The consumer packaged goods (CPG) industry is undergoing significant changes as market fragmentation continues with consumers spreading their dollars across retailers (large, small and discounted), online, and direct to CPGs themselves. There is much work to be done by consultants particularly in the area of developing new go-to-market strategies for their clients to help gain competitive advantage. At the top of the list of “things to do” is the designing of omni-channel sales and distribution approaches using digital marketing, social media and analytics to “get the message out,” as well as working collaboratively with retailers when appropriate in order to differentiate product and service offerings to consumers.
The Strategy and Operations (S&O) consulting service area will see significant activity as consultants work with CPG clients to develop and refine their go-to-market strategies. An overall rethinking of the go-to-market strategy including creating omni-channel distribution and sales strategies and brand awareness needs to occur in order to meet consumer expectations for convenience, personalization, and customization at the right price.
In conjunction with the development of go-to-market strategies, an essential component for a successful foundation will be newly designed media strategies that include all digital and social media avenues. Customer communication must be direct and reachable through multiple channels including websites, mobile apps, and smartphones in addition to traditional print and TV. This will allow consumers to compare products and prices and make direct purchases in addition to taking advantage of extra functionality and personalization features of digital devices.
Understanding consumer behavior is critical moving forward, and greater differentiation, personalization, and targeting through the use of data collection and advanced analytics will help to fill the gap, tapping the middle class of the market where growth is stagnating (the top of the market is spending on higher quality, the low end of the market is spending for value). Consulting firms are also looking at new market entrants and their successful business models, which include direct to consumer and online subscription-based models, to see what is working and to leverage that approach to more traditional players. Increasingly, vertical integration will occur. Direct CPG manufacturer to consumer relationships will become more and more common through the ability to communicate directly with consumers. Additionally, the collection of data through analytics will allow for more personalization and customization of products.
Interestingly, according to Accenture’s recent “Global Consumer Shopping Survey 2017,” a key insight about Gen Z consumers (the generation born after millennials) is that although they are very much a “digital native” group, 77% still prefer to purchase in brick-and-mortar stores. In addition, 44% will still go to a physical store to get additional information before making an online purchase.
In that vein, Estee Lauder’s recent announcement of a partnership with YouCam Makeup app makes perfect sense. Estee Lauder aims to create an omni-channel experience that will entice customers to browse the app on their mobile devices and still attract them to brick-and-mortar stores. Users can try on lipstick shades through the app (which has been downloaded more than 400 million times globally already). Then, in some stores, there are beauty advisors to show customers how to use the YouCam app to help them make purchase decisions (“How Estee Lauder Is Looking To Attract Millennials To Brick-And-Mortar Stores,” Forbes, April 19, 2017).
Differentiating product and service offerings and providing consumers with multiple sales channels and options will be the key to success for CPGs moving forward. Consultants are leading the charge here by offering advisory on omni-channel go-to-market strategies, combining online and physical store channels which will continue to be refined and sharpened through the further integration of digital media strategies and advanced analytics to target more granular micromarkets with greater specificity.