Need to create platforms to interact with consumers
Consumer packaged goods companies need to step up their game as traditional marketing loses efficacy
Until recently, CPG (consumer packaged goods) companies could rely on a time-tested formula to create brand loyalty: provide a trusted, competitively priced product, and then invest in advertising and in-store promotions to grow consumer mindshare.
Digital is turning this formula on its head by fostering liquid expectations among consumers.
"If Coke comes in a personalised bottle, and Birchbox make-up is available on subscription," they ask, "why can't every brand do these things?"
In turn, we see the rise of the digital-savvy, hard-to-please "fluid consumer" - on whom big-budget campaigns have less impact than they did previously.
More important to these consumers is the sense that the brands they buy are making a positive difference to their lives.
An additional complication is that servitisation and subscription-based business models are making brands less visible.
Amazon Dash, which enables customers to re-order essential products at the push of a button, makes life easier for consumers - but this means they no longer have to choose between comparable products in an aisle.
As a result, traditional marketing activity - whether packaging or poster advertising - is less effective.
In response, a growing number of brands are reinventing how they interact with the consumer. Rather than seeing themselves purely as makers and sellers of products, they are becoming platforms.
They are building digitally-enabled communities of like-minded individuals that help them stay relevant and build greater intimacy with the market.
Nike's running app - Nike+ Run Club - is a great example of how this works in practice. The app lets users track progress, learn about fitness and connect with a community of millions.
It has already been downloaded 50 million times, keeping the Nike brand top of mind among consumers.
Furthermore, as more people sign up and contribute to the community, a "network effect" is created whereby the app becomes increasingly beneficial to users - who associate this positivity with the Nike brand.
Building on this achievement, Nike has also teamed up with Instagram to offer NIKEPHOTOiD, which enables consumers to create sneakers inspired by their Instagram photos.
The initiative proved to be a hit and helped make Nike the most popular fashion brand on Instagram, with more than 31 million followers.
Perhaps the best outcome of having an Instagram presence on this scale is that the brand gets to expand its number of consumer touchpoints.
By creating new opportunities to interact with consumers, building new touchpoints along the way, Nike can keep its brand top-of-mind among the most digital-savvy and fluid of consumers.
To emulate the success of these initiatives and others, many forward-looking CPG companies are also looking to turn their brands into platforms. Yet, for many, doing so is easier said than done.
Where should you start? First, you need to ensure that your brand is the right one to develop into a platform. This means assessing your goods through the eyes of the fluid consumer and deciding whether they would see them as "experience" or "utility" brands.
So what's the difference between utility and experience brands? In essence, consumers buy the former on a frequent and predictable basis, whereas the latter are products that come with a distinctive, memorable experience attached.
Think Nescafe versus Nespresso. Both are excellent products, but Nescafe - as an instant coffee - is something consumers buy routinely as part of a set shopping pattern. It could therefore be seen as a utility brand.
Nespresso is an experience brand. Consumers visit the Nespresso boutique to try different flavours in an environment that provides an experience that is exclusive to the brand.
Simply put, experience brands are the ones that will engage consumers on a whole new level and can be developed into platforms.
Utility brands, while equally valuable, need to be made to engage with consumers in a different way.
The next step is to consider how the wider ecosystem of digital players and providers can reinvigorate how consumers interact with your brand.
For experience brands, this may mean working with expert providers to co-develop a platform capable of supporting a community comprising millions of users.
It may also mean partnering with other brands that provide different yet complementary apps and services.
Taken together, this will create the most compelling, multi-faceted experience for users.
As well as teaming up with Instagram, for example, Nike also allows users to connect its running app to their Spotify accounts.
For their utility brands, CPG companies can partner with companies that complement their customer proposition.
Together, they can deliver a service to meet consumers' needs for convenience - as Tide, Fairy and Kleenex have done with Amazon Dash.
This will help ensure utility brands are visible, even if they don't have the "wow factor" of experience brands. Together, the above steps can help CPG brands create a roadmap for exceeding the liquid expectations of today's consumers.
Yet, whatever their ambitions, ideas and strategy, the priority must be a shift in perspective: From purely making and selling products to engaging in a more intimate and fluid relationship with consumers.
This article appeared in The Business Times yesterday.
The writer is senior managing director at Accenture Consumer Goods & Services