Package Goods Marketers - Go Digital or Perish

Although e-commerce is no longer a new word and it has greatly changed people’s shopping behaviors, consumer packaged goods manufacturers and retailers may have underestimate the market opportunities there. As a graduate student in Medill’s Integrated Marketing Communication program, with concentration on marketing analytics, I have been looking at potential opportunities and future trends for consumer packaged goods companies. Recently I found 2 informative articles on digital commerce opportunities for consumer packaged goods companies. 

In the article Digital Commerce Remains a Largely Untapped Opportunity for Consumer Packaged Goods Companies, Deloitte talks about its two surveys on CPG industry executives and senior managers as well as on consumers. The results show that consumer’s intent to purchase these products online far outpaced executives’ expectations and CPG companies are obviously not well prepared. Moreover, surprisingly, only 43 percent of CPG executives think their company has a clear, well-understood digital commerce strategy. Pat Conroy, vice chairman, Deloitte LLP and consumer products sector leader, concludes that CPG companies are not well prepared enough for consumers’ changing behavior and data suggests that they should develop a more comprehensive strategy in order to take full advantage of this growing opportunity. 

In the article E-Commerce: It’s an Evolution, Not a Revolution, Nielsen also mentions that although E-commerce enables CPG manufacturers and retailers to engage shoppers in more ways and create more values for shoppers through online models CPG manufacturers and retailers have not capitalized such opportunities as well as other categories. The article points out that consumer engagement is greatly increased because much more touch points, such as websites, emails are social media, are available for online shoppers. Therefore, it is important for CPG manufacturers and retailers to understand what these shoppers are looking for in order to create more value to them and build stronger relationships with them.

Based on the reviews of these two articles and my knowledge and experience, there are three principles CMOs of CPG companies may apply in order to help their companies succeed in the evolving digital commerce world.

1. Create a Digital Commerce Strategy - Be prepared for the evolution and develop comprehensive digital strategy for digital commerce. The first step for companies is to create a clear and well-rounded digital commerce strategy. 

2. Understand the Potential Online Shoppers - It is crucial for CPG companies to understand what benefits online shoppers are looking for and what added value they can provide for shoppers.

3. Increase Engagement and Create Values for Long-term Relationship - E-commerce make it possible to reach consumers almost any time. Marketers can leverage on that to improve brand awareness, drive product initial purchase, increase repeat purchase and reconnect with lapsed consumers.

Digital commerce provides CPG retailers and manufacturers more opportunities to directly communicate with customers, which means that marketers are now able to influence off-line decisions as well. Digital commerce no doubt has its unique benefits and as technology develops it will only becomes more and more important. Therefore, by developing a more sophisticated digital strategy based on understanding potential customer behavior, CPG marketers can maintain long-term stronger customer relationship and in the end take advantage of the opportunity.

Happy Chen is pursuing her master degree in Integrated Marketing Communications at Northwestern University, with a focus on marketing analytics and digital analytics. With previous working experience in consumer packaged goods industry, she is also a number lover, Excel junkie and SAS programmer. Questions or Comments?  Contact me on LinkedIn or Twitter @Happy_CHP .

Source of the picture: http://www.webexpand.co.uk/e-commerce-websites.htm

CEOs - Remember Value Speaks Louder Than Prices

As CEOs, we often consider price discounts and sales to grow market share but, often, the opposite is what sells. As a graduate student at Northwestern University in the Medill IMC marketing program, I have studied the price to value relationship and found two articles you need to know about.

According to Maureen Morrison and Matthew Creamer's latest article How P&G, Ford and Wendy’s are Redefining Value from adage.com, those companies are trying to shift consumers’ perception of value from a product. The companies want to command premium prices for products which could offer convenience and high quality. The reason why they don’t choose the low price strategy again, because they’ve found value speaks directly and louder to what benefits a product or service could add to customer’s life. A good example in this article is Tide, a premium laundry detergent brand of P&G. Although its retail price is 35% higher than any cheaper offerings’ in Walmart, consumers still choose it when they find those bargain brands won’t offer the same effectiveness of cleaning clothes and they have to use three times of the dose of the bargain brands to reach the same effectiveness.

Another view of the Tide’s is from Jack Neff's Tide Pods Winning $7 Billion Detergent Wars By Redefining Value in adage.com, value means efficiency more than price. P&G innovative Tide Pods has already made a slash in a saturated new-product world where hits are increasingly hard to come by. They are the most expensive product in the laundry category but it has increased its sales without using any promotion. The successful sales performances have been contributed to the Tide Pod’s innovative technology and marketing strategy.

From these two articles, I have concluded three actionable recommendations for you to implement right now:

1) Technology Adds Value

Even in the tough times, consumers are still willing to pay for added value. Besides the cleaning efficacy benefits from Tide’s Pod’s innovation, the repackaging of its detergent into one-pack-per-load pellets is a smart technology innovation and benefit to the consumers because they help to avoid the messy measuring.

2) Quality Differentiates

Consumers would pay more because they can’t find the substitute for the same high-quality product. Greek yogurt is expensive than standard yogurt, but people would like to open their wallet a little bit more because of its higher levels of protein. In this case, value doesn’t mean the cheap yogurt. It is the premium yogurt, which will make you feel more healthy and live your life better.

3) Offer Convenience

In the laundry industry, we already have the liquid and power detergent. But Tide Pod’s has brought a new category in it-unit dose. They offer convenience to college students and apartment dwellers who need Tide’s Pod’s most for its convenience. The new target group would like to pay more for the convenience purpose.

Innovative marketers must have good insights of what their consumers need and how they could offer more added values to charge more. We can’t always be involved in the rug of price war in the long run, which seems to increase the sales volume in the short run but downgrade the brand value in the long run. We should take good advantage of technology innovation and product quality improvement to retain the old consumers and attract new ones. Being consumer-centric and valuing the customer experience are both important in today's marketing world. 

Jin (Jerry) Zhu is a M.S. Candidate in Integrated Marketing Communications at Medill, Northwestern University. Her three-year experience was in product and branding management in fashion and luxury industry. Her focus is on brand strategy and marketing analytics. She will be graduating in December 2013. Follow her @Huaijerry

Making Your Product "Pop" Off the Shelves

As a CMO, the packaging of your product can make the difference between success and failure. Many marketers focus on advertising a product through various communication channels, but overlook the importance of marketing in the store itself. The variables and conditions in a store may greatly shape a consumer’s final purchase decisions. Thus, how a product is packaged can have a great effect on what a shopper buys. As an undergraduate student in Northwestern's Medill IMC program, I have found two important articles discussing some research on how packaging impacts consumer opinions and purchase decisions.

One important marketing feature in the packaging of consumer goods is the colors used in the packaging. Studies in Consumer Reports Magazine and LifeHacker have shown that consumers have certain associations for different colors. For example, green tells us that a product is “good” for our health or the environment, whereas purple or gold signify to us that a product is rare or exclusive. However, it is important to note that the emotional tone of colors can change. For example, you must be wary of using red to convey feelings of love, as it can also be linked to feelings of danger or urgency (likewise, blue has been associated with feelings of both optimism and sadness). The saturation can also play a role: richer colors indicate richer flavors to your consumers, whereas lighter or muted colors give the perception that a product is ‘lighter’, i.e. lower in fat. Also, it is important to consider the packaging of your key competitors’ colors when designing yours: if you use colors contrasting those of your competitor (think Pepsi and Coke), the consumer can more easily differentiate your product.

Additionally, the packaging itself plays a big role in shaping the consumer’s decision. An article by Sarah Nassauer in the Wall Street Journal described how Hershey Co. recently began selling miniature versions of its chocolates in resealable bags, as opposed to separately wrapping each piece. Sales of unwrapped miniature chocolate in the new bags rose about 14%, compared to only 4% growth in the sales of wrapped chocolates. Consumers associated this new packaging with convenient on-the-go eating, as they no longer had to deal with unwrapping each candy and disposing of the wrapper afterwards. Likewise, consumers also believed the candy in resealable bags would stay fresh longer than similar candies in containers that did not re-seal. Thus, it is important to study consumer trends in the marketplace when choosing how to market your product in-store through packaging design.

From my analysis of these two articles and my studies at Northwestern, here are three action items I recommend you initiate:

1. In-Store is Critical - Don’t undervalue the importance of in-store marketing.
2. Colors Communicate - Choose packaging colors based on what you want to communicate to your consumers about the product, as well as the colors of the competition.
3. Key Trends - Consider current trends, such as consumers eating-on-the-go and valuing goods that come in convenient, portable packaging, when designing products.

As the research shows, sub-optimal product packaging may be costing you dollars and market share in your most valuable markets. Following these action items could not only save your products, but strongly impact how consumers perceive your brand as a whole. 

Hayley Buch is an undergraduate student at Northwestern University, studying Integrated Marketing Communications, Psychology, and Sociology. She is interested in consumer psychology, and applying psychological concepts to the field of marketing. Hayley will be graduating in June 2013, and can be reached on her twitter handle @hayleybuch.

Learn To Target...Like CPG Does

As a graduate student in the Nortwestern Medill IMC program, I have been studying best target applications by social marketers. In the past decade, the lack of face-to-face interaction in the store had been a challenge for the consumer packaged goods (CPG) folks. But things started to change with the expansion of technology and tools. In the face of intensifying competition, digital channels will be critical in keeping your brands relevant to the consumer. To be specific, the CPG industry has been hit hard by the economy in recent years, and as a result, private labels are gaining more popularity. There is no better time than this for brands to start embracing social media as a form of trusted, earned media.

It is important to understand your competitors’ strategies (obviously leaning towards social and interactive now) in order to stay ahead of the pack. A research conducted by dunnhumby reveals that shoppers who already had a history of brand purchase are more effective in social media marketing. CPG firms would need to do more to take advantage of retail data by looking for shoppers with high frequency of purchase in their brands and locate them on social media platforms. Building authentic voices will help influence other consumers and eventually drive sales, creating a strong foundation for a profitable growth of the company.

The social marketing program will be heavily reliant on shopper marketing data. In addition to the frequency of purchase (most likely an indication of loyalty), CPG firms will need to target demographics profile while also  considering their customers’ social influence scores (e.g. Klout) in order to find the right advocates for the brand. My recommendations include:

1) Observe what people think about your product – finding what customers have been sharing online e.g. uploading product picture on Facebook wall, or writing reviews on the latest items they purchased on Amazon. This way, CPG marketers can monitor real-time user experiences and obtain feedbacks promptly. There is also a possibility of improving product design by finding what they might have missed out during product testing via observing discussions around the brand.

2) Improve in-store experience – letting some of the more socially-engaged customers do their job, for example, customers sharing experiences via their smartphones while also being able to research similar offerings online, or scanning the QR codes to deepen their purchase experience right in the aisle. 

3) Share what your customers care – posting the latest trends on social media. We can do extra research and analysis to find out what the consumers really want to stay ahead of the competition by, for example, observing the meals people prepared and shared on Pinterest to learn what they are looking for in the grocery stores in terms of convenience and creativity.

4) Activate the dialogue – creating a space where customers who have a history of purchases can tell their personal stories and share their expertise. We already know that word-of-mouth and personal recommendations are one of the biggest drivers to purchase in the CPG category.

Yet, the biggest mistake is to let the advocates run the program themselves. We need to provide guidelines and activities to keep these consumers engaged and motivated, hence the need to strike the right balance between over-monitoring and letting the social marketing program run itself.

Arisa Kulpiyavaja is a graduate student in the Northwestern Medill IMC program. She is a marketer with a long passion in the consumer packaged goods industry, specializing in branding and marketing analytics. You can reach Arisa on http://www.linkedin.com/in/arisakulpiyavaja or follow her @arisaimc.