To be competitive today, consumer packaged goods (CPG) manufacturers must come to grips with the profound changes that have occurred in the marketplace.
Now, new technologies and greater access to consumer data are opening up exciting possibilities for CPG companies to connect with their consumers in ways that had not been possible before. Through the effective application of interactive database marketing technologies and programs, CPG marketers can regain their influence with consumers and engage directly with users and potential buyers of their brands.
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To be competitive today, consumer packaged goods (CPG) manufacturers must come to grips with the profound changes that have occurred in the marketplace. Consumers are more empowered, and have more diverse interests. Retailers have gained much more control of the consumer relationship. Conventional media is less effective, more fragmented.
Interestingly, more households are net-connected and spending more time online. But many CPG manufacturers have yet to leverage the Internet to satisfy consumer interests in a truly effective manner. Many Internet marketing efforts still consist of Web sites with pretty graphics and nothing more; and measurement metrics still focus on site hits and page views. None of which answer the really important questions: Did these e-marketing efforts move more products off the shelf? What was the ROI? What was the impact on market share?
Now, new technologies and greater access to consumer data are opening up exciting possibilities for CPG companies to connect with their consumers in ways that had not been possible before. Through the effective application of interactive database marketing technologies and programs, CPG marketers can regain their influence with consumers and engage directly with existing and potential buyers of their brands.
Fostering Consumer Relationships to Build Brand Preference
Many CPG companies are exploring new ways to use innovative technologies more effectively to build their brands. Well-planned e-mail marketing creates the right blend of proper care and relevant information that consumers will welcome and respond to. Web-based surveys, interactive promotions, online sweepstakes and more can be integrated to build engaging consumer interactions. Significant improvement has also been made in the security of Internet coupons, which are distributed online, then printed out and redeemed in stores. With uniquely bar-coded serial numbers, they provide much more precise targeting capabilities for CPG marketers.
Most important, is the compilation of data generated through these disparate efforts that provides the true revelation of e-marketing effectiveness. Vital statistics can be accessed, viewed and analyzed in real-time, so decisions can be made based on intelligence quickly and confidently. With this information marketers are able to identify their most valuable consumers, understand their needs, market to them even as individuals, and motivate purchases with fine precision.
A New Era for CRM
The combination of new technologies and access to consumer data are creating a new era in CRM for CPG. Yet most CPG marketers are not proficient with consumer relationship marketing. In fact, the term CRM is getting a bum rap and even no longer has a clear meaning. But instead of focusing on the acronym "du jour", CPG marketers should concentrate on optimizing direct consumer relationships according to these principles:
1. Consumer-centric versus brand-focused: Traditionally, brands have been the center around which all of marketing revolves. Instead, the consumer should be on center stage. Share-of-consumer and lifetime value should replace the focus on brand share. The role of effective relationship marketing is to increase consumer lifetime value and determine how much each strategy affects such value.
One of the difficulties in this approach is the mindset within the existing brand management structure. Brand managers are typically measured by short-term sales with little motivation to pursue long-term efforts. To build lifetime value, marketers can bundle brands around consumer groups and focus on household profitability versus product profitability. This practice can be more effective and less costly than the traditional brand-centric, mass-media approach to marketing.
2. Information is power: The advent of new technologies enables practical means to build a database of existing users and prospects. The key is to track, collect and manage data across multiple consumer interactions with a single view to develop much better insights about these consumers. This is a quantum leap from relying on the traditional methods of gathering data. With this type of intelligence, marketers can develop detailed profiles and get close to their individual consumers much faster and more cost-effectively. They can quickly determine how different brands fit into their lives and whether their marketing messages or offers need to be adjusted accordingly.
3. Targeted marketing with precision: Once marketers identify whom they really want to target, they must treat them as individuals. Many dollars are wasted in marketing to the wrong demographic group or to those with only a slight or zero interest in the category. Rather than one-size-fits-all messages and offers, marketers must develop online programs that are tailored to specific consumers. With the right information, they can determine the appropriate strategy and tactics and can more effectively get competitive brand users to switch, and convert occasional users to frequent, loyal consumers.
Key Action Steps to Successful CRM for CPG
CRM for CPG success must take advantage of the proper fusion of new technologies and consumer data that enables a higher level of relationship marketing effectiveness, efficiency and accountability. Among the key actions:
Set realistic parameters and focus on the practical. Companies should step back from tactics and first define clear yet practical objectives. And they should establish realistic ROI and time frame expectations.
Empower marketing teams. Marketing teams should be empowered to drive technology decisions that relate to consumer relationship management. And IT should understand that Marketing is not just about pretty designs. And both of them should buy each other lunch -- regularly.
Build a database of your consumers - today. Marketers should leverage their existing offline marketing efforts, as well as effectively plan and execute an online consumer acquisition program.
Segment consumers to better target offers. Promotion strategies typically fall into three categories: acquire consumers, retain consumers and increase consumption. Marketers should deliver different types of offers to target appropriate segments accordingly.
Track results with true accountability. By tracking actual in-store sales, CPG manufacturers can measure the real impact of e-marketing, and learn to detect patterns of purchase behavior for different brands in the portfolio.
Deliver on your promise to consumers. Remember: it is all about the consumer, not the brand. Marketers must understand their consumers better, learn more about them over time, and provide them with truly relevant information and values to not break the trust of those hard-earned relationships.
The Opportunity is Ripe for Progressive Marketers
According to a study by New York University's Stern School of Business, leading brands are more likely to fail over the long haul rather than maintain their market positions. Simply put, they rest on their laurels. Cultivating consumer relationships in new ways requires vision and a belief in the potential of innovative technologies. In such a bold endeavor, there will be leaders and followers. Consumers and retail partners will be drawn to those enterprising marketers on the cutting edge. In a time of exciting change, that's the only place to be.
About the Author
Dadi Akhavan is president and COO of E-centives, a leader in interactive direct marketing technologies and services for global marketers
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