Commentary

CPG Brands: Winning In The Era Of Relevance

Consumers have been moving beyond “products” for years. First, they wanted services on top. Then, experiences. Now, they are seeking brands with purpose. According to one recent study, 62% of respondents say it is critically important that a brand have ethical values and demonstrates authenticity in everything it does.

For consumer goods companies, this means engendering a sense of connection between brand, consumer and the wider community. That has radical implications for traditionally linear value chains. Everything from product conception and design, through manufacturing and sales, to after-sales services is impacted.

On top of this, the competitive landscape keeps getting tougher. For every traditional brand that struggles to adapt, there are plenty of small or medium-sized players capturing outsized bites of the market.

In the U.S., the top 25 food and beverage brands now generate just 2% of industry growth, while the smallest 16,000 brands account for a huge 53%. And this phenomenon isn’t unique to developed markets. New brands have leapfrogged from outside the top 100 to establish themselves in the top three in just five years.

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Consumers are determining what the brand means to them and how it fits into their lifestyle. They are not passively receiving marketing messages and product offers. They are demanding relevance and have become active product creators and curators.

We have seen new business models emerge to meet this need, allowing consumers to participate in every stage of the value chain, whether as investor (Brewdog’s crowdfunding model), product innovator (Volition’s customer-inspired product development), manufacturer (Bite’s Lip Labs), marketer and seller (Ipsy’s subscriber vlogging), or employee (Field Agent’s mobile audits).

For brand owners, it means having an intimate understanding of their consumers and continually evaluating the positioning of each brand in a category through their eyes to ensure a compelling, balanced brand portfolio strategy. That means analyzing the “utility” versus “experience” perception of a category, which can be used to inform where to play, and the areas ripe for disruption. And, by looking at purchasing journeys through a consumer’s lens, brands can reimagine and adapt the experience as purchasing habits evolve.

Above all, they need to reorient their operations to put the consumer, not the brand, at the center of everything they do. Digital technologies and innovations have fueled an explosion in consumer touchpoints. Now, from the home to the office to the hotel to the car, brands have opportunities to engage with consumers that go far beyond the retail store setting.

How consumers decide what to buy is changing, too.

Traditional media are still key sources of brand information. But other factors are now just as important. Look at Dollar Shave Club, which has succeeded by adopting an integrated marketplace approach with a completely new business model predicated on demand for a convenient experience spanning revenue model (subscription), channel (D2C vs in-store), and product (easy to understand.)

Adapting the business to deliver relevance at scale isn’t just a good idea — it’s essential for future competitive advantage. But it won’t happen by itself. To make it a reality, brands need to assess their footprint carefully and comprehensively, remembering the “secret sauce” that made them great in the first place, but adapting and industrializing it for a new era of growth.

1 comment about "CPG Brands: Winning In The Era Of Relevance".
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  1. Robert Wheatley from Emergent -- The Healthy Living Agency, November 15, 2019 at 2:48 p.m.

    Of note, many of these new emerging brands come to market with a higher purpose that helps align their values with consumers, and imbues the brand with deeper meaning. Emphasis here recognizes that the relationship is exactly that, a relationship founded on improved product experience on the one hand and doing something important for the world at large on the other. 

    It is difficult for legacy businesses founded on a more traditional business model and more transactional point of view about their existence to suddenly and genuinely aquire a soul -- which by the way cannot be bolted on as a messaging adjustment in the next ad campaign. Transformatiom and disruption will be required to keep up. 

    We'll see how this shakes out.

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