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6 consumer trends impacting growing CPG brands

Most leaders feel overwhelmed by uncertainty right now. The questions CPG brands are asking are big ones, and they have consequences for companies with limited resources who are trying to grow and scale. What from the last year was an aberration? What can and should I count on going forward?

Here are six trends we have identified that CPG brands can and should plan to take action on:

  1. COVID-19 made “buy online, pick up in store” a mainstream option for shoppers, meaning even more purchase decisions are being made on our devices, not at the physical shelf.
  2. At the height of the pandemic, consumers would put up with inconvenience to support small businesses by buying direct. Now their patience is waning.
  3. The rise of remote work means that where consumers are spending their time has changed drastically.
  4. Amazon is becoming even more flooded with both brands and third party sellers, increasing competition.
  5. Consumers are becoming harder to reach, which means the ability to speak directly to your current and prospective customers is more valuable than ever.
  6. Consumers are expecting more from social media content than most brands are delivering, meaning there is opportunity for those that create truly relevant and engaging content.

Read on to learn more about each of these trends and get tips you and your team should use to address them.

Trend #1: More retail purchase decisions are being made online. 

 

THE DATA

  • “Buy online, pick up in store” orders placed online increased 202% in just three months from March to May 2020 (Rakuten Intelligence).
  • It’s not just for the upper-middle class. 29 percent of dollars, orders, and items are coming from consumers earning $25,000-$50,000 annually.
  • New order-for-pick-up activity spans all generations. In fact, Gen Z buyers and seniors are the two groups accounting for the most first-time orders, with each group accounting for 22 percent of the new growth respectively.

WHAT TO DO

  • Since CPG brands previously depended on a strong shelf presence in-store, you now need to translate the same experience to digital environments. Here are some ways to make up for that lost tactile experience:
    • Invest in high-resolution, naturally lit photography that will allow shoppers to zoom in on details.
    • Set a style for primary product images (image quality, lighting, distance from camera, background, size, styling, etc.), and then maintain it consistently across all of your brand’s products.
    • Leverage 360-degree product videos to mimic the in-person, three-dimensional shopping experience.
    • Mix in-use and lifestyle images and video with your product images, too. Don’t rely solely on product descriptions to convey your product’s features and benefits. Help your customer imagine how the product will fit into their life.
    • Take image loading speed into consideration. Your product photography can be “saved for web” after photoshopping to limit file size, without significant effect on image quality.
    • Tailor product descriptions to your primary target customer, ensuring you anticipate what questions they will have, and consider their top priorities when making purchasing decisions in your category. Emphasize keywords most important to that primary target, and build your product information hierarchy in a way that’s consistent with their shopping priorities.

Trend #2: Customers did put up with inconvenience to buy direct from CPG brands before the pandemic. Now they expect more of you.

In addition to more widespread consumer adoption of online shopping methods, more retailers have arrived (albeit a bit late) to the ecommerce party, too. This perfect storm will result in higher expectations for CPG brands in direct sales as well-polished, seamless ecommerce experiences become a shopping norm.

 

THE DATA

  • 19 percent of small businesses began selling products online or shipping to customers for the first time in 2020. (Chase Ink)
  • Large retailers are making it more difficult for brands to be competitive with their direct sales. Digital Commerce 360 notes that the top 100 retailers, minus Amazon, accounted for 74 percent of the new, non-Amazon ecommerce growth in 2020.
  • More competition means increased investment required to move your target customer from awareness to sale. The top spending increases for small businesses in 2020 were shipping, social media and search advertising, and ecommerce platforms.

WHAT TO DO

  • Understand how building direct-to-consumer sales fits into your brand strategy and business plan. If you’ve punted on selling direct-to-consumer through your own website and are unsure if the model makes logistical sense for your brand  — now’s the time to decide.
    • Our Solve for Y Ecommerce Gap Analysis can provide guidance on what it will take your brand to compete in ecommerce. We will dive into everything from shipping costs, to logistics, to SEO, to how (and how much) your competition is advertising.
    • Then, invest accordingly. If CPG brands intend to rely on direct sales as a significant revenue stream, you must invest in tech (platform), creative that aids the sale (web design, product photography, video), and advertising that drives traffic (SEO and search advertising, social media advertising, etc.)
    • Winning a first-time sale is only half of the equation. With ecommerce acquisition now more costly than ever, be sure to have a retention strategy in place to keep customers engaged, happy, and purchasing regularly.

Trend #3: Where consumers are spending their time has changed drastically.

Changes to where and how consumers spend their time means your advertising focus should shift. It also means you could quickly become out of touch with your target customer’s new lifestyle if you aren’t proactive. 

THE DATA

Lifestyle changes, new hobbies, new financial priorities — this is a transitional time for everyone. Your target customer has gone through an evolution that will have lasting effects.

  • Job status and finances are volatile. We’ve still lost 10 million jobs in our country overall. Millions have transitioned jobs, and/or have transitioned to working remotely.
  • The number of people continuing to work remotely could increase three to four times compared to pre-pandemic levels of remote work.(McKinsey & Company).
  • An estimated 9 million Americans relocated between March and October 2020 (National Association of Realtors).

WHAT TO DO

  • Go straight to the source. Interview and survey your existing customers, and plan to do so more frequently than you have in the past.
    • Use email surveys to engage past customers who haven’t made recent purchases. 
    • Capture in-the-moment feedback from your site’s visitors with an intercept survey. 
    • Mix optional survey questions into the checkout process.
    • Follow-up with a survey post-purchase as an opportunity to re-engage the customer in your brand. 
  • Compare pre-pandemic website analytics (2019) to present day analytics.
    • Are you noticing major shifts in visitor location? It’s possible that your customers are moving away from major cities, into suburban and rural areas where you may be able advertise more cost-effectively. 
  • Go through the exercise of mapping the customer journey again.
    • For most, the daily commute has instead been replaced with more screen time, frequenting social media and other digital channels during breaks in the day. How you influence the first stage of the customer journey — brand awareness — will need to shift further towards digital spaces. 
    • Think about all of the decision-making advantages your customer has in-store. If your packaging tells your brand story in a way that immediately resonates with customers, that experience needs to be brought into the ecommerce shopping experience. If consultation from a store associate is an important part of the decision-making process for your product, look to mimic this experience in ecommerce. Cover frequently asked questions through multimedia when possible, limiting reading time for the customer. 

Trend #4: Amazon competition continues to increase exponentially.

Amazon’s 2020 growth (38 percent net growth in North American sales) means sellers will be spending more to jockey for the attention of Amazon shoppers. 

 

THE DATA

  • Amazon currently boasts 2.4 million active sellers, with as many as 1.5 million more expected in 2021. 258,000 have joined in Q1 2021. (Marketplace Pulse)
  • 96 percent of Amazon sellers plan to expand their business in 2021. (Jungle Scout)
  • Amazon advertising dollars increased 47 percent year-over-year, with bidding on popular searches commonly costing $7 or more per click

WHAT TO DO

  • If you’re selling on Amazon, a “set-it-and-forget-it” approach to your product listings won’t get you the results you need anymore. Invest in optimizing copy, images, and videos for your product listings. Build an Amazon Brand Store, making it easier for fans of your products to shop your full product lines. 
  • Tap into video ads, which don’t yet suffer from the same level of cut-throat competition. 
  • Understand which Amazon fulfillment model best fits your goals. All have their drawbacks and positives. If you don’t know the difference between them or haven’t recently reviewed them, you need to. If you don’t know where to start, contact us and we can recommend an expert that can help you.

Trend #5: A direct connection to current and prospective customers is more valuable than ever. 

While Amazon’s Fulfillment-by-Amazon (FBA) model makes it easy for brands to sell more without logistical challenges, it’s still critical to keep a direct throughline to your target audience.

 

THE DATA

  • Tech giants are preparing to roll out new advertising targeting policies that will inhibit brands’ collective ability to target potential customers.
    • Apple’s new policies will allow its users to opt for increased privacy in mobile ad targeting. 
    • Facebook is making its own adjustments to remain compliant with Apple. 
  • FBA is an easy sales model logistically, but as more CPG brands lean on it as a primary ecommerce channel, they’re missing out on useful customer-identifying information Amazon doesn’t share. 
  • As consumers uproot and move across the country, your customer data is likely to quickly become out-of-date. 

WHAT TO DO

  • Maintaining a direct-to-consumer ecommerce strategy, even if not a primary sales driver, can help you build and segment CRM lists.
    • Email marketing keeps your brand top-of-mind and reengages existing customers. 
    • Communicating regularly with existing customers helps to increase their lifetime value to you, and provides access to cheaper revenue vs. costly one-time advertising and acquisition programs.
  • Build “data collection” into your social media content strategy.
    • Focus on building a community of engaged fans. 
    • Poll customers where they’d like to be able to find more of your products. 
    • Run contests and giveaways, building a direct connection with winners you can survey or interview in the future. 
  • Engage influencers.
    • Influencers have a built-in, trusting audience. If you can find influencers that appeal to your target audience, you can shortcut the process of getting in front of them. Find influencers that align with your brand, and begin building partnerships. 
    • Start with a $10,000 budget while you’re still learning what influencer partnerships will work best for your brand. In general, influencer activity shouldn’t dominate your marketing budget — and it doesn’t need to dominate it to add value. 
    • Understand that costly “big names” aren’t the only partners who will get a return on investment. In fact, content posted by “nano influencers” (1,000-10,000 followers) and “micro influencers” (10,000-100,000 followers) gets more engagement.  

seTrend #6: Consumer expectations for relevant and engaging social media content are high. 

Virtually all consumer brands have social media presences, and consumers are spending more time perusing social media than ever before. Still, consumers have indicated that the majority of brands are still missing the mark with their content.

THE DATA

  • 68% of people don’t think brands or companies share interesting content. 

As noted in HootSuite’s Social Trends 2021 report, brands are now counteracting this by paying closer attention to what their customers want. 

WHAT TO DO

  • Begin social listening, the practice of tracking conversations and mentions related to topics relevant to your brand. Brand mentions, relevant hashtags, competitor mentions, industry trends, and keywords will provide you with complementary insights you can’t get from customer surveys and interviews. 
  • Use the insights you glean to make adjustments to your content strategy. 
  • Between social listening and trial-and-error of new content, answer the following questions:
    • How does your brand fit into customers’ lives on social media, and how does that influence your posting frequency? 
    • How can you find creative ways to fit into the conversations customers are having, instead of leading them? 
    • What will “break the wall of indifference” customers have to brand social media?
    • Are you “reading the room” to get timing right before launching campaigns? 
  • Treat social listening as ongoing practice and critical must-have to optimizing your social media results going forward.

CPG Brands: Count on the six trends outlined in this article to continue into the long-term future. Nimbleness is an advantage for second-stage brands over slower-moving, enterprise-level competitors. Lean into that advantage! Adjust now, and capitalize on change as opportunity. If you wait until beyond 2021 to address new consumer preferences, expect to fall behind your savvy competitors.

Answer the questions keeping you up at night.

If the pandemic has brought into question your purpose, your target customer, or your brand strategy altogether, find out if Solve for Y is the right solution for your team.

When Brand Focus is More Important Than Brand Scalability

When Brand Focus is More Important Than Brand Scalability

Effective brand strategy is critical to companies in the second-stage business life cycle. The outcomes that brand strategy needs to accomplish depends on where in the life cycle your company is.

Does generic talk of “growth” make you cringe?

When you hear young companies aspire to scale, do you smirk a bit? “Been there, done that,” you might say. “It’s not all it’s cracked up to be.”

Six-Point’s focus is on “second-stage companies” — meaning 10-100 employees or $1M-$50M in revenue. But that is a wide gap, and the growth-oriented companies in the first half of second stage have very different headsets than the focus-oriented companies in the latter half of second stage. Companies with more than $25M in revenue or 50 employees, especially ones that are decades old and may now be smaller than they once were, are battle-scarred enough to cast a skeptical eye at growth for growth’s sake. They know that not all revenue is created equal.

One of our clients, a product manufacturer, had experienced solid revenue growth over many years. They were getting national placements in “big boxes,” controlling full retail bays, and selling entire walls of planogrammed product. But it soon became clear that the bump in revenue didn’t equal profitability. The big boxes did what they do — demand more and more price breaks, start private labeling, and erode margins wherever they can.

This company had to make some hard calls: Say no to some high-volume, big box sales in order to focus on more profitable customers. Reinvest in streamlining operations and new product development to better serve their core customers. Begin to speak directly to new end-user customers and influencers, rather than simply relying on shelf space to drive sales.

This same decision to focus on profitability over unbridled growth is one that faces most privately held companies under $50M. Especially as they become large enough to attract attention and compete with companies (and sometimes even customers) much larger than themselves. At some point they have to ask … is growth the goal? Or is profitability and strength really what we are looking for, even if we have to shrink top-line revenue to get there?

From a brand perspective, this is a time when saying no is much more important than saying yes.

If your company is in a period of needing to focus on its core instead of simply chasing growth, here are four critical questions that you must be able to answer:

  •  Who is your primary customer? Yes, this can be someone other than the end user, such as distributors or franchisees. No, you can’t have more than one. More than one primary customer will guarantee underperformance. As Robert Simons of Harvard Business School underscores, the competitor who has clarity about its primary customer and devotes maximum resources to meet their specific needs will beat you every time.
  • Is this customer profitable when we include all aspects of making and fulfilling the sale?
  • Where do our core values and our primary customer’s core values intersect?
  • How can we maximize this customer’s brand loyalty? What would make them accept no substitute for our brand?

These should be your areas of focus as you hone your brand strategy. Protect and defend your core. Focus your capital and human resources as much as possible towards your primary customer, and cultivate their brand loyalty. Minimize resources that are allocated to attracting secondary customers or any unprofitable business.

Yes, the overall size of your company will shrink, but if done successfully, the business will become more profitable. Employees will be more engaged. The cost of customer acquisition and customer price sensitivity will drop, and customer retention will increase. From there, you will have the groundwork laid for a next stage of growth that is purposeful and focused.

Should you work with an agency who is a specialist in your industry?

When companies search for a branding or marketing agency to partner with, they often wonder if they need a fresh perspective with specialized branding and marketing subject matter expertise, or if industry specialization is more critical.

There is an ad industry adage: Two clients in the same industry is a conflict. Three is a speciality.

Industry (or vertical) specialization is a common tactic employed by marketing and branding agencies to gain credibility and expertise. When we were developing Six-Point Creative, one of our big questions was “do we specialize in a single industry?” We opted instead for “horizontal specialization.” In our case, this meant focusing not on industry but on company lifestage that we felt was underserved in the agency world (second stage companies preparing for additional growth), and on brand development and brand strategy instead of general “marketing and advertising.”

Prospective clients often ask me if they should choose an agency that is more specialized in their industry. Unfortunately, I don’t have a yes or no answer to that, but I do have some food for thought.

You want a horizontal agency if: 

  • You have a significant amount of internal industry expertise. Leadership teams that already have a lengthy history and experience in their own industry may greatly benefit from a relationship with an agency with a broader experience. I have seen many companies get so mired in looking left or right to their competition that they miss opportunities by not seeing broader social, technological, or business trends. Our clients are already experts in their industry and their existing customers and markets. They are relying on our expertise to bring them best practices for reaching new customers and markets, and employing positioning techniques that are not already part of their competitors playbooks.
  • You are trying to do something new or disruptive to your industry. For these companies, experience outside of their industry is a necessity, because they are developing opportunities that their competition isn’t. A distributor launching private labeled products for the first time needs an agency skilled in product launch, not industrial distribution. A business-to-business company who need to extend its brand to the end user consumer needs a consumer product specialist, not an industry specialist.

You might want a vertical agency if:

  • Your industry is highly technical (and you don’t have the time or the resources to get an agency up to speed). When speed and self-direction is of the essence, and you have a technical product or industry, you might gain a lot of value from a company who has worked in your industry for years. You will spend a lot less time with them upfront, and will likely have to do less collaboration with them during the engagement. You may even save money if they can use pre-developed templates, technology, or content and repurpose it for your business. For many small businesses in which resources are scarce, this is a significant benefit.
  • Your internal team is new to the industry. If you have hired talent without industry experience, especially in marketing and sales, it can be very helpful to bring in outside industry marketing specialists to give your team insights on the competitive landscape and what techniques are traditionally successful. Particularly if you are in an area of the company where the labor market is tight and limited, bringing in an outside partner from elsewhere in the country can allow you to access industry expertise that isn’t available locally, as well as industry connections to media or other partners that may be particularly valuable to you.

The bottom line: Vertical or horizontal specialization is your call based on your goals, structure, and comfort level. But you never want an unspecialized agency. If your agency is totally unspecialized (“we will do anything, for any company”), they are not experts. It is simply impossible.

Market Research: Big Returns on a Little Sweat Equity

One of the alarming statements Six-Point often hears from small-to-mid-sized companies — even the ones seeking aggressive growth — is that market research isn’t something they do.

High-potential brands don’t achieve their potential unless they make informed decisions about their future. Making assumptions about the customer or the opportunity simply isn’t good enough.

Your company can and should be doing market research right now, and it requires no formal budget.

Six-Point creative strategist Tyler Leahy explains where to start.


Misconceptions on market research

One of the alarming statements I often hear from small-to-mid-sized companies — even the ones seeking aggressive growth — is that market research isn’t something they do. Often, it’s mislabeled as a luxury reserved for industry titans with millions or billions of dollars to spend. Sometimes these companies feel they don’t know how to do basic research on their own without outside expertise, or just feel that they don’t have the people or the time. 

Sure, the goliaths have more resources (not just capital, but people and dedicated time, too) to put towards primary research, either hiring glamorous agencies or building a specialized internal team to glean insights that will help them make more strategic decisions, mitigate risk, and forecast the future. That truth, however, doesn’t mean you should do nothing, hedging your brand’s future on unchecked hunches. 

In fact, there’s quite a bit of useful research you can do with almost no formal “market research” budget…and it’s the fruitful work your team should be doing right now.

Here’s an example

At ExpoWest 2019, Eat Your Coffee CEO and Co-Founder Johnny Fayad told SnackNation the story of how his brand collected insights from its superfans, shortly before they began selling direct-to-consumer via their own e-commerce operation. 

Without access to customer email addresses, Johnny and his team began cobbling together mailing addresses from different Amazon order data sources. They then discerned their top 200 Amazon customers, and Johnny sent hand-written thank you letters to each of them. He also encouraged them to complete a survey (in exchange for free product and brand swag) that led to insights that helped shape the brand’s future, particularly at this critical juncture of planning an evolution to its sales model and preparing to launch an e-commerce site. 

The types of questions Eat Your Coffee wanted to answer? Smart ones about customer lifestyle and product use.  

  • How did these top customers get their caffeine fix before they discovered Eat Your Coffee? 
  • How do the caffeinated snack bars fit into their day now

What Eat Your Coffee’s team learned from this process was invaluable. They learned that one of their top three customers was an 82-year-old woman who eats the all-natural bars as a caffeine solution that’s friendly to her acid reflux. Their brand was solving a problem they hadn’t deeply considered. Another realization? While Eat Your Coffee isn’t marketed as a coffee replacement, many customers were starting their days with the product as they previously had done with a cup of coffee — an important consideration that could influence when and how to introduce potential customers to the brand in the future. 

Continuously collecting customer insights allows Eat Your Coffee to refine its value proposition over time. In the interview with SnackNation, Johnny noted that his brand is always “going the extra mile and doing something personal” in their attempts to learn more about their customer. 

I’m an advocate for all growth-minded brands adopting this mindset. B2C. B2B. Doesn’t matter. When you go the extra mile, customers open up, leading to more meaningful data. That’s not the only benefit, either. It turns a learning opportunity into a highly-personal, long-lasting brand touchpoint that makes the customer feel more connected to your brand.

Market research your team can (and should) do right now

Here are the low-cost market research tactics my team at Six-Point is recommending to second-stage companies coming out of the COVID-19 slowdown:

Interview and/or survey existing top customers.

Understand how COVID-19 is changing your customers’ pressures and behaviors. How is the way your product or service fits into their lives changing? Go the extra mile and do something personal.

As Johnny noted, go the extra mile and do something personal. Lead with a handwritten letter or personal touch from company leadership. Donate on the customer’s behalf to a charity reflective of your brand values during this difficult time. Offer a free product or service to help offset the financial pressure people are facing. Any of these personal touches can go a long way!

Analyze competitors, in real time. 

Instead of conducting a competitive analysis once or twice per year, observe competitors at least once per month in the wake of COVID-19 as your industry landscape rapidly adjusts.

How are competitors communicating with customers through different marketing channels? Keep tabs on their social media, their website, and their other owned content channels.

Has the customer experience changed? Mystery shop the online customer experience, looking for tweaks to messaging, delivery method, and the packaging and fulfillment experience.

Begin social listening. 

Actively seek customer questions and concerns. Use social media to create a dialogue with your customers, employees, and other key stakeholders.

Considering testing something new? Poll customers and get feedback in real time.

Track mentions of your brand and your competitors across social channels and influencer activity, news sites, industry blogs and podcasts, and product/service reviews.

Challenge your own assumptions about the target customer and the market opportunity. 

Making a pivot, or focusing more on a specific target customer? Consume existing secondary research to answer questions like…

  • Does existing research suggest this is a viable customer? 
  • How do they make purchasing decisions, and how do they shop?
  • What other brands do they love? 
  • Where do they consume content?

Still unsure where to start? Contact us!