New Retail Experiences - Consumer Packaged Goods trends in Go To Market Approaches.
Consumer Packaged Goods (CPG) consumers are more health conscious and socially aware today than they ever were. Breakfast cereal brands like Kellogg are being replaced with healthier breakfast options like yogurt. Brands are promoting their sustainability initiatives on social media to foster transparency and trust. A shift in consumer purchase habits is happening as more and more consumers are now opting to make CPG purchases online as against physical stores. The consumer is smarter and better informed than before and is fifty percent likely to make a purchase decision even before entering a brick-and-mortar store. Brands are using data from various channels to tailor their promotions and offerings to consumers.
HEALTH & WELLNESS
Consumers have become increasingly conscious about eating healthy. A recent survey found that 63% of Americans are trying to eat healthier and consume foods with ingredients that have a higher nutritional value.
Other findings that indicate this trend: volume growth of organic products in 2016 was 13%; volume growth of probiotic supplements have increased by 26%; 22% Americans are restricting their sugar intake, while 52% try to avoid artificial sweeteners; over 56% of Americans are willing to pay more for healthier foods.
Kellogg's flagship Morning Foods business is seeing a decline in sales. Kellogg cereals are being perceived as an unhealthy food option, especially the sugar category. The company has received a lot of flack for marketing sugar to children—a smaller than ever population of consumers. Kashi, a Kellogg brand, which is positioned as a healthy cereal brand, has seen a decline in sales ever since it was discovered that it has GMO ingredients.
There is a decline in diary consumption and a shift from carbohydrate consumption to protein consumption. The Breakfast Cereal category faces a significant threat from healthier and more convenient alternatives like yogurt, snack bars and breakfast serving fast foods. For example, yogurt is growing rapidly and has captured 40% of the ready-to-eat breakfast market share.
SOCIAL IMPACT AND TRANSPARENCY
Consumers are demanding transparency about the ingredients in their food and the techniques employed in producing them. Sustainability and corporate social responsibility of the brand have become relevant to the consumer. Two out of three consumers (67%) think that it is the brand’s responsibility to provide such information. The US FDA recently announced that companies will need to provide product labels that give detailed information on the sugar content.
Additional facts that substantiate the trend in need for transparency: 94% of consumers surveyed in 2016 said it is important for them to know what is in their food and how it has been made; 83% said a more detailed product label would be more valuable; more than a third (37%) of consumers said they would switch to another brand that provides them with more detailed information.
This trend goes beyond food items to other CPG items like toiletries, household supplies, etc. For example, while Method talks about the natural ingredients it uses in its products it also mentions all the “dirty” ingredients it doesn’t put in it.
The online share of the CPG market revenue is on the rise, while retail store sales for CPG products have been on a decline. The total CPG revenue rose from $7.6 billion in 2015 to $10.4 billion in 2016. Online CPG sales have grown twice as fast as total e-commerce sales.
The barriers to entry in the online space are lower than the brick-and-mortar format, which has enables many private label brands to reach consumers.
Eight percent of the total CPG sales now comes from e-commerce and is expected to increase substantially with time. Fast shipping, a variety of product offerings and low prices will only keep this channel growing.
BETTER INFORMED SHOPPERS
Three out of four of all shopping trips begin online. Shoppers use online information to do product research, compare prices and pre-plan their purchases even before they visit brick-and-mortar stores—what is now known as webrooming.
It is estimated that half the consumers have made purchase decisions even before they have entered a store. CPG products are seeing a higher degree of purchase involvement than they were previously.
SOCIAL MEDIA PRESENCE
Nearly 70% of North American consumers are on Facebook. Becoming more accessible through social media enhances a brand’s transparency. It is also a great platform to drive sustainability initiatives as it is possible to tell consumers about your environmentally-friendly initiatives.
Social media makes it possible for brands to connect with consumers over various social issues and priorities. Ben & Jerry’s is one such company that highlights its social initiatives via social media campaigns. For example, it once ran a promotion on Twitter to create messages that raise awareness for World Fair Trade Day using unused Twitter characters “donated” by their followers.
ENCOURAGE CONSUMER INTERACTION
Consumer generated content humanizes a brand and also helps the brand strengthen its connection with consumers. Having a consumer communicate back to you about their own efforts on improving the environment can help start a meaningful conversation about sustainability.
Shopping apps allow companies to create greater visibility of their brand. Consumers use shopping apps to obtain product information either before or while shopping in brick and mortar stores. Making a product available for purchase on a shopping app not only gives your consumers the option to purchase it online, but also increases the chance of them making a purchase offline.
Customers are now better informed and smarter than they previously were. It is more effective to use an influencer marketing strategy than market directly to savvy consumers. For example, a consumer is more likely to buy a food product based on recommendations from a creator of a recipe (on YouTube) than a TV personality.
USE OF DIGITAL TECHNOLOGY
New innovations like Augmented Technology can be used to provide consumers nutritional information, ingredients, customized recipes, etc. in a more engaging way and thereby develop an immediate connection with the consumer.
Companies are gathering data from multi-channel sources--loyalty programs, social media, online search--to tailor their products and promotions.
For example, maker of Mucinex, Reckitt Benckiser used search data from WebMD to anticipate where flu outbreaks would occur next and tailored its ads to those geographies. This resulted in an increase of 22% in sales in a four-week period, when compared year-on-year.
Brands like Unilever are using insights from digitally obtained data to support their marketing campaigns. Just knowing that the social media conversations around Ben and Jerry’s ice cream peak on Thursday and Friday, and sales of Ben & Jerry’s ice creams increased on Saturdays, enabled Unilever to optimize their marketing spends by running ads only from Wednesday to Saturday.
Consumers today look for healthy and eco-friendly options in the CPG category. They are smarter and better informed than ever before. Brands are communicating more interactively via social media and using influencer marketing strategies to build trust among consumers. More purchases are being made online and a majority of consumers are using online information to make purchase decisions even when they shop offline.