Industry Stories
How CPGs Can Avoid Losing Brand Recognition on the Retail Shelf
There are several surveys and studies that point to the growing impact of social media on buying decisions. An overwhelming majority of people today rely on online reviews, recommendations and comments from friends to make purchase decisions. With the free flow of information, consumer behavior has evolved considerably in terms of how consumers find products, evaluate them and finally make a purchase. As a result, the paradigms for customer engagement have changed too.
Facebook, Amazon, Alibaba, Netflix, Google, Uber, Airbnb and TransferWise, among others, have proven that eliminating distance between the consumer and the consumable (product and/or service) is value for the consumer. Yet consumer package goods companies have not made significant changes to the way they design, produce and sell consumer goods to reflect the macro changes in societal trends.
The CPG industry is going through massive expansion. According to McKinsey & Company, it is expected to grow to $14 trillion by 2025.1 Given the exposure today’s consumer has, it is not easy for CPG companies to maintain and grow brand recognition and affinity. There is an unprecedented need for them to engage with their consumers directly.
There have been a few surface level-changes, such as the increasing use of digital advertising. However, the basic overall processes of procuring raw materials, manufacturing the products and finally taking them to the customer has not changed. According to the Infosys “Endless Possibilities With Data for Retail, CPG and Logistics” report, only 25% of CPG companies undertook a business model transformation initiative to support better use of data analytics.
Given the extent to which brand experience influences buying decisions, it is imperative that companies take necessary measures to own the process of how consumers experience their brand. Ideally, there should be zero distance between the CPG company and its consumer.
With current processes, brands have little control over how a customer experiences their product once it’s out of the manufacturing hub. For example, how is the product displayed on store shelves? Is it presented in an attractive manner? Is it placed alongside the most appropriate products? The same holds true in the case of online stores and e-commerce portals too.
This can be worrisome given the amount of money and resources that CPG manufacturers invest to create unique, differentiated brands with a particular theme or vision in mind. There is a considerable disconnect in the way the retailer, whether a physical store or an online portal, finally displays the brand to customers. By contrast, owning the entire brand experience until the final point of sale can allow the CPG manufacturer to effectively align with the overall brand ethos and deliver a superior experience for customers. In fact, building transparent supply chains ranks among the top three priorities for CPG companies according to the “Infosys Digital Outlook for the Consumer Packaged Goods industry.”
Having said that, this is not easy to achieve given the complexity and diversity of the consumer mix as well as sales channels. Digital or online interactions do not offer a comprehensive view of consumer behavior since they account for only one part of the consumer experience. Most brands use online channels for information dissemination only rather than engagement.
A Consistent Brand Experience Strategy
The first step for a CPG company to achieve an efficient, consistent and scalable way to deliver their brand experience directly to consumers is to find ways to record and consolidate all customer interactions, both online and off-line.
Digital may still account for a smaller share of the revenue pie, but it offers a wealth of consumer insights starting from how they search for products to their interactions with the brand. Our client discussion indicates a steady rise in the use of digital channels not only for actual transactions, but also inquiries for information about products and brands.
By gleaning data from physical stores and converging it with digital insights, CPG companies can create intelligent and actionable insights that can result in more intelligent and effective campaigns. Some of the biggest advantages are:
Consolidated Strategy
Currently, most CPG companies do not use a consistent, holistic strategy to manage their brand experience. Instead, we see piecemeal product-specific campaigns that are not well-integrated with the overall brand strategy. These one-off exercises offer limited gains and don’t translate into long-term benefits for the overall company or even the brand. Besides, they result in considerable duplication of efforts and don’t allow the company to accrue the tremendous benefits of scale. For instance, take the case of a CPG manufacturer running a special Valentine’s Day campaign for its brand of premium chocolates through a dedicated microsite. While there might be some short-term gains from the campaign, its real value can only be accrued if the data collected is used to augment future campaigns targeted at a similar target audience.
Integrating New Brands
A consolidated brand platform can help integrate newer brands into the company’s overall portfolio, especially in the case of mergers and acquisitions. When a company acquires a new brand, it is challenging to quickly bring that brand to their consumers globally. Adopting a global brand hub model can help integrate new brands quickly and seamlessly into the company’s brand mix, like in the case of high-profile acquisitions such as Ferrero Group’s acquisition of Nestle’s US confectionery business or Campbell Soup Co.’s acquisition of Charlotte, North Carolina-based Snyder’s-Lance.
Time to Market
With traditional marketing models, campaigns usually take weeks to launch. A consolidated brand hub model allows new campaigns to be launched in a matter of days. Given the dynamic nature of the market, time is of the essence when launching new campaigns.
Taking action
To sum up, the CPG industry needs to take ownership and control of the brand experience directly with the consumer. There is currently too much dependence on retail stores, not just for transactions but also to deliver the brand experience. In such a situation, there are several opportunities for the dilution of the brand experience, which consequently has an impact on brand loyalty and sales.
With the rise in digital technologies, there is plenty of scope to eliminate the distance between the consumer and the brand. There are also several successful examples, such as the Dollar Shave Club, whose strategy is centered around building a direct connection with consumers to shape a consistent brand experience.
Instead of guerrilla techniques that most CPG companies are using today, a concerted technology-led effort that integrates the digital and physical marketplaces is crucial to achieve long-term success.
