Two years ago, we surveyed 270 decision-makers from the packaging industry on the subject of market intelligence. The result: two out of three of those surveyed saw market intelligence as one of the biggest opportunities for their growth prospects – and the percentage is likely to be even higher by now. In this article, we’ll show you exactly what market intelligence is and how companies can successfully acquire it and use it to their advantage, especially in the face of major, disruptive changes and crises. At the core, there are three critical factors.
The current situation is characterized by an ongoing supply chain crisis. Many companies in the packaging industry are struggling with difficulties in sourcing natural resources, as well as volatile and high prices for these resources and for energy. Despite this, some companies have consistently achieved double-digit growth.
The key to this above-average sales growth and high profitability lies in these companies’ market intelligence, that is, their ability to acquire and target crucial market information.
Market intelligence is based on a holistic view of the market. In the words of Bill Gates, “How you gather, manage and use information determines whether you’re a winner or a loser.”
- Companies that rely on market intelligence systematically analyze the market, identify trends and thus anticipate new market opportunities and risks. They develop an edge over their competitors.
- Companies with market intelligence respond to the discovery of attractive growth opportunities, for example, with proactive and forward-looking product innovation. This enables them to provide their customers with solutions at an early stage. This is possible because, for example, they understand the strategic issues and pain points of their customers and the emerging market demands faster and better.
- In principle, companies can use market intelligence to gain important competitive advantages by exploiting information leads for themselves on the basis of market-relevant data.
Market intelligence can take different forms: For example, it can exist as a separate unit within the company or be obtained entirely from outside.
Regardless of this, it is crucial that a company has the necessary processes in place to integrate or transfer the acquired market insights into the strategic decision-making process.
3 Success factors for the packaging industry
Market intelligence in the packaging industry mainly focuses on external information. The following 3 success factors are of crucial importance.
#1 – Thinking backwards from the end-consumer
(End-consumers -> retailers -> CPG companies & customers -> suppliers).
There are definitely companies that already manage to orient themselves to the needs of their customers and thus derive measures for their own company and strategy as well as develop appropriate solutions. You can take your hat off to these companies, as that is great!
However, it goes one step further with Market Intelligence, which also addresses requirements or upcoming requirements that not only the customers but also the customers’ customers (will) have to deal with.
The decisive factor here is to think the packaging value chain backwards, step by step, from the end-consumer. So:
- How is consumer buying behavior changing?
- Which relevant trends can be identified among consumers?
- How do retailers stand and what packaging policies do they pursue?
- What does the packaging policy of CPG companies look like? What developments and trends can be identified?
- It is also worth taking a look at the suppliers. What negotiating power do they have? How are the prices for raw and auxiliary materials developing?
Of course, this list is not complete and conclusive. But it shows the approach and the direction.
#2 – Do not lose sight of the macro environment
(Regulation, Social Changes, Geopolitics, Economics, Investors, Technology, NGOs)
The aforementioned 2020 B+P Consultants survey of 270 decision-makers from the packaging industry showed us that the greatest uncertainty of companies in the packaging industry when it came to sustainability was not in the area of customer requirements (though this is critical). It was legislation and regulatory activities – in other words, a major element of the external market environment.
It follows: A consideration and analysis of the market environment according to opportunities and risks for one’s own business becomes mandatory for companies in the packaging industry. The market environment has an impact on the entire packaging value chain and is currently exerting tremendous pressure on it.
An examination of the market environment enables an understanding of the strategic issues, opportunities and challenges that companies in the packaging value chain – be they customers or competitors – are dealing with or will have to deal with in the future.
allows forward-looking, anticipatory and proactive action, the development of innovative solution contributions and ultimately leads to sustainable competitive advantages.
Some of the most essential elements of the market environment that a company in the packaging industry should consider and analyze include:
- Legislation. These currently include, for example, the European Green Deal, the Circular Economy Action Plan I & II, the EU Taxonomy and many others (see also the list in the first article of the newsletter on the topic of “Sustainability”).
- Geopolitics, Society and Economy. Here especially but not exclusively inflation, energy crisis, Ukraine war, Taiwan, Brexit and skills shortage.
- NGOs such as the Ellen MacArthur Foundation (EMF).
- Investors and capital providers. Here, for example, it is topics such as ESG ratings (see also here the mentioned article in the “Sustainability” section).
#3 – Know your competition and yourself
(Direct and indirect competition – substitutes, related industries, your own company).
Our survey mentioned earlier had shown as another result that competitive pressure is seen as one of the biggest challenges for three quarters of the respondents in terms of growing their existing business.
To meet the challenge, companies should monitor their direct competition all the more closely. The focus here is on:
- How is the competition dealing with the trends and issues of the overall market?
- What topics are they dealing with and how are they addressing them?
- What are the best practices? What is the benchmark?
- What are developments in related industries and in indirect competition? What is the benchmark there?
- Are there key learnings from related industries that can be transferred to your own industry?
- Are there potential substitution threats that may arise (such as plastic substitution and paperization)?
It is fundamental that a company understands itself. It must be able to identify strengths and weaknesses in relation to developments in the market and realistically assess its position in the market. So
- How well is my company positioned compared to the competition or to certain topics?
- What is my position in the market – also from the point of view of my customers and in comparison with my competitors?
- How well do I meet the key purchasing criteria and requirements of my customers compared to the competition?
Accurate analysis from these angles allows a company to stay ahead of the competition and become a leader in the market for specific topics.
Market Intelligence is becoming increasingly essential for companies in the packaging industry to succeed and grow profitably in the face of major disruptive changes and crises.
Market intelligence is most promising when it is based on a holistic view of the market, including the macro market environment, packaging value chain and competition. Under this condition, it becomes an essential building block for a thriving, market-oriented company.
Core factors for success through Market Intelligence are:
- the integration of market insights into strategic decision-making processes,
- the anticipation of next moves of the competition,
- the needs of customers and customers’ customers, as well as
- trends in the market environment.
All in all, Market Intelligence enables companies to prepare the ground for establishing sustainable competitive advantages. They can identify opportunities at an early stage and at the same time contain risks efficiently and promptly.
Are you considering equipping your business with Market Intelligence?
Or do you still have any questions?
Let’s talk about it! As one of the largest suppliers of Market Intelligence in the packaging industry, we have been empowering and qualifying our clients’ organizations for decades with the key building blocks for a thriving and market-driven business to underpin their long-term success.
Feel free to book (here) a 1:1 call with Karsten, Managing Partner for Growth and Market Insights at B+P Consultants. We look forward to hearing from you.