Overview

Consumer products is one of those elastic phrases that can include any of the jars, boxes, cans, or tubes on your kitchen and bathroom shelves—or it can expand to include pretty much everything you charged on your Visa card last year. This industry manufactures and, perhaps more importantly, markets everything from food and beverages to toiletries and small appliances. (We do not include industries sometimes put in this category but covered in other profiles: autos, apparel, entertainment products, and consumer durables, which are large appliances and other products expected to last more than three years).

The consumer products industry can be divided into four groups: beverages, food, toiletries and cosmetics, and small appliances. Most firms offer products that fit primarily into only one of these groups, although a firm may have a smattering of brands that cross the lines. Virtually all companies are similar in organizational structure, emphasis on brand management, and approach to business.

Consumer products are the foundation of the modern, consumer economy. The industry itself not only generates an enormous portion of the gross domestic product, it also pumps huge amounts of money into other industries, notably advertising and retail. Individual consumers make up the majority of this industry's customers; sales are concentrated in the United States, Japan, and Western Europe, though other parts of the world are working hard for the privileges of wearing clothing emblazoned with company logos, eating processed food, and chopping vegetables with an electric motor instead of a traditional utensil. Success in consumer products is all about marketing an individual product, often by promoting a brand name. The competition is ferocious for shelf space, so package design, marketing, and customer satisfaction are key elements.

The majority of companies that sell consumer packaged goods are conglomerates consisting of many diverse subsidiaries selling brands that consumers recognize. Sara Lee Corporation produces products from Ball Park franks to Hanes underwear and Endust furniture polish. Unilever, an industry giant based in England, sells teas and soups, pasta and pizza sauces, ice cream, bath soaps, shampoo, salad dressing, margarine, laundry detergent, toothpaste, cosmetics, frozen foods, and perfumes. Other big players in the industry include Nestle, Clorox, Kraft, Procter & Gamble, S.C. Johnson, and ConAgra.


Trends

Alliances
Many of the more forward-thinking consumer packaged goods (CPG) companies are trying to enhance growth via alliances with other companies. One CPG brand management insider says of her company’s partnership on a product line with a big industry competitor, “It seems amazing that we’re partnering with ‘the enemy,’ but it’s true.” CPG companies are doing this for a number of reasons. Some are doing it to create and bring to market new products with less risk than they’d have if they were going it alone; for instance, PepsiCo and Starbucks teamed up to create a line of bottled coffee drinks. Some are doing it to reach new demographics; for example, Coca-Cola teamed with Danone to distribute bottled-water products to new customer segments. Others are doing it to expand geographically into new markets; General Mills, for instance, has joined forces with Nestlé to market breakfast cereals outside North America. And some do it for other reasons, such as to increase operating efficiencies, cut costs, or reduce capital outlays.

RFID
In recent times, Wal-Mart, Albertson’s, other retailers of CPGs, and other organizations like the U.S. Department of Defense have given their CPG suppliers mandates to begin tagging their product shipments using RFID, or radio-frequency identification, technology so that those retailers can improve their supply chain efficiencies. This means that at most of the big CPG companies, there’s a major focus currently on getting up to speed with RFID technology—which in many cases means good news, in terms of job opportunities, for engineers and other tech types.

Other Technologies
As in most industries these days, technology is becoming an ever more significant factor in doing business in the CPG industry. One of the biggest technology trends is the rise in importance of customer relationship management (CRM) applications. CRM software collects information about customers, their behavior, and all aspects of their relationship with a company, allowing the company to better understand the marketplace for its products and how to increase sales and market presence. If you go into brand management in a CPG company, expect to use data collected by CRM applications to tailor your efforts to sell into the marketplace.

The Internet is another area of technology that’s had a big impact on CPG marketing. In the Internet arena, the most successful companies are using the interactivity of the Web to strengthen the relationship between consumers and their brands. Campbell Soup, Coca-Cola, and Hershey’s all offer online gift shops where Internet surfers can buy branded collectibles such as decorative tins, T-shirts, and plush toys.

How It Breaks Down

Following are the product categories found in the CPG industry. Many companies operate in only one category—especially smaller companies. Others, including many of the big dogs of the industry, are diversified CPG companies: They make and sell products in multiple categories. Nestlé’s brands, for instance, include products in the food (e.g., Toll House cookies), beverage (Nestea), and pet care (Alpo) categories. In many cases, diversified CPG companies started out by making products in just one category, but diversified over time via mergers and acquisitions.

Beverages
Intensely competitive and hugely reliant on advertising, this is a mature industry. Different segments of the beverage world include beer (Adolph Coors, Anheuser-Busch, Miller, Stroh's), soft drinks (Coca-Cola, PepsiCo), and juices (Tropicana is owned by PepsiCo, Minute Maid by Coca-Cola).

Foods
There may be a little less consolidation in the food industry than in beverages, but this is also a mature and competitive industry with single-digit growth. Most of the packaged goods that fill our pantries, cupboards, and refrigerators come from a handful of big-league corporate players. Some are household names; Campbell Soup, General Mills, H.J. Heinz, and Kellogg have spent enormous sums of money to tattoo their names onto your brain. Other big players, such as ConAgra (Hunt's, Healthy Choice, and Wesson) are better known for brands they own.

Toiletries, Cosmetics, and Cleaning Products
Baby Boomers aren't getting any younger, and vanity will outlast us all. So will household dirt. So this is a solid category for the foreseeable future. At three-and-one-half times the size of its nearest competitor, Procter & Gamble is the Godzilla of this group—and indeed the consumer products world in general. Other players include Clorox, Colgate-Palmolive, Revlon, Gillette, Kimberly-Clark (Huggies, Kotex, and Kleenex), Unilever, and S.C. Johnson (Pledge, Glade, and Windex).

Small Appliances
This is an amalgam of companies in various industries. More people are building and buying homes, and forecasters don't expect the trend to slow. So tools, kitchen gadgets, air-conditioners, chain saws, and anything else Saturday shoppers enjoy pausing over in the hardware store are selling well, and the future looks rosy for this segment of the industry. Nevertheless, this is also a relatively mature industry, and the brand system is not as strong as it is in the other categories mentioned above. Players here include Black & Decker, Sears, and Snap-On.

Job Prospects

The big consumer products companies employ people in a range of fairly standard corporate functions—everything from accounting and finance, human resources, and IT to research and development, operations, and sales. You can find yourself a good career in these and other functional areas in the industry. However, none of these will ever get the focus that one functional area gets in CPG companies: marketing and brand management.

According to the Bureau of Labor Statistics (BLS) 2004 Occupational Outlook Handbook, employment in the field of marketing overall is expected to increase faster than average—at a 21 to 35 percent clip—through 2012. The BLS says that this sustained job growth will be supported by increasingly intense domestic and global competition in consumer products and services but cautions that budding marketers should expect increased competition for full-time corporate marketing positions as marketing projects (including brand management) are increasingly outsourced to ad agencies and contract specialists.

The hiring outlook at CPG companies, whether in brand management or in other departments and functions, depends primarily on the financial performance of those companies. If a company is growing, it will be hiring. These days, after a few years in the doldrums due to the recession in the early 2000s, CPG companies are starting to enjoy growth again. As a result, some companies are hiring. But by most accounts, in late 2004, the economy is not out of the woods yet. Because of this, even companies that are hiring are doing so cautiously.

Still, these are big companies, and as people leave jobs at CPG companies, they must be replaced. And, while there are never many brand management positions available, each year many CPG companies bring at least a few brand management trainees on board. At the biggest companies, these are typically MBAs from top schools.