The past years have been tough for businesses as they’ve navigated the various macroeconomic forces. What are the implications for the sectors this year? What should businesses anticipate moving ahead?
A forward-thinking approach must be the primary focus for all sectors in 2024.
Businesses that adopt innovative commercial management and growth strategies will achieve rapid sector development.
Our industry leaders have identified opportunities and strategies for 2024 that you can apply to accelerate your business growth.
Consumer sector trends in 2024
If 2023 was about managing for stable profitability, 2024 will be the year for the consumer sector to re-prioritize for growth.
Although inflation persists, consumer demand is on the rise again. Still, a lingering uncertainty in consumer confidence, particularly in key regions like the US, adds complexity to the landscape.
The consumer sector faced several challenges in 2023, such as high stock levels, slow rotation, and higher operational expenses, that have been largely addressed. In 2024 businesses must use the opportunity to gradually shift from reactive to proactive strategies again and refocus on a strong consumer-centric management of their business to move back onto a growth track.
The key lesson for 2024 – Action comes first. Do not wait to react.
Growth opportunities and strategies 2024
Understand your key consumer segments
Ongoing price increases and tighter budgets caused by recent market changes may have resulted in behavioral changes among consumers. Allocate resources to understand your primary consumer segments’ needs and concerns in order to market to them accordingly. In doing so, reduce business risks, make better decisions, and gain a competitive market advantage.
Build a targeted consumer offering
Match your pricing, offering, and key messaging closely to your validated consumer segments and needs. Continue to emphasize your unique selling point and clearly differentiate yourself from key competitors. However, keep a close eye on positive price image and value perceptions as consumer confidence is still at risk.
Identify untapped markets
Watch out for new markets that offer potential for growth and success. Explore new markets or categories with growth potential and strategic positioning to diversify your revenue streams and cement your position in the broader business ecosystem. Besides enhancing business sustainability, it also boosts brand awareness and reputation.
Monitor your marketing budgets
Don’t overlook your marketing budgets and promotional activities. Forward-thinking businesses regularly review size and allocation of their marketing budgets, as these are instrumental to support the defined growth strategies. Continuously monitoring data allows you to steer resources efficiently, initiate changes early in the process, optimize ROI, and drive incremental sales.
Invest in tech for RGM and decision support
In 2024, investing in technology is about more than just adopting innovation. For many businesses, it is about risk-proofing revenue growth management strategies and integrating AI-driven decision-support into daily business routines. Respond thoughtfully to market changes, consumer behaviors, and competitive dynamics by harnessing the power of technology.
Better growth, your next phase
We expect consumer sector businesses that come out ahead this year to continue focusing on these five key areas:
- National/International growth strategy to identify lucrative opportunities, mitigate risks, and establish a solid foundation for sustained growth on both national and international scales.
- 5-Year commercial strategy plans that include a deep-dive into sector trends, ever-evolving consumer behavior, and market dynamics.
- Revenue growth management operations to ensure sustained profitability and maximize every facet of revenue generation by fine-tuning pricing strategies and operational processes.
- Regional pricing strategies to address market diversity and local consumer preferences. This includes adjusting Portfolio-Price-Architectures (PPAs) to align with regional dynamics.
- Revenue management solution that supports all price waterfall components, which can be tailored to your pressing requirements, be it all-in-one solution or a best-of-breed strategy that combines and integrates different systems, each covering a different area (price management, rebate/discount management, etc.)
Unlock better growth
with Simon-Kucher.
Reach out to our experts in the Consumer sector today.
Financial services sector trends in 2024
In 2024, decision-makers in the financial services sector must navigate interest rate developments cautiously given the macroeconomic uncertainty prevailing globally and the looming recessions in Europe and North America. For banks, this means a meticulous management of interest margins, securing and growing deposits, and refining lending pricing capabilities. Insurers, facing challenges from persistently high interest rates, need to reevaluate their relevance beyond protection.
Sales models and marketing processes need to be more efficient in light of rising distribution costs in the year ahead.
Regulatory pressures necessitate financial institutions to design new revenue and pricing models. A good example is the EU commission's "Retail Investor Strategy", which poses significant risks to commission income.
Growth opportunities and strategies 2024
Improve customer engagement
Financial institutions must keep the focus on customer engagement in order to nurture existing relationships, build customer loyalty, and grow revenue in 2024. We expect the banking industry to prioritize personalized communication, using both digital and advisor-led advice, to meet highly specific customer needs. AI-driven recommendations, enabled by advanced data analytics and automation, can enhance customer buying journey by suggesting relevant products and also increase the likelihood of purchase through its ‘next best option’ recommendations.
Deliver mobile-first expectations
As digital banking grows, customers have clear mobile-first expectations from their banks. Digital customers want an accessible, convenient, and personalized service that is seamless and intuitive. Neobanks and brokers already have a competitive edge in this aspect. Traditional banks must adapt to the evolving digital banking market demands in order to thrive in 2024. Create efficient, mobile-first sales journeys and introduce new channels like embedded payments and finance to address customer demands.
Explore new customer segments
Unlock growth by tapping into attractive, new customer segments in 2024 – youth, young adults, active investors, and SMEs. Most financial institutions don’t prioritize younger customers as they don’t impact short-term profits. However, many banks now recognize the significance of diversifying their portfolio and implementing new services that will greatly influence the bank’s future. Opening up new customer segments also leads to expanded cross and up-selling opportunities.
Attract, grow, and retain deposits
Banks must win the battle for deposits in order to grow. It’s essential to enhance customer engagement strategies to identify opportunities and provide tailored services, and expand to new customer segments, such as SMEs, to draw in new deposits. Employing personalized communications helps grow brand loyalty and reduces attrition. At the same time, financial institutions will monitor cost of funds and net interest margins while aiming for deposit growth.
The path forward
We expect the high demand for revenue protection, efficient product and packaging offering, and marketing and sales model transformation services to continue in 2024. Our smart pricing solution provides you with a comprehensive strategy, including deposit and lending rate optimization. In addition, we craft strategic price and premium increases for your business to prevent margin erosion due to inflation.
Our growth experts drive innovation in digital services, going beyond traditional banking, to explore new avenues for monetization. We assist banks in building comprehensive ecosystems around specific client needs, ensuring relevance and value.
We empower your business to drive sales productivity through the strategic integration of digital and AI technologies, allowing you to operate more efficiently at lower costs.
Our financial services sector leaders are committed to providing comprehensive insights and strategies to help you address challenges and seizing growth opportunities in 2024. Stay tuned for a deep dive into the following crucial topics:
- Rate management: Explore strategies for managing deposit and lending rates in a dynamic economic landscape.
- Changing investment landscape: Navigate economic volatility and adapt strategies for optimal results.
- Embedded payments: Delve into digital innovation with a focus on embedded payments’ transformative potential as well the state of Neobanking and B2B pricing landscape.
- Customer engagement: Find out effective strategies to enhance customer engagement in an increasingly competitive landscape with a focus on resilient financial health.
Unlock better growth
with Simon-Kucher.
Reach out to our experts in the Financial services sector today.
Healthcare and life sciences sector trends 2024
In the aftermath of the COVID-19 pandemic, healthcare budgets are constrained and the industry is still facing supply shortages. Several market segments have experienced a downturn, including vaccines, vitamins, food supplements, and cough & cold medicine.
We are experiencing payer cost containment measures in many markets, from reimbursement caps and cuts to mandatory discounts. Also on the patient side, the ability and willingness to self-pay for elective treatments and other medical services is declining.
So, while costs and interest rates are rising, room to increase prices is limited. It’s no surprise that the industry is experiencing consolidation on the manufacturer, provider, distribution, and retail level. Meanwhile, investments in medical innovation and startups have cooled down and financial investors are hiking up the pressure for early-stage ventures to finally deliver a return on investment.
Growth opportunities and strategies 2024
Aim for better health and go beyond just “treating” disease
An ageing population and the increasing prevalence of chronic diseases keeps a favorable outlook for healthcare companies. The fundamental need for healthcare innovation that drives quality and efficiency of care remains. We are also seeing growing demand in the area of preventive care. Patients are becoming increasingly involved in taking care of their own health, creating opportunities for healthcare companies to enhance their engagement with them. In low and middle-income countries, care standards are increasing, with more equitable practices and faster access to therapies.
Make the most of the latest technological trends
From personalized healthcare, early diagnostic screening, CDx tests, and self-testing, to cell and gene therapies and digital therapeutics – technological developments offer an array of opportunities for healthcare companies. AI in healthcare will see further advancements in 2024, as companies are exploring various applications in R&D, diagnosis, treatment, and patient care, all while improving their commercial efficiency. Innovative technologies and holistic solutions enable new business, offer, and payment models, with a growing appeal for value- and performance-based contracting. On top, there’s the opportunity for new/incremental revenue streams via services, data, and software monetization.
Prioritize and rationalize portfolios
In 2024, R&D spending should be better prioritized with a focus on improving returns. Healthcare companies should focus innovation on expanding their portfolios into therapeutic areas with high clinical unmet need and/or areas with significant measurable impact on quality and cost of care. It’s also important to continuously explore licensing and market & access strategies to fill portfolio gaps and address growth priorities.
Which healthcare companies will come out on top in 2024?
In addition to the right portfolios, solutions, and services, we expect the year’s winners in the healthcare industry to excel through a holistic and forward-thinking approach to commercial management and growth strategies:
- Showcasing lean and effective commercial management structures.
- Embracing digital and omnichannel sales models, including direct-to-patient and provider marketing, enhancing their market reach and engagement.
- Pursuing strategic partnerships with technology companies and collaborating across diverse healthcare sectors.
- Excelling in commercial digital transformation, leveraging advanced technologies to optimize operations and enhance customer experiences.
In addition, innovative go-to-market approaches, launch excellence, as well as market access, pricing, and monetization excellence will remain integral elements of success, and require a comprehensive understanding of the evolving market and healthcare value chain.
Unlock better growth
with Simon-Kucher.
Reach out to our experts in the Healthcare & life sciences sector today.
Industrials sector trends in 2024
For many industrials companies, 2023 was the year of rightsizing. The focus was on adapting cost positions to the new reality, with overlapping shocks like political crises, wars, inflation, interest rate increases, and an economic downturn. This will be different in 2024, with the focus shifting more toward profitable growth and therefore market and customer centricity.
While headline inflation has now cooled in some key markets, many industrial firms waited too long to react to past inflationary pressure. Those that still haven’t recovered past margin performance will face an even harder challenge of margin expansion in 2024. Meanwhile, willingness to accept price increases has cooled and many indices are on a downward trend. This will lead to “fighting cost reduction demands”.
Wage inflation means we’re seeing industrial firms struggle with ever-increasing labor costs. Last year’s headlines highlighted how the US & German militaries issued their largest pay increases in decades, the Mexican government mandated 30% wage increases, and UK wage inflation reached record levels. The effects will carry into 2024, significantly impacting labor-intensive manufacturing and professional services.
All the while, companies struggle with talent retention and a shortage of skilled labor. Another development is the de-globalization of supply chains. Many companies are relocating their production sites to higher labor cost regions in order to secure supply – putting additional pressure on profitability.
Growth opportunities in 2024
Know and grow your value with the right pricing and go to market approach
The return to a profit mindset holds major growth potential for 2024. Companies need to put more emphasis on the VALUE they deliver, with implications for how they price and sell. However, many industrial firms are still redefining “growth” from volume metrics (revenue, units) to profit metrics (contribution margin, growth margin). Others haven’t got their heads around the idea that inflation effects have just as much to do with a product’s VALUE as with a product’s COSTS. If a company makes a robot and sells it in Mexico, their costs may have gone up by 15%. However, given that wages have been mandated to increase by 30% in that market, the value of the robot is up by 30% for each unit of labor the robot replaces.
Automation technology, hardware/software combinations, and any industrial product that impacts labor will be in the spotlight in 2024. Moreover, new offerings and business models that combine hardware and data add value and drive competition – partially also due to new regulations like the European Data Act.
Companies that understand how inflation has swelled their value and not just costs have excellent organic growth opportunities in 2024. Now’s the time to update your value calculators and ensure you have the proper tools in place. Especially those looking for a short-term impact to counteract inflation should consider a commercial value assessment, identifying untapped value pricing potential, securing robust price adjustment capabilities, and instilling a value mindset among the sales team.
Adjust to changed customer demand and re-assess your growth paths
AI and the related expansion of data centers is increasing demand across different industries to fulfill component and system needs. New semiconductor and battery factories are leading to a greater demand in factory automation equipment and solutions. Then there’s the trend toward green and renewable energy, leading to expansion and modernization of the energy infrastructure and power lines.
Prioritizing the portfolio to align with these changes is essential. While investments in new equipment may be postponed, higher demand in after-sales business and services will increase instead. And while new sustainability regulations indeed come with challenges, companies that prioritize the right investments and engage in value chain partnerships have an opportunity to generate and extract value.
Companies may also want to re-assess their growth ambitions and update their strategies, considering how their offering currently fits with market demands. Where do you want to grow in 2024, in terms of regions, segments, and applications and how do you want to make this happen?
Create efficiencies and new revenue streams by monetizing data and using new technology
An abundance of data, new tools, and the buzzword everyone’s talking about – GenAI. Industrials companies that use new technologies for benchmarking and automation in their sales and pricing processes will experience efficiency gains in the years ahead. However, the benefits are not only on the operational side…
Software and data are becoming a larger part of industrials products. Companies that once sold a transactional product can now build a more meaningful, long-term customer relationships, with the transition to recurring revenue accelerating in 2024.
An additional opportunity is service, data, and software monetization. Developing and expanding service offerings can generate incremental revenue streams, complementing core products and enhancing overall customer satisfaction.
Unlock better growth
with Simon-Kucher.
Reach out to our experts in the Industrials sector today.
Technology, Media & Telecom sector trends 2024
Over the last few years, many technology, media, and telecom companies have prioritized growth over profitability. This was all well and good when the cost of capital and investment was low. However, the current environment of raising interest rates and bank collapses means tech-friendly funding is scarce.
Companies can no longer “buy” their way to growth. The focus in 2024 needs to be on balancing growth and profitability.
One way to achieve this goal is to incorporate new technology effectively into your growth strategy. There’s no denying that the increasing popularity and adoption of Generative AI has implications across all industries. But this is especially true for many companies in the TMT space, with AI impacting the way you operate, innovate, and deliver products and services. In 2024 it will be crucial to define how to use these capabilities for growth.
Another challenge will be responding to customer tech-stack consolidation. When access to capital dries up, companies have less money to spend on tech solutions. As companies continue to reduce their spend, the competition is heating up in many TMT markets.
Growth opportunities and strategies 2024
Understand your core value propositions and protect core customers
Let’s be honest. When growth was thriving and the money was flowing, the bar for purchase was low. Now TMT companies need to overcome multiple hurdles to get customers over the finish line, fighting off intense competition along the way.
What sets your products or services apart? Which accounts and segments contribute the most to your revenue and long-term success? Understanding your core customers, concentrating your efforts on them, and delivering them the right offerings will maximize profitability and ensure a solid foundation for sustained business growth.
Take your customer base management to the next level
Growth through acquisition comes at a huge cost – and the current economic environment means these costs are on the rise. Companies that focus on adding new customers while neglecting development of their existing customers base will fail to take advantage of the new market reality.
Your existing customers know the value of your product better than anyone else. On average, retaining customers is five times cheaper than winning new customers. Moreover, existing customers are 50 percent more likely to try new offers and are usually responsible for the bulk of a company’s profits.
2024 is the year to prioritize customer retention as a key revenue driver and margin protector.
Effectively adopt and monetize new technologies
Of course, not all companies will be revolutionized by the new “breakthrough” technologies we see in the market. However, there are spaces within technology, media, and telecom where the environment is being severely disrupted. The are also opportunities to better serve customers through smarter offers and services using Gen AI solutions. Here it’s important to evaluate, understand, and plan for how they to manage these new technologies in your own portfolios – or those from the competition.
Understand and adapt to market changes in 2024
Over the last four years, the social and economic environment has been highly unpredictable. Companies cannot continue to be caught flat-footed. Action plans need to be practical and deliver tangible results:
- It’s crucial to have the right defensive pricing and sales approach in place. With companies experiencing recession-driven pressure on their costs and margins, it becomes increasingly difficult to defend prices and maintain the customer base. Focusing on your offering strategy, monetization approach, and especially efficiencies within your sales operating model.
- Companies that observe decreased demand in the market must explore ways to drive near term impact, such as through targeted price increases.
- Lost revenue from churned customers can be compensated with more revenue from remaining customers, such as through up- and cross-selling.
- Those introducing new technologies into their offerings need to ensure a pathway for monetizing them effectively.
Unlock better growth
with Simon-Kucher.
Reach out to our experts in the Technology, Media & Telecom sector today.
