For a new CPG brand to succeed, communication with consumers must occur through the right channels. Omnichannel marketing is not the same as using the right channels.
Customer interactions with consumer packaged goods (CPG) companies have evolved over time. The new CPG brands used to sell their products primarily through physical retail stores, and their interactions with customers were generally restricted because retailers do not readily share anything they learn. The best method for direct interaction with consumers is an in-store demo supported by retail event management software. The rules of the game have changed, and businesses are revising their CPG brand strategies. Because of changing consumer preferences, new shopping channels, and the combination of offline and online shopping, the landscape for selling consumer packaged goods has changed from what it was in the past.
How Do Omnichannel Strategies Work?
It becomes more difficult for product manufacturers to deliver consistent customer experiences across all consumer touchpoints as new and evolving channels like CPG-owned direct-to-consumer, marketplaces, last-mile delivery, social commerce, and the metaverse emerge.
The scope and scale of the phrase “omnichannel” have significantly changed. Being omnichannel involves more than just being reachable through all touchpoints. It demands an integrated and seamless customer experience instead. 74% of consumers use both physical and digital channels to research products and make purchases. The distinction between consumers as either physical or digital consumers is nonexistent. Shoppers expect identical experience on all channels (e.g., consistent pricing and the ability to conduct a transaction across channels). Thanks to the development of social commerce, smart devices, in-game purchases, and the metaverse, there are more opportunities than ever before to promote a brand.
Advantages of Omnichannel Strategies for CPG Brands
Having multiple channels makes it possible to direct products based on consumer demand and move them to locations with the highest margins. Consider, for example, that you sell directly to customers in addition to traditional brick and mortar stores. You can shift inventory to another channel if a product isn’t moving quickly enough at a retail location. There are more opportunities to use up back stock while maintaining the margin when there are many options. It also provides flexibility in handling commodity price increases and protects your customers from disruptions.
New CPG Brands’ Omnichannel Challenges
It’s crucial to keep in mind that an ever-increasing number of channels does not always equate to higher revenues or client demand. While larger, more established CPG companies have the resources to experiment with a variety of current and emerging technologies, the lack of best marketing practices greatly increases the risk of alienating their current customer base.
New channels are constantly being introduced, but none of them offer the possibility of higher margins, and the resources available to developing brands and CPG startups are insufficient to support this.
Vendors of omnichannel retail marketing strategies seem to misunderstand the idea of customer experience in order to promote more technology. Their idea is that the key to an effective omnichannel retail marketing strategy is to “sell everywhere to everyone all the time.”
Despite the fact that I concur that an omnichannel distribution strategy can be a helpful addition to achieving overall business goals, I believe that an omnichannel retail marketing strategy for smaller CPG brands is a destructive idea. Focusing on the requirements of a particular clientele is what gives a small CPG company its power. An organic baby food company might, for instance, concentrate on selling directly to parents who are concerned about their children’s health through its website and neighborhood farmer’s markets. They risk losing the trust of their core customers if they diversify into many different channels without first having a clear understanding of who their target market is. The effect of an omnichannel strategy on their distinct brand identity and customer base must be carefully considered by CPG brands, especially smaller ones.
The best retail marketing strategy a small CPG company can use is to only be present on channels that the brand’s target audience prefers. The most effective marketing tactics revolve around choices:
- You decide who your best clients are, and you stop attempting to win over those who aren’t.
- You identify the channels that your best customers use to purchase products similar to yours.
- You discover why your best customers value your products, and you decide how to communicate this value through the chosen channels.
These tasks can be carried out more cheaply thanks to technology, but they still need to be done. For any business to be successful, you must interact with your customers through the appropriate channels (not omnichannel). You can learn important information about how your best clients view the worth of your products by choosing the right channels. With this knowledge, you can modify your marketing strategies and messaging to more effectively reach your target market. Although technology can help with this process, it cannot take the place of the human element needed to connect with and understand your customers. Instead of trying to be “seen” on numerous channels, it is preferable to remain active and responsive to customer feedback and concerns using just one.
For instance, a business might discover that its best clients primarily purchase its goods at nearby farmer’s markets and on social media sites like Instagram. Then, they can concentrate their marketing efforts on this platform and produce targeted advertisements that emphasize the benefits their products offer to those particular clients. By directly engaging with customers at the markets, the business can also gather sales information and customer feedback. With the help of in-store demo events, local independent supermarkets can be encouraged to support the expansion by using this information. Premature attempts to introduce these goods to a national supermarket chain or the Amazon Marketplace may increase volume, but the expense of customer acquisition and the spread of management focus may lead to the company’s demise.
All fairy tales start with “Once upon a time…”
All sea tales start with “Shit! And there I was…”
The opening line of every technology tale is some variation of, “Businesses must adopt a new paradigm to scale up quickly.
Knowing who your best customers are and why they pick your product over one from a competitor cannot be replaced by investing in “new shiny” technology.