Brand Strategies

Part
01
of two
Part
01

Purchasing Directly from a CPG Versus a Distributor

We have provided six insights into the value of a consumer purchasing directly from a consumer packaged goods (CPG) brand versus a distributor. The insights include collecting customer data, strengthening brand loyalty, creating personalized products, faster introduction of new products, controlling the user experience, and implementing omnichannel marketing and sales.

COLLECTING CUSTOMER DATA

  • Having an e-commerce site will enable a CPG company to have direct access to its customers’ data. The collection of customer data such as email address, social profile, psychographics, demographics, and geography enables CPG brands to have unfiltered access to their customers as well as purchasing behaviors which can help in growing or introducing new product lines.
  • Selling directly to consumers (D2C) can provide a CPG company with a more comprehensive perspective of its consumer behavior at every phase of the consumer journey.

STRENGTHENING BRAND LOYALTY

  • The opportunity of freely connecting directly with customers provided by D2C can result in better support and customer service, more robust personal relationships, and more targeted marketing to boost customer retention and loyalty.
  • Retail distributors view their customer data and insights as competitive advantages and are not likely to share them with CPG companies. Hence, they keep customers loyal to themselves rather than to the CPG brands.
  • P&G's Gillette on Demand subscription service includes a loyalty program with rewards for customers. The loyalty program offers customers a free product on every fourth order.
  • L’Oreal is another CPG brand that has a loyalty program through its D2C platform. It offers five points to its customers for every spent dollar.

CREATING PERSONALIZED PRODUCTS

  • "Going above and beyond or offering some uniquely customized products" through D2C gives CPG brands, especially for key customers, a competitive advantage when compared to the old CPG landscape.
  • A wide and unique categorization that features exclusive offers, premium products, and personalization, can provide customers with a distinctive value proposition.
  • A CPG company could combine categorization strategies with a subscription service to differentiate its D2C site from the site of distributors in order to attract and retain customers and also control channel conflict.
  • Consumers are now expecting their favorite CPG brands to provide them with a subscription experience.
  • P&G created its own D2C e-commerce site as well as a number of subscription services like Gillette and Tide Wash Club and that has added value to their customers.

FASTER INTRODUCTION OF NEW PRODUCTS

  • In the CPG industry, innovation is risky and time-consuming. It takes 18 to 36 months to introduce a new product to the market. D2C helps CPG firms to reduce the risk by enabling them to "launch their new products on a smaller scale".
  • Brands can create specific products for specific customers, and consumers can choose the products they prefer when they make purchases. This enables CPG brands to understand what is attractive to their customers about their newly introduced products.
  • The brands can then use customer feedback to modify the products and marketing strategies.
  • In this way, they can implement rapid product testing, iteration, and education of consumers.

CONTROLLING THE USER EXPERIENCE

  • CPG brands can use D2C as a way to directly disseminate information and content like videos and narratives on the features of their products to their customers. With D2C, they can aim to satisfy the increasing expectations of their customers and offer positive and memorable customer experience.
  • D2C allows a CPG company to take complete control of its “brand image from the moment it first engages with a consumer until the customer has the brand’s product in their house”.

IMPLEMENTING OMNICHANNEL MARKETING AND SALES

  • Through D2C, a CPG company can influence how its consumers engage online with its products, not just on its own D2C site but also within a more extensive ecosystem that could include retail distribution sites like Amazon as well as social media networks.
  • The Honest Company offers subscriptions and sells its products through its D2C site, honest.com. However, the site has a “retail locator” to help its customers to locate stores that also sells its products.
Part
02
of two
Part
02

Case Studies - CPG Brands Selling Directly To Consumers: Differentiating From Amazon

Perky Jerky and Dirty Lemon are two examples of direct to consumer CPG brands that use unique strategies to differentiate themselves from Amazon. Perky Jerky's direct-to-consumer (D2C) strategy leverages the company's existing technology, a digital cash-positive marketing vehicle that enables them to match the most relevant products to the most relevant searches to get the customers to try their products. Equally, Dirty Lemon is capitalizing on conversational commerce (C-commerce) and uses a text-based business model as a strategy to differentiate itself from Amazon.

1. PERKY JERKY

  • Besides selling directly to customers, Perky Jerky is available across leading retail chains like Walmart, Target, Whole Foods, Publix, and Kroger to reach customers almost anywhere and everywhere.
  • Perky Jerky has a small internal team with the ability to pivot and develop new flavors in months, rather than years. Everything is developed in-house. According to the company, “We look at what’s trending in the industry and decide what to go after next.”
  • Perky Jerky’s value proposition includes the brand's “all-natural ingredients and emphasis on ethically-sourced meat ingredients, i.e., 100% grass-fed beef, cage and crowding-free poultry.”
  • Perky Jerky’s team knew that to compete with big-name competitors they had to build their brand recognition both in-store and online. While the brand lacks distribution relationships to stocking and selling products in the nation’s largest retail stores, they, instead, share “real relationships with their retail buyers, and have earned a substantial footprint in almost every major retailer in the US.”

LEVERAGING DIGITAL CHANNELS & PAID MEDIA

  • While originally focusing on retail distribution relationships, Perky Jerky incorporated digital advertising to reach customers that they could not reach in-store.
  • Perky Jerky leverage its existing technology companies with capabilities enabling the brand to grow its power in data and digital channels in retail.
  • Perky Jerky’s AMS strategy enables them to match the most relevant products to the most relevant searches and can interrupt customers in their purchase process to get them to try their products.
  • According to Patrick Bernard, Director of mEatCommerce, “Our digital machine is a cash-positive marketing vehicle that will serve up 93mm impressions and hundreds of thousands of clicks to our site and Amazon next year. It is the most effective and efficient use of marketing dollars.”
  • Perky Jerky uses paid advertising through Google, Facebook, and Amazon to increase awareness and is “the only way to force yourself in front of people” says Bernard.
  • Perky Jerky also has an effective AMS strategy that allows them to “display for lucrative search queries as well as showcase their brand offering through the Perky Jerky Amazon Store.” Therefore, Perky Jerky, through Amazon, can meet customers when they are planning to buy.
  • Perky Jerky’s digital advertising strategy comes full circle with their leveraging of Facebook and Instagram that enable them to prospect for new audiences and drive traffic to their website.

2. DIRTY LEMON

  • Dirty Lemon’s retail concept is based on text-messaging that allows customers to walk into a store with no staff, pick a bottle of Dirty Lemon and send a text to the company regarding what they have purchased, then the company will email them a receipt.
  • The purchase process is simplified. The customers will send a message (#917-588-0640) to set up an account. After they sent a text message, a customer service representative sends a secure link where the customer enters credit card and address information. For subsequent purchases, customers are charged directly to the card on file.
  • According to Zak Normandin, Co-founder, and CEO of Dirty Lemon, “We’re moving beyond experiential marketing and into experimental— this type of engagement enables the convenience customers have come to expect from our brand. Our customer prefers conversational interaction — we’re committed to a transaction process that eliminates all unnecessary steps.”
  • The brand has cultivated a strong following on both Facebook and Instagram — and has a particularly strong presence within the highest echelons of Instagram’s socialites.

DIRTY LEMON's TEXT-BASED BUSINESS MODEL

  • The text-based business model allows Dirty Lemon to speak directly to its customers, which offers invaluable insight into what they are looking to purchase, which most traditional CPG giants lack. Moreover, the company believes that conversational commerce is the future of consumer ordering, considering 75 percent of American Gen Z and Millennials prefer to communicate via text message.
  • Dirty Lemon’s vision is to change the monotonous way consumers access the beverage brands they love most, by challenging the inefficiency of the CPG distribution system that most brands rely on to connect with consumers.
  • Rather than sell via traditional channels such as Whole Foods or Kroger, Dirty Lemon deploys a proprietary conversational commerce (C-commerce) platform that supports product purchases via text to take frictionless ordering to the next level.
  • Because of Dirty Lemon’s proprietary technology, they are transitioning from investing in digital advertising to investing in offline, physical activations to drive customer acquisition and retention. As part of Dirty Lemon's ‘The Drug Store push’, it will invest its entire marketing budget in physical retail in 2019.
  • The data acquired through their proprietary technology enables Dirty Lemon to develop in-demand products and improve how it interacts with its customers, without the high cost of typical CPG shelf-space competition and distribution.
  • On social media, Dirty Lemon has expanded fast and has over 100,000 followers on Instagram, and has sold over 2 million bottles since its founding.
  • Overall, if Coca-Cola, Pepsi or any big CPG brand were re-building their core business, it would look like Dirty Lemon which offers a personalized, direct-to-consumer buying experience that effortlessly brings the product to the customer and where customer experience is the priority.

Research Strategy:

To find examples of case studies of CPG brands selling directly to consumers and differentiates themselves from Amazon, we commenced by searching for case studies published by leading digital performance agencies such as CPC Strategy, which also focuses on consumer packaged goods. Fortunately, we found numerous examples of D2C brands case studies on CPC Strategy such as Perky Jerky, Dirty Lemon, Care/of, and Moon Juice that are deploying different selling strategies when compared to Amazon’s strategy. We further researched each case study across other business publications and relevant websites such as Business Wire and Food Dive. We did additional searches on each case to gather relevant insights not covered by the other reports we examined. Overall, we have included in-depth information on both the business models of Perky Jerky and Dirty Lemon, two examples of D2C brands beefing up the competition with CPG giants such as Coca Cola and Pepsi and retail chains such as Walmart, Kroger, and Target.

Sources
Sources

From Part 02
Quotes
  • "erky Jerky’s pivot to focusing on its proprietary process, distinct flavors, and unique texture have catapulted Levin’s novel idea into an enormously successful jerky brand that has rapidly expanded both in-stores and online."
  • "DIRTY LEMON is a digitally-native wellness beverage brand founded in 2015 that has sold over two million bottles, attracted an army of celebrity influencers and venture capitalists, and is now reportedly in talks with Coca-Cola."
Quotes
  • "Perky Jerky also has an effective AMS strategy that allows them to display for lucrative search queries as well as showcase their brand offering through the Perky Jerky Amazon Store. “Amazon allows us to meet customers when they are in mind to buy,” says Bernard."
  • "Perky Jerky’s digital advertising strategy comes full circle with their leveraging of Facebook and Instagram that enable them to prospect for new audiences and drive traffic to their website."
Quotes
  • "Much like the rest of DIRTY LEMON’s business model, the Drug Store is downright unconventional: there are no lines, no cash registers, and no staff to monitor the refrigerators housed with the brand’s minimalist bright-colored “beauty elixirs” and “cleansing blends” that retail at over $10 a bottle."
  • "That’s because customers pay the same way most of today’s generation conversates: through text message. “Customers simply walk in, take what they want from the refrigerator, and send us a text message of what they took,” says Zak Normandin, Co-founder and CEO of DIRTY LEMON."
Quotes
  • "Dirty Lemon plans to open three additional stores — another in New York City, one in Chicago and one in Miami — in in the coming year."
Quotes
  • "It points a way forward for stakeholders across the digital ecosystem with insights and guidance for flourishing in the shifting consumer economy—where upstart brands such as Allbirds, BaubleBar, Brooklinen, Dagne Dover, Dirty Lemon, Kopari, Madison Reed, Peloton, and Plated are grabbing market share away from household name retailers."
Quotes
  • "But while the direct-to-consumer (DTC) brand prepares to expand throughout 2019, it's also cutting its entire digital marketing budget to focus on retail at a time when many traditional players are shuttering their stores."