percent)
    still rank high on senior executives' agendas, suggesting that companies
    are concerned with costs, but increasingly view operations and supply chain
    management as contributors to top-line growth.
    
--  Only 9 percent of respondents named Consumer Intimacy as a top
    concern, suggesting that companies are focused primarily on maximizing
    relationships with retail customers.
    
--  Marketing & Brand Effectiveness was identified as an emerging
    challenge, signaling a growing focus on trade promotions and merchandising
    activity as keys to successful brand management in the future.
    
--  When evaluating consulting firms to address their business challenges,
    CP executives indicated that deep industry expertise is the No. 1 criteria
    they use in making their decisions.
    
"This study reaffirms that the consumer products company that effectively meets these emerging challenges will distinguish itself from the rest of the pack," said Bornemann. "Many of these challenges require a transformational approach that can only be achieved through strong internal leadership combined with external support that brings deep industry expertise and best practices to the table."

The Clarkston Consulting study was conducted by an independent market research firm and is based on interviews with senior level decision-makers in the food and beverage, consumer non-durables, and health and personal care sectors. The annual revenues of the participating companies (and divisions within companies) range from $500 million to $2.5 billion. The survey is intended to provide a broad view of CP companies' future challenges and the strategies they plan to use to address them.

To get a copy of the study or for more information about Clarkston Consulting, please visit www.clarkstonconsulting.com/cpmarketchallenges.

About Clarkston Consulting

Clarkston Consulting is a global management and technology consulting firm that provides strategic business solutions for clients within the life sciences and consumer products industries worldwide. Market leaders turn to Clarkston to help them bridge the gap between strategy and execution to sustain a competitive advantage. Clarkston is a sought-after business partner because of its deep industry knowledge and dedication to delivering results. We have sustained a five-year client satisfaction rating of 94% or higher as measured by The Conference Board. For more information, visit www.clarkstonconsulting.com.

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