SOURCE: The Boston Consulting Group

The Boston Consulting Group

April 20, 2012 00:01 ET

How Branded Consumer Goods Can Hold Off Competitors Through Speed

The Boston Consulting Group Finds That Time to Market Varies Greatly Within Industries

BOSTON, MA--(Marketwire - Apr 20, 2012) - Fast-moving branded consumer-goods companies have been competing with private labels for more than two decades. Technical superiority, creative marketing, and, more recently, efforts to differentiate at the point of sale have failed to hold off the competition from private labels. A new report by The Boston Consulting Group points to one remaining sustainable advantage: rapid time to market. The report,
"Speed to Win: How Fast-Moving Consumer-Goods Companies Use Speed as a Competitive Weapon," is being released today.

"Private labels have learned to match branded products in every important way," said Ivan Bascle, a partner in the firm's Munich office and a coauthor of the report. "But their business model limits their ability to bring out real innovations fast. That's where the branded companies can thrive -- if they move faster." That speed can also give them the flexibility to thrive under the spotlight of social media, enabling them to respond quickly to consumer demands.

Bascle and his colleagues have seen a recent uptick in consumer brand projects around speeding up product development. The team found a dozen "speed champions" representing each major product sector. These champions typically got new products to the marketplace -- from the creative idea to the shelf -- about 30 percent faster than the average company in their sector: in fewer than 15 months versus 22 (and 30 for laggards). This capability not only gave them an edge over private labels but also helped them compete against rival brands.

The differences were sizable whether the industry as a whole was quick in getting products to market, such as fashion (Zara, for example, requires only three weeks), or slower, such as alcoholic beverages and tobacco. "Companies in every kind of industry can become speed champions for their context," said Bascle.

Time Is Money
How did they do it? "The biggest step was simply making the organization aware that time is a major cost," said Andreas Rainer, a consultant in BCG's Vienna office and a coauthor of the report. Avon, for example, found that close to one-third of its development time went to simply waiting, while another third went to reworking previous efforts. To reduce those numbers, project teams established strict "change windows," after which developers had limited ability to push for alterations.

Many speed champions base their success on the BCG methodology standardize, prioritize, mechanize. Procter & Gamble set up a rigorous stage-gate schedule that includes return-on-investment numbers showing the likely gains from speed. The company piloted this speed process in less capital-intensive categories such as detergent in the U.S. and started launching speed improvements in capital-intensive businesses such as its Pampers line of diapers, adding the ability to innovate up to twice a twice a year -- a frequency that enabled it to reverse recent losses to private-label rivals.

To download a copy of the report, please go to www.bcgperspectives.com. To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

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