Consumer goods manufacturers are reaping benefits from developing a direct relationship with customers.
by Cassandra Moren, September 2012
More than ever, today's consumers shop across channels, including retail stores, websites and catalogs. Social media and loyalty programs are increasingly affecting the brand experience. With the advent of social media, more consumer goods (CG) manufacturers are pursuing integrated, cross-channel strategies that can ensure consumers are engaged by the proper brand experience at every touch point. There is an increasing drive to engage with and potentially sell to evolving consumers across channels.
Consequently, consumer goods manufacturers are starting to adapt in ways that mirror retailers. They are making investments in innovative technologies and processes to build the infrastructure to support the market demand. With advances in aspects like social networking, digital marketing and mobility fundamentally changing the way consumers behave, the door has opened to building a more direct relationship with their customers.
The research showed that over the next year, CG companies plan to leverage social media for a broad range of marketing activities, including product promotion (74 percent), capturing consumer feedback (63 percent) and customer service (62 percent). Respondents believe social media is growing in importance as a tool to increase consumer loyalty, with 33 percent of respondents saying that social media participation will become a top priority in the year.
In addition, the survey results found that the use of social and mobile channels are increasingly helping CG companies become more comfortable with the direct-to-consumer selling model, with the number of companies selling products directly to consumers expected to increase from 24 percent to 41 percent over the next 12 months. Despite the growing social and mobile marketing trend, survey respondents and other CG executives see their e-commerce efforts as complimentary to, not competing with, existing retail channels, but are committed to expanding their direct-to-consumer strategies.
More and more people are spending time online and interacting with brands, so it is no longer a one-way relationship. To attract and engage the consumer, consumer goods manufacturers are increasingly exploring ways to integrate new channels such as mobile and social media into their marketing mix. Thus, they need to create the right online presence. For product consideration, purchase, and post-purchase support, consumers are already going direct to manufacturers. Many consumer goods companies are increasingly using the web to connect more directly with end consumers by offering coupons, recipes, lifestyle tips, and product information online. There are many reasons for CG companies to step up their efforts in having a relationship directly with the consumer:
New product introductions and innovation (test and learn)
Allows companies to learn about the social and e-commerce space
Gather valuable insights into consumer preferences to better target consumers and to share with retailers to jointly provide a better experience for consumers
Better understand consumer buying behavior -obtain feedback on products, services, pricing and promotions
Drive brand loyalty with the proliferation of retailer private label programs
Retailers dictating more terms in the buying process
Become more consumer-centric in a world of an increasingly empowered consumer
Extend the brand experience in social communities
Increase sales across multiple channels (store, web, social, mobile, marketplaces)
Test promotion and pricing decisions
Leverage the robust growth of e-commerce and cross-channel shopping
Influence consumer purchase and support the full product lifecycle
Most importantly, be wherever the consumer is — not just in the store
As more and more consumer packaged goods manufacturers embrace a direct-to-consumer model as part of their overall sales mix, it is important to provide a personalized buying experience that mimics how they would interact with the brand in a retail buying situation. They can benefit by selling direct to drive and maintain sales growth, deliver their brand promise, and capture valuable information about consumer’s wants and expectations.
A Cross-Channel Approach to Consumer Engagement
In 2012, we are seeing that more CG companies are exploring ways to integrate social media and mobile into the marketing mix as well as to step up their efforts in e-commerce. In today’s highly-competitive global economy, it is critical that consumer goods companies take advantage of every touch point with the consumer. For a successful consumer direct initiative, CG companies must deploy a strategy that combines direct sales, community building and an alliance with retailers.
Today, more than ever, CG companies need to create cross-channel customer interactions for consumer engagement and direct to consumer commerce. Here are some approaches to consider:
Leverage customer information from all channels and systems
Manage interactions across all channels
Create personalized consumer experience including marketing, commerce and service across all channels that will built customer satisfaction and loyalty
Offer select products only directly to the consumer
Orchestrate customer demand to supply chain management, scheduling and fulfillment execution systems from across all channels
Implement an engagement platform and commerce solution which creates a single view of the consumer
Deploy a high-performance enterprise architecture to support direct to consumer selling and the large amounts of POS data including demand signal repositories.
Consumer goods companies have long worried about channel conflict with their retail partners by going direct. This has been changing in today’s challenging economy with fickle consumers, decreased spending and increased competition from premium retail private label products. Creating a direct to consumer platform also has many advantages — including getting close to the consumer — and being wherever they are.
Cassandra Moren is senior director of consumer goods industry marketing at Oracle.