The CPG or Consumer Packaged Goods industry is a massive one, globally. It also has a varied range of products in its purview, such as packaged foods to sanitary products to daily essentials. Reports indicate that the global consumer packaged goods sector is slated to be a USD 14 trillion industry by the year 2025.
The sheer size of the industry indicates two characteristics –
i) The massive opportunity which can be tapped into in terms of market share.
ii) The competition that may exist within the industry, making it a highly entrenched and crowded market.
In such a crowded marketplace, it is crucial for companies to stay relevant and grow year on year to be able to tap into higher market shares. The following strategies can prove to be very useful, in that endeavour in 2019.
1. Presence in Multiple Channels
In order to win customers in a CPG market, your products need to have an omnichannel presence. This refers to having your products present in as many sales channels as may be relevant for your product – which may include but is not limited to physical stores or retailers, large online retailers such as Amazon, or on your own company’s website.
As per a global study conducted by SDL, it was concluded that over 90% of consumers expect consistent customer interactions across channels for a seamless experience. With such heavy dependence on devices, it is imperative for brands to have an online presence to be credible in the market and have a steadfast existence in the minds of the customers.
With countless options available to customers, especially in the space of essential items such as consumer packaged goods, as a brand, you cannot afford to be available in just one channel. This way, a large portion of your potential customers may be missed out. By having a presence in brick & mortar stores, one can capture the traditional shoppers who prefer to do their shopping in person and physically examine the goods they purchase and by having a presence in online retail, customers who prefer convenience over tradition can be captured.
2. Innovation at the Forefront
Businesses focused on innovation tend to study shifts in consumer demand to understand what the trends are and where the market is heading. By aligning current strategies with where the market is headed, market-conscious brands are able to achieve a heads up on the competition by identifying and capturing new avenues of growth. For example, with consumer preference moving towards organic and natural products, many brands are introducing healthier, more consciously produced versions of their current offerings that focus on freshness & simple ingredients sourced from nature and manufactured without much chemical process intervention.
In terms of your product, utilising the established lines of communication with customers helps collect and collate feedback, test out new products or modifications to old ones and helps understand which what works. As for your business model, being on the lookout for new ways to refine and enhance internal processes or employing new channels to sell product through. In current times, the companies that keep track of consumer buying patterns and are quick to adapt to changes to product or selling strategies are the ones that remain most relevant or are able to compete effectively.
3. Proximity to Customers
With such growth and expansion of social media, in terms of users, and the existence of several digital channels, the potential to impact and influence purchase decisions has maximised significantly. Industry leaders constantly use their customer touch bases to gather and analyse data about the general customer sentiment about their product or the specific industry and design their marketing strategies accordingly. Analysis of POS data is another crucial data point which helps understand consumer preferences better and using Analytical approaches like Market Basket Analysis helps identify which items are bought together and what price points work. Moreover, they use these insights to raise the standards of their core capabilities, product innovation, pricing, business model innovation, etc.
4. Finding the right partners
Finding synergies with new partners helps tap into the network of an existing brand. If your company is in its initial phases, identifying and choosing a few key retail partners can help your brand grow thoroughly and quickly. Even if you may have a fairly established CPG company, it can still benefit from establishing power partnerships based on the core competencies of both companies.
Partnering with significant retailers for your business typically means that both companies engage in joint planning for the near future. When efforts are synthesised in this manner and collective planning is done by sharing customer data and insights, both parties are able to tap into higher ROIs and achieve greater revenues. An effective strategy should call for partners or partner retailers whose value potential and strategic goals reflect or augment your own. The right partners will act as advocates for your product, help maximise sales and increase your return on marketing spends.
5. Trade Promotion Optimization
“59% of trade promotions carried out globally do not break even” – Nielsen Holdings
Decision making for crucial aspects of a business cannot be done blindly, especially with regards to the four Ps: Product, Price, Place, and Promotion. Data is a major component that must be considered in that process.
This is necessary, as ineffective trade promotions impact revenues for CPG companies negatively. Trade promotions are the second largest cost item on a manufacturer’s P&L statement.
The challenge lies in measuring trade promotion effectiveness and ROI and leveraging data to optimize the trade promotion spend to maximise profits. Most companies have so far relied on gut, spreadsheets, TPM and ERP systems, however, it is time now in 2019 for CPG companies to shift focus to better alternatives like Trade Promotion Optimisation Softwares.
Using a robust trade promotion optimization software, decision-makers can predict the ROI and sales uplift for various promotion combinations. A TPO tool helps you in measuring the performance of trade promotions and transforms data into actionable recommendations for running the right promotions.
An AI-Powered Trade Promotion Optimization Software, akin to Acuvate’s offering – Compass, can collate data from multiple internal and external sources (past promotions, POS, social media, competitors, events, syndicated data, primary and secondary sales etc.), harness it and transform the same into crisp promotion insights.
In order to prosper in the CPG market, one must leverage a good mix of data, innovation, strategic partnerships and use of the right Trade Promotion tools. There is a persistent movement in consumer preferences, market competition, and retailer dynamics, therefore, keeping track of these factors by way of effective tools separates market winners from mere market survivors.
