The super marketing opportunity: customer relationships in FMCG marketing

Times are changing for FMCG marketers. In this post, Peter Applebaum questions the power of the supermarket and suggests a new way for FMCG brands to gain customer loyalty.  

Forget Point Piper, Toorak, New Farm and Peppermint Grove. The most expensive real estate in Australia is just down the road from where you live. Per square metre, the humble shelf in your local supermarket is worth infinitely more than any property the so-called ritzy suburbs have to offer.

Why? Supermarkets have done a fabulous job of marketing themselves and being accessible to consumers. Millions walk through the doors of Coles and Woolworths every week to buy tens of millions of products from their shelves. Such is the enormity of their success that general/trade publications, newsletters and websites eagerly report on the supermarkets’ every media release, staff change and initiative.

Then there’s the fact that annual grocery sales in Australia top $100 billion accounting for 29% of overall retail turnover. And to top it off, supermarkets consistently feature in Australia’s top advertising spenders lists. Clearly, supermarkets matter.

But why do they have to matter so much? Particularly when it comes to their supply partners struggling to get noticed on their crowded shelves.

In this age of global disintermediation, the grocery business model is one of the few that has not changed for decades. On any day, dozens of nervous FMCG account managers head off to Hawthorn East and Bella Vista with their fancy brand presenters and planograms hoping to influence their Coles and Woolworths category buyers. Fail to impress that handful of people and your brand could end up delisted and dead in the water.

All because supermarkets ‘own’ their customers and the grocery brand marketers don’t.

This is lunacy. And there’s no greater proof of that, for brand marketers at least, than the relentless growth of the supermarkets’ own premium housebrands. Having driven their suppliers to collectively invest billions of dollars building consumer demand for pasta, soft drinks and breakfast cereal etc. supermarkets are in the process of successfully re-directing that demand to their own brands.

Yes, housebrand/generics have been around for years but traditionally they occupied the cut-price, lower quality end of the market. Brands are now being forced off the shelves by cheaper alternatives of equal or even greater quality that are owned by their supposed retail partners. Clearly, it pays to own the customer.

Nielsen predicts that house brands will make up 40% of grocery sales within four years; in the UK, they already make up 50%.

So how can brand marketers halt their shrinking shelf visibility and market share? The solution is so simple and so cost-effective that it’s astounding that grocery marketers are not implementing it en masse.

Put simply, grocery marketers need to leverage digital platforms to turn their consumers into brand zealots with a vision of relegating supermarkets to transactional distribution centres.

Now before you dismiss this as a pie in the sky, completely unrealistic idea, consider how many people care what company is selling the tickets when they’re lining up overnight to see Bruce Springsteen, One Direction or the AFL Grand Final?

None. Those attractions are so desirable and so invested with their own unique emotional drivers that everything else is just logistics. Bruce Springsteen owns his customers, not Ticketek.

OK, consumers are not likely to spend hours waiting in line to buy your brand of tomato sauce. But if your brand can in some way deliver on your consumers’ interests, needs and desires there’s a good chance that you won’t be lumped in with every sauce brand/house brand.

Create relevance and connection by giving consumers what they want and they will enter your competitions, give you their email address, comment on your Facebook page and watch your YouTube videos. And if you continue to emotionally engage them with interesting, informative and fun content on these and other platforms, maybe, just maybe, they’ll choose your sauce over the cheaper alternatives.

Consumers default to price when they’re given no other meaningful reason to pay a premium. There are many far cheaper entertainment alternatives to a Bruce Springsteen concert but there’s only one ‘Boss’ so seeing him is worth the premium for his fans.

Of course not every consumer will be interested in such an approach. Many will choose the cheapest. But if higher priced brands weren’t relevant there would only be housebrands and generics.

The mistake most FMCG brand marketers are making is that they don’t understand the far-reaching benefits of creating individual consumer relationships as opposed to what they and their agencies are used to: six week ad campaigns.

Traditional advertising used to be the glue that built and bound consumer emotions to your brand and drove sales. That’s still true to a degree. But that degree is shrinking in direct proportion to the consumption of traditional media. Are you watching TV, listening to the radio or reading newspapers and magazines more than you were five years ago? You’re not alone.

FMCG brand owners need to have a strategic consumer relationship vision instead of just a tactical promotional plan. You now have the tools to engage and nurture consumers well beyond the next gondola end promotion or two week price cut. Yes, tactics are critical, particularly when you need to deliver results in the next month/quarter. The challenge arises when your brand lurches from one tactical implementation to the next with no longer term consumer engagement strategy. Consumers aren’t stupid; you and your retailers have educated them to buy whatever brand (for those who still buy brands) is on special.

Thanks to digital and social platforms, consumers are more accessible to marketers than ever before. And they are willing to get involved with your brand; they just need good reasons to do so.

Then there’s the icing on the cake: you get so much more for your digital marketing dollars than you do with traditional ad budgets. What would barely cover the production of a typical 30 second TVC, could power a highly effective digital customer engagement program for a year. Plus, at the end of that 12 months you could have built up substantial databases and other owned digital assets that you can leverage for years to come. Something traditional brand advertising has never done.

Many tangible commercial returns can be delivered for the FMCG marketers who build direct consumer relationships. The days of allowing others to own your consumers are over. You have the tools, you have the strategies. What you don’t have is a good reason to do nothing about it.

 

 

Peter Applebaum