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CPG Brands are feeling the squeeze between the rise of digital marketing channels on one side, and the dominance of retail channels on the other. To succeed, brands must shift their focus from traditional awareness and trial, to retention and growth.
The Consumer Brand “Squeeze”
Not so long ago, Brand Managers had merely to produce a good TV ad that would be viewed widely on the nightly national news; connect with consumers through one or two main retailers in each market; and compete with a few others in the category — with no private label competition.
Fast-forward to 2015, and Brand Managers are facing more challenges than they’d ever anticipated. Most notably, the “CPG Squeeze” as we’ve defined it at PunchTab, leading to declining consumer loyalty.
From the retail side, brands are continuing to lose control of their consumers as distribution channels and competition diverge. Consumers are increasingly shopping at an ever-growing list of retail outlets – both off and on-line. Brick-and-mortar has evolved to include the rise of the warehouse club; and now other channels such as the dollar stores are gaining traction. Additionally, many brick-and-mortars are offering an on-line integration – either themselves, or through a 3rd party like Google Express. Digital sellers, especially Amazon, are continuing to gain traction with consumers in the CPG space. With services such as Prime Pantry, Amazon Fresh, and Subscribe & Save, Amazon is investing heavily in CPG to get it right.
The Private Label Impact
One of the biggest headaches for brand managers is the rise of Private Label. Retailers are putting marketing dollars behind ever-more sophisticated Private Label brands, which in turn are more accepted by consumers. Millennials have grown up with Private Label brands, and are not as loyal as generations before them. And some Private Label brands have even gained their own following.
The Digital Dilemma
On the other side of this “squeeze” is the rise of digital influence on the consumer. Today, consumers are receiving huge volumes of messages on a multitude of digital channels. At the same time, they are creating their own content –content other consumers often prefer to marketing messages from the brand. Consumers browse on Amazon, post and learn on an ever-growing mix of social networks, find eCoupons on their mobile apps, check ratings, and shop on-line. They are influenced by their friends and blogs, and less by brand advertising. In this age of content explosion, it is increasingly difficult for Brand Managers to reach their consumers, make meaningful connections, and most importantly control the message.
So what is the solution?
Brand Marketers need to be laser focused on engaging current consumers, and start concentrating on retention for growth. It is not enough to rely on traditional media, assuming that TV impressions will bring in sales. In my time as a consultant for PunchTab, I’ve seen how brands can successfully engage their current consumers beyond traditional outlets — letting those consumers become advocates for their brands. Here are my prescriptions:
1. Shift more media dollars to digital where you can track and engage more deeply with your consumers – and create a two-way conversation.
2. Integrate your marketing message across all of your media – off-line and on-line. Your digital marketing should be augmenting and amplifying all of your other programs and tactics.
3. Begin to segment on-line, personalizing the messages and content that is relevant to each high value target.
4. Make certain your programs allow you to listen and gather data that will provide insights for continuous improvement. Create a 360 view of your consumer.
5. Optimize for eCommerce. Have a subscription option to maximize share of requirements, and monitor what is selling in your category on-line. Unlike traditional retail establishments, an on-line marketplace is optimized based on highest consumer ratings; so smaller, or newer brands can sometimes gain a presence online that they would not gain in a brick-and-mortar establishment. Reward your consumers for rating your brands, so your products will appear at the top.
All of this can be achieved and optimized — or made more “sticky” by adding a consumer management platform.
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