Backyards without fences: Carving out territory in the changing consumer products terrain

For many farmers, repairing fences, maintaining boundaries, and strengthening fortifications is a never-ending task. So it is with consumer product companies. Over the past three decades, many consumer product companies in the United States had strong fences to mark their territory and protect their business. Most large companies in the industry often enjoyed unquestioned consumer trust in their brands; a fragmented, often subordinate, retailer base; a vast innovation and quality advantage over store brands; a command of advertising media; and the resource and margin advantages associated with scale. The US consumer base, too, was relatively homogeneous, making it easier to capture the business of large numbers of consumers using relatively undifferentiated tactics. But times have changed.

Today, many brands struggle to maintain relevance and a price premium. Shifts in channels and a more heterogeneous consumer base are weakening the traditional fences firms once maintained around sizeable consumer populations. Building new, more effective fences amid the complexity will require a different approach.