Consumer Packaged Goods, known in the retail and commerce industry as CPG, is a booming business that has gained serious traction in the past few years. The basic definition of CPG are products that consumers use and replace frequently. This includes food, cosmetics, personal care items and household cleaning products. There are many different ways that CPG retailers market their merchandise, but the joining of CPG with ecommerce requires a different approach to marketing and planning than brick and mortar models.
CPG items can be contrasted with merchandise that falls under the umbrella of DG, otherwise known as durable goods. These include items that are not replaced for longer amounts of time until necessary, such as appliances, furniture and cars.
There are two essential elements for CPG to think about in 2019: strategizing product delivery and innovative marketing. Here are a few tips to get you going down the path of a successful marketing strategy.
Using Existing Marketing Methods
Existing marketing methods that are tried and true never go out of style. CPG requires a specific approach to appealing to customers. There are a few core components to how customers choose what’s on the shelf in a brick and mortar setting:
- Brand Loyalty: Since CPG merchandise often comprises items of convenience and not a long-term investment, consumers will go for what they know. This is especially true of a product like food, where the price differential of brand-name versions versus generic may be minimal but trust is high. Brand loyalty isn’t about altruistic support of an actual brand, but the trust of the consumer that they know what they’re getting. Creating a strong brand and maintaining its consistency is a hallmark of good marketing.
- Price: Competitive pricing that you can market is especially important in the world of CPG sales. For example, personal care items are often considered less specific than a product like food. If there’s a toothpaste with the same ingredients, a consumer will most likely opt for the cheaper comparison.
- Promotional Offers: Shoppers always like the idea of a future investment. Promotional offers can comprise extra coupons if a certain amount of money is spent during a single transaction or a discount for signing up for an email list.
All of these approaches are traditional, solid marketing strategies that lead major brands to successful sales. However, in today’s evolving online marketplace, developing further strategies that address digital needs and ecommerce companies is necessary to stay ahead of the pack.
Developing New Digital Marketing Strategies
Considering CPG in the context of ecommerce doesn’t necessarily mean that you’re dealing with retailers based solely online. This can be a mix, but the key is that there’s an online component that traditional brick and mortar CPG products didn’t have before.
One of the greatest challenges with CPG is the fact that the market is oversaturated, and therefore, it’s more difficult to stand out. You need to find your strengths, niche markets and keep up to date with what competitors are doing and doing well.
Two current approaches to combining CPG sales with ecommerce are the “click” models:
- Click and Collect: A customer pays for an order online and then receives an electronic communication, such as a text or an email, informing them of when the item is ready for pick-up. For example, you may order food on a website like GrubHub for pick-up, utilize Amazon Locker or even place an order online for a product and retrieve it in-store. For many consumers, having an in/out experience in a big box store is far more convenient than roaming the aisles and waiting in line.
- Click and Deliver: A customer pays for an order online and the products are then delivered. The thing that makes CPG merchandise much different than other types of online shopping, though, is the fact that you’re dealing with short-term, disposable products. Unlike shopping for a pair of shoes or a new grill, customers who are shopping for groceries and household supplies are looking for different qualities. For some people, the idea of shopping online for things that they can simply go to the store and buy may be a new concept. However, the attraction to better prices and convenience often outweighs the accessibility of the supermarket or convenience store right down the road. Using a service, for example, like Amazon’s Prime Pantry, means that you can shop for groceries with a click from the comfort of your own home and receive the items the next day.Mainstream big box stores like Walmart and Fresh Direct offer a combined service where customers can choose whether to walk in-store or place an order online. Large retailers want a piece of the ecommerce pie. This also means that smaller businesses need to hone a good marketing plan to attract customers looking for the same services.
- Subscription-based Services: These are growing increasingly popular for many consumers and range from cosmetics to premade meals. Companies like Freshly and Blue Apron offer freshly cooked meals delivered directly to the customer’s door based on subscription plans. Many personal care companies also offer everything from mystery grab-bags sent once a month to curated packages of cosmetics. This is a version of CPG that’s based completely online.
Taking into account the models of these shopping options, much of your marketing is going to take place online. Utilizing promo codes for online purchases is the equivalent to offering extra coupons or discount in-store that are displayed on the shelf with the product. Search Engine Marketing (SEM) and paid display ads may seem old-fashioned in terms of online marketing, but they’re very relevant for CPG strategies. This is especially true with the increasing popularity of localization which hones online advertising to a certain geographic range.
Whether your customer is ordering exclusively online or a combination of online shopping and brick and mortar pick-up, the most important quality of these transactions is the fact that digital marketing is essential.
5 Actions CPG Companies Should Take Right Now
If you’re wondering what you should do next as a CPG company to stay up to date on marketing strategies and keep up with the crowd, here are five action points.
- Take a Lesson from Competitors
CPG is extremely competitive due to how many companies are developing their marketing strategies and consumers relinquishing brand loyalties for the best price they find online. Take a note out of a successful competitor’s book. What are they doing to earn business that you’re not? How does it compare? Some companies are simply corporate behemoths that have a generous marketing budget, and they’re more likely to succeed than a small retailer. But instead of trying to compete, figure out how you can learn from them. What are they using as a marketing strategy, whether online or in-store, to push their CPG products with an ecommerce component? It’s also worth looking into if you can partner a smaller company with an established brand.
- Utilize the Correct Tools
Executing any marketing strategy requires using the proper tools. In this case, this is Supply Chain Management (SCM) software that helps you manage a workflow plan. This includes tracking the progress of a product from the fabrication stage to the delivery to the customer. Using SCM software to do this supports a streamlined process of product management and presents the most cost-effective way of doing so. Other things to consider are contingency plans in the event a product is defective or needs to be returned. Another useful part of using software to gauge workflow and help plan product orders is having access to analytics and data.
- SEM and SEO Approaches to Ecommerce CPG Retailers
Search Engine Marketing (SEM) and Search Engine Optimization (SEO) are old hat in the world of ecommerce but are essential elements to work into your plan if you’re a CPG retailer. The way consumers search for CPG items is going to take place differently than internet searches for DG items. They’ll often be comparison shopping, so the types of display ads you decide to pay for and keywords you focus on will be different than traditional ecommerce retailers. Consumers shop for shoes based on aesthetic and style, but they’re not going to look for toothpaste the same way. Finding a way to stand out in the currently oversaturated market is achieved by recognizing your customer base and successfully connecting them with your product.
- Gather Data About Your Customer Base
Not all shoppers are created equal, and the way people shop for CPG items is especially diverse. There are different types of customers who are shopping online with a mission in mind. Whether it’s finding a lower price than a mainstream brick and mortar retailer, ordering in bulk to save time and trips or dealing with the desire of a conscientious consumer, gathering information about who’s buying your product and looking for it is necessary. This is doubly true if you’re appealing to a niche market with a smaller customer base but more likely they’ll spend money to invest in your more unique product. Use the analytics available on your website, whether you’re using a CMS system like WordPress which offers easy to access analytics and advice on its dash or have an in-house advertising and marketing team capable of interpreting complex analytics.
- Omnichannel Marketing
The ability of shoppers to navigate seamlessly from one platform to another is referred to as omnichannel marketing. In other words, customers can explore potential purchases across multiple devices, including mobile, desktop, telephone or a brick and mortar store. It should be as simple as possible for your customer to think they need to order toothpaste on their way home and bring up the site on their smartphone, and then finish it when they sit down at their desktop computer. Making this convenient is extremely important, because not only does it offer initiative for the busy shopper, but it also characterizes your company as well-organized and efficient. Building customer trust is something that can’t be paid for, but it’s invaluable.
The marriage of CPG and ecommerce is standard fare in today’s retail world. Developing a cutting-edge marketing strategy is all about taking in the current state of advertising and assessing your competitors. With some innovation, careful study of successful marketing campaigns from other retailers and recognition of your core customer base, implementing a rigorous marketing plan for CPG products is completely possible.