While consumers still show an interest in buying private label products, consumer packaged goods (CPG) manufacturers are looking for a way to revive sales of their branded items. One way to bring about change is to directly market and sell to consumers according to a new Grocery Manufacturers Association Report. This process may also involve encouraging brand evangelists to participate in product innovation and design.
Up to 40% of CPG marketers plan to begin selling at least some of their product line directly to consumers in 2013. This is a significant increase over the 24% who were doing so in 2012. Research shows that just over half, 52%, of consumers are already comfortable with buying online from their favorite companies.
This study underscores the need for marketers to understand their customers and posits that:
- Consumers can still be influenced in the digital age, but the process is more about individual preference rather than mass marketing
- Value is more important than price
- Digital channels mean that brands must now engage directly with consumers in a two-way conversation, something they’ve never done before
Analysts point out that marketing tools such as loyalty programs can be as effective for brands as they can be for retailers. But CPG companies are likely to be more careful about these programs and target the 12%-15% of loyal customers who generate over half of revenue. As consumers get more mobile with their marketing intelligence, CPG companies will need to ensure that their loyalty programs work well with smartphones and tablets. Digital coupons and hyper-targeted email are two marketing tools that CPG advertisers are likely to turn to.
Most CPG marketers are using social media, but analysts say that moving into the fully engaged stage will be the next milestone. At that point, these companies will be able to tell effective stories about their brand. In addition to the obvious benefit of developing loyalty, leading edge companies can work with brand evangelists to develop new products and differentiate themselves from the me-too store brand competition.
If you’re working with a CPG company, have you seen a successful DTC promotion that has helped them turn around a sales slide?