The data gravity effect: When less is more
In the post-cookie world, brands should rethink their approach to customer data collection by amassing less, but more meaningful data.
In a digital world where every click and swipe can be analyzed, the consumer products industry finds itself at a difficult crossroads.
On one side, rapid technological advancements are reshaping the way companies connect with their customers, offering new ways to engage them and win their loyalty. On the other side, however, this new style of customer engagement comes alongside several challenging CPG marketing trends:
- Inflation-weary consumers
- Too much or too little data
- Eco-conscious consumers
- Omnichannel expectations
- Supply chain resilience
- How do companies stay relevant in an era where traditional strategies are being upended by the next big tech innovation?
- How can they reconcile the drive for widespread data collection with the need to cut costs and improve efficiency?
- How can they do so while satisfying a consumer base that demands both transparency and sustainability?
1. CPG marketing: Inflation trend puts loyalty to the test
Between climate change, inflation, and geopolitical instability, the playing field for consumer products brands is constantly shifting. TV advertising is 40% more expensive, marketing budgets are dropping drastically, and to top it off – products are getting more expensive to manufacture.
These trends don’t leave consumer products brands with many options other than to pass costs onto the customer.
Across the board, prices are increasing on everyday items like eggs, breakfast cereals, and beverages, with some seeing jumps as much as 40% compared to previous years. This inflation makes a noticeable impact, with customers feeling the strain on their wallets at the checkout line.
However, while customers continue to seek economic value, they aren’t willing to sacrifice their ethical values to purchase the types of products they like at a lower price point.
This presents consumer products brands with a double-edged sword. They can’t sacrifice quality and values to achieve a lower price, but they can’t expect customers to happily pay inflated prices.
To survive, CPG marketers need to find efficiencies in the marketing process that get more results from less input.
2. The CPG marketing data dilemma
Data, data data: Some brands have far too much, others don’t have enough. CPG marketers might feel a bit like Goldilocks as they struggle to hit that “just right” middle ground.
Tell a fledgling e-commerce brand that you have too much data, and they’d say there’s no such thing. However, when you get to the dizzying heights of pillar consumer products brands like Coca-Cola, which have databases with hundreds of millions of lines of data, it becomes incredibly costly to manage.
On the other side of the equation sit the brands who haven’t captured enough customer data to truly understand their customers and deliver the level of personalization needed to drive engagement and loyalty.
The solution for this CPG marketing trend sits somewhere between these two cases. The fact is, you don’t need reams and reams of customer data to drive results. By taking a quality-over-quantity approach, you can manage a smaller, more valuable database, cut database management costs, and get 99% of the top 95% of the way there at a fraction of the cost.
3. A purposeful trend: Eco-conscious consumers take charge
Ten years ago, the main question that crossed customers’ minds before making a purchase was, “What does this cost me?” Now, they also ask: “What does this cost the environment?”
Today’s eco-savvy customer not only questions price, but also questions a product’s environmental impact. This CPG marketing trend has had a dramatic impact on supply chain and production.
Consumer habits and values are driving product innovation within the CPG industry, as customers insist on transparency and sustainability not just in products, but also in corporate operations.
And if the consumer is the boss, consumer products companies need to work to meet these shifting demands.
Your customers seek products that offer transparency in ingredients and sourcing, with a clear label indicating the impact on both personal health and the environment. This demand extends beyond the supermarket shelf to the practices of the companies behind them, where there’s a growing expectation for ethical behavior and sustainability in operations.
As consumers continue to redefine what they value in products and how they choose to engage with brands, consumer products companies must remain agile. The ability to quickly respond to these changing demands with innovative solutions and flexible marketing strategies will be key to remaining relevant.
Smarter sales, service, e-commerce.
Get the ultimate CX AI toolkit HERE.
4. Everything, everywhere, at the click of a button
The omnichannel model is revolutionizing the consumer products industry with changes as transformative as the shift to on-demand TV. Just as television viewers have moved from eagerly awaiting weekly episodes to binge-watching entire seasons on platforms like Netflix, shoppers are experiencing a similar seismic shift in their purchasing behaviors.
People have gone from shopping in stores, to having someone shop multiple stores for them with services like Uber Eats, to shopping for their desired products on any channel.
This trend demands that consumer products companies rethink their distribution and marketing strategies, because it’s no longer about being present in a single type of store or online platform. Success now depends on seamless integration across all possible points of sale.
Consumers shopping for their desired products expect a unified experience, whether they’re interacting with a brand through a mobile app, a website, a physical store, or third-party e-commerce platforms. It’s up to consumer products brands to deliver upon that expectation.
Omnichannel customer engagement: 4 inescapable truths
The friction is REAL when it comes to the modern buyer’s journey. Fortunately, there’s an omnichannel solution.
5. Improving supply chain resilience
The frantic shopping for toilet paper and empty stores shelves during the pandemic are hard to forget for consumers and suppliers alike.
CPG businesses faced huge challenges in meeting consumer needs, and many continue to grapple with these issues. Traditional manufacturing and supply chains, designed primarily for efficiency and economies of scale, proved inadequate in handling major disruptions. Lack of flexibility led to visible consequences, including the waste of perishable goods like milk and the infamous shortages of toilet paper.
Recognizing the need for greater flexibility, consumer products companies now prioritize resilience in their business strategies. This trend involves strengthening networks with copackers, third-party manufacturers, and improving delivery systems to create a more robust and responsive supply chain.
It underscores the importance of building adaptable and robust supply networks capable of withstanding unforeseen challenges and swiftly responding to changing market demands.
CPG marketing trends: Looking to AI
Economic uncertainties and changing consumer habits will force consumer products marketers to remain agile and ready to adapt. In their quest for flexibility and efficiency, consumer products companies are investing in artificial intelligence technologies.
In addition to optimizing supply chain operations, AI is opening up new opportunities for deeper engagement by boosting personalization. With AI, CPG marketers can gain customer insight to craft tailored product recommendations to resonate with individual customers.
Despite all the challenges the consumer products industry, new technologies like AI promise to help companies forge a bright future.
