Escaping the CPG Squeeze

Escaping CPG’s Store-Brand / Start-Up Squeeze

Over the next few weeks, many CPG brands will look back at last year’s performance, frown, cut some spending, make some minor tweaks, but then continue running the same basic plan they have been running for years. I’m sympathetic as most CPG brands are caught in a difficult position, squeezed in the middle of larger brands, store brands and start-ups. To escape this squeeze and get on a new growth path, they need a new approach. And here it is.

Most CPG brands started life in a mass marketing world.

They were designed for mass appeal, used mass media and sold in mass retail. The internet broke up this cozy mass consortium by empowering people to discover (or launch their own) unique products that better fit their needs. Rather than starting in the R&D department of a mass brand manufacturer, these brands started in kitchens and were sold in farmers’ markets.

They started small, local and sincere, and thanks to the internet, they:

  1. spread far and wide via friends and people like their friends on social media
  2. paid a modest amount, or designed their website so that people who had the same needs and wants could find them
  3. created truly engaging digital content that didn’t sell hard but that educated and engaged around a simple proposition, and lastly
  4. they sold their product via their website or via retailers like Amazon, which often better fits people’s lifestyles.

Part of what enabled this marketing approach was that they didn’t have to support mass distribution on day one.

Mass brands feel restricted from fighting back against these start-ups because they have mass distribution to support and store brands to defend against. Many former CPG marketers, innovation consultancies and agencies have enabled stores to create portfolios that directly map against mass brands, offering the same benefits and great taste at a lower price, and promoted more often.

So, what is a mass brand to do?!

Mass brands need top-of-mind awareness, but how they get it needs to change, both in media and message. Forcing your brand into the consumer’s life with clever, intrusive TV ads is too expensive and wasteful. Entertainment does not create that same type of relationship that adding value, educating and making the consumer’s life better does.

Digital and social can do that cheaper and in a more personalized and engaging way when good storytelling and a compelling brand personality is applied. With this approach, your CPM will be substantially lower, as will your waste, while your efficiency and return will be much higher. There are also digital and mobile options that will allow you to compete at the store level when and where needed.

For today’s consumers, the most valuable brand building doesn’t come from TV ads, celebrities, taglines, etc. Rather, it comes from what your brand is made of, both its product and non-product features, things like its social mission, how it gives back, new ways it can be used to solve problems in their lives. Digital and social are just much more efficient and effective for this kind of communication.

One thing I won’t say about this approach is that it is easier.

It’s not. It’s constantly measuring, learning, adjusting, learning some more, trying some more. It can be exciting, exhausting, exhilarating… but most importantly, it will be worth the extra effort and you will start winning again!

Contact me to find out how we can help you escape the CPG squeeze.

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