Digitization: Disrupting And Defining All At Once

The digitization of the global consumer packaged goods (CPG) business is posing huge challenges for marketers. The most obvious is the scope of the change that lies ahead. More than half of C-level executives globally, for example, believe that digital will bring about significant change or complete transformation of their businesses, according to a CEO study we conducted. This will impact CPG companies as much as it is hitting other sectors, too. 

The good news is that the shift to digital is also providing new tools to meet those challenges — and it is opening up new opportunities for CPG marketers to embrace.

Looking ahead, we see a number of trends that will emerge as marketers change their orientation away from the analog, brick-and-mortar world to one in which digital is dominant.

  • Digital will drive a more global marketing perspective. By circumventing the need for a physical presence, digitization will speed up a more global approach to marketing — and growth. Nearly three-fourths of the respondents polled in a commissioned 2014 survey conducted by Forrester Consulting on behalf of Accenture, were moving away from a country- or region-based organizational structure to one that focused on global product segments. From a user’s perspective, this might seem obvious: when searching for a new shampoo brand, for example, geographic distinction is irrelevant — so CPG marketers will need a global mindset in a digital world.
  • Marketers will prioritize investment into new digital channels — often direct ones. CPG marketers are already investing significantly in digital marketing channels. Surveyed marketers reported that 28% of marketing spend is now devoted to digital channels and media — and 66% will significantly increase investment in digital marketing. These executives also expect proportionately more growth in sales through their own digital channels than through those of online retailers.
  • CPG marketers will need to master mobile. As consumers become more demanding, marketers will need to respond by helping shorten the path to a purchase. This will mean a greater reliance on mobile: Facilitating purchases in as few taps as possible, and making use of new location-centric marketing opportunities. In some respects, consumer attitudes are already clear on this: More than 60% of consumers would welcome text messages with relevant offers when in a physical store, for example. The turn to mobile also speaks to a departure from episodic, campaign-centric marketing and further enables the shift to continuous engagement — driving lasting customer relationships.
  • Digital will accelerate new product development. In a digital world, CPG companies will accelerate product development in order to keep pace with rising consumer expectations. Two-thirds of marketers polled by Forrester expect the rate of new product introduction to accelerate significantly. This process is further supercharged by social media, which enables live consumer feedback. Furthermore, digitally enabled crowdsourcing is also a powerful means of spurring new product development.
  • Emerging technologies will offer new opportunities for CPG marketers. CPG marketers are also exploring the rapid growth potential of wearables, beacons and other new ways to reach consumers. Despite only being a burgeoning market, about 40% of consumers express a willingness to share data from their wearable devices with retailers or brands in exchange for coupons, discounts or more information. Marketers will be keen to tap this resulting stream of new data.



Disruption won’t be easy

It would be a mistake to believe that there are no potential pitfalls ahead for marketers in a more digital world. More than nine in ten of those polled by Forrester Consulting were concerned that there were both cultural and regulatory issues that would make it hard to sell direct to consumers via digital channels, as just one example. And barring some high-profile exceptions, many CPG companies remain at an earlier stage of maturity when it comes to embracing digital tools.

But CPG marketers are increasingly realizing that the rapid digitization of their industry is bringing about new ways to look at customers on both a macro and micro level. And while the terminology and approaches from the old analog days may differ, the formula for success is actually quite similar. The marketers who are able to best understand the habits, desires and intent of their customers and then respond with relevant experiences and the right measure of engagement — allowing customers to achieve their goals in the moment — will win.

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