Accenture recently polled 1,000 chief financial officers (CFOs) and chief marketing officers (CMOs) and found that most are "holding the reins tightly" when it comes to price competitiveness and increasing costs.
The vast majority (85 percent) of those who participated in the study said they do anticipate growth. But they also reported that continued economic uncertainty is forcing a more disciplined approach, one that focuses on cost management and the prudent use of cash.
For example:
Nearly 90 percent of survey participants said price competitiveness is a primary strategic issue and that they expect to continue to maintain or cut costs and build cash positions further.
Nearly three out of four CMOs surveyed (71 percent) said pricing is now among their companies' top three strategic priorities. More than two thirds (71 percent) of the combined group of CMOs and CFOs believe they will have to maintain pricing, or even drop prices, given the current economic environment.
Virtually all are eying additional cost-cutting. Continued pricing pressure, combined with persistent uneasiness among executives about the prospects sustainable global economic growth led 99 percent of survey participants to indicate that their companies would be pursuing some additional level of cost-cutting.
70 percent of respondents indicated that their companies have optimal-to-excess cash positions relative to current business demands, and nearly 90 percent have teams in place (some permanent, some temporary) focused on continuing to improve working capital productivity. Roughly one third of the CFO participants indicated the need to continue generating cash to allow for opportunistic investments, increased R&D and/or future operational necessities.
Coupled with this disciplined approach to cost management, the study found that the CFOs and CMOs polled expect major impacts to their growth to result from improved product value, innovation and promotion across their businesses.
Nearly half of survey participants said they expect their companies to grow by more than 6 percent annually over the next 18 months (nearly double most consensus forecasts for global GDP growth).
CMO participants indicated that their companies had achieved short-term success from pricing strategy and process change, with 65 percent indicating that pricing and promotion programs had measurably impacted profits, and 59 percent indicating market share improvement as a result of already-implemented programs.
In addition, the study showed that speed-to-results of these reported programs was very strong. In fact, four out of five respondents indicated that their companies had achieved measurable growth impact in less than 12 months.
CMO participants indicated that their companies had achieved short-term success from pricing strategy and process change, with 65 percent indicating that pricing and promotion programs had measurably impacted profits, and 59 percent indicating market share improvement as a result of already-implemented programs.
As Greg Cudahy, managing director of Accenture's Operational Strategy practice, points out, now that near-constant volatility is the "new normal," companies are being careful to cushion any aspirations of growth with caution.
"It's different this time," he said. "In past recovery periods, there has been a greater expectation of the ability to capture price leverage across the board, and a related shift away from cost cutting and cash- position building. It's clear that in a market of essentially permanent volatility, CFOs and CMOs are staying a bit more reserved in their plans, despite their own expectations for growth."
