In the late 1990s, the fast moving consumer goods market was one of the most competitive environments for any company to operate in.  There was pressure on three sides: Firstly, there were major players who dominated most of the sectors, and these included companies such as Coca Cola, PepsiCo, Unilever, Procter & Gamble, NestlΘ and Grand Met.  These companies were all global players in their respective markets and they spent vast amounts of money on advertising, promotion and, of increasing importance, new product development.

The second major force in many of the markets were the retailers themselves who were becoming more and more powerful.  Ten years earlier they were often treated as distributors, but now the large supermarkets offer brands in their own right and the development of distributor own brands was presenting a real threat to the dominance of companies such as Unilever and Coca Cola.

The third competitive pressure in the market was the consumer himself.  Consumers now knew exactly what they wanted, how much they were willing to pay, where they wanted to buy it.  They had also become much more advertising literate over the last decade, and were not fooled by clever advertising or products and brands that failed to deliver any real added value.
 

The Matrix Company

Matrix were a large European manufacturer, operating in a number of different geographical markets (primarily the UK).  The sectors in which they competed included personal care (soaps, shampoos, deodorants), ice cream, tea, coffee and frozen foods.

In the middle of 1997, the company felt that three of its most important UK brands each had a number of strategic issues that needed resolving over the next 18 months.  The three brands and their key issues were as follows:

1.   Fruitice, a innovative take home ice cream had been on the market for about three years and was  market share leader in its sector. Although highly successful, the business unit team were coming under increasing pressure from the board to improve levels of profitability, which currently were unacceptably low.
2.   Soft and Simple was a soap and this was the companyÆs largest and oldest brand.  It competed in a mature, price sensitive market, dominated  by larger multinational companies such as Unilever.  The key strategic dilemma for the business unit team was where should they focus their attention.  Should it be in the area of new product development for example or should they be sending more time and effort on the powerful retailers?
3.   Matrix Pyramid was an innovative tea bag, competing in the fastest growing sector of the tea market.  Unfortunately for The Matrix Company, they had been beaten to the market by a Unilever brand called Pyratea.  This market sector presented huge opportunities, but Matrix had to become much clearer about its basis of differentiation.  At the moment, it appeared to have none.