How CPG Marketing and Content Strategy Drive Lasting Product Demand

Companies that sell consumer packaged goods (CPGs) traditionally address two key challenges with their marketing strategies. The first is standing out in a crowded, competitive market; the other is creating demand for new products. Increasingly, these efforts happen on digital battlegrounds. To generate fresh demand, a CPG marketing strategy must approach content and competition in new ways—and that's never been truer than in the wake of the pandemic.

Any discussion of marketing or demand generation within the CPG industry today requires taking a step back to understand how COVID-19 reshaped CPG brands. Initially, brands faced panic buying and rapidly scaling demand for items that left shelves bare and customers scrambling. Anticipating changes in consumer buying habits proved impossible as radical shifts hit the market weekly or monthly. The Consumer Brands Association estimates demand soared 21 percent in 2020; demand is expected to hover between 7.4 and 8.5 percent higher than the last "regular" year on record.

The changes introduced by the pandemic—from a rise in online shopping to more flexible brand loyalty—are set to stick around, suggests McKinsey. Consider the stats:

• Driven by convenience and value, 40 percent of consumers tried new brands.
• Online spending increased 35 percent year over year, suggesting the stickiness of digital shopping experiences is here to stay.
• Nearly 30 percent of consumers invested in changes to their homes, while other categories such as clothing and cosmetics are just beginning to rebound.

CPG brands used new strategies to understand changing customer needs, meet fast-evolving demands, and remain relevant in a stay-at-home world. Here's a closer look at marketing and demand within the CPG category and how brands are adapting to the latest changes.

Putting CPG into Context

My own introduction to CPG demand began with industry analysis—for years, I had an agency contract to write a monthly report for a market research company that followed the latest releases in the food industry. Using consumer surveys, we examined buying intent, interest, and other factors around emerging products. How does a CPG company create demand for their new lilac-scented disinfected wipes, for example, or make hungry people think about rhubarb Pop-Tarts?

Through that project, I learned many things, and two important ones stood out. First, that CPG companies create some truly strange products, and they hit the shelves month after month. These products aren't always made because people are asking for them, which creates a need to drive demand. And second, I learned how absolutely unrelenting CPG competition really is. One Harvard Business School professor estimates that 30,000 new products launch every year—and 80 percent of them fail.

Amid these rapid pivots, looser brand loyalty, and new ways of shopping, the competition has only intensified. With such huge stakes and fierce competition, CPG marketers can no longer afford to go all in on once surefire methods like limited editions, packaging, and prime shelf space when launching new products. That's also increasingly true as brands opt to reach customers where they often are: online and at home. To stay relevant and connected, CPG brands are embracing content marketing, and direct-to-consumer messaging and delivery in particular, in order to get people excited about a product release and generate demand.

Image attribution: Clay Banks on Unsplash

Understanding the Dimensions of Demand

What makes a consumer buy a product? And what makes them want to buy it again and again? CPG companies have embedded the work of consumer scientists into every element of their marketing strategies, from building awareness to package design. That same intelligence can drive CPG experiences.

Take Glossier, a beauty brand regularly recognized for its innovative approach to marketing. As a digital-first company, Glossier's marketing approach adapted quickly to the changes over the past year. They got an edge in understanding and shaping demand from their "ride or die" community: as BetterMarketing.pub notes, "By using customer's content on their Instagram, they engage people to be a part of the community, where you can find people who share a love for Glossier products and have other things in common . . . They create this feeling that the brand cares about their customers so much more than other brands."

Glossier's community-based strategy highlights two aspects of generating demand. First, they develop open feedback loops with customers to understand what they need in this moment. Social feedback or customer service engagement can provide real-time data, while a survey may take months to implement, analyze, and incorporate. The second is that by connecting with enthusiastic buyers, it's possible to amplify digital reach exponentially.

Thanks to smart marketing efforts focused on connection, Glossier has been elevated from a cosmetics company to a deeply embedded brand—you'd be hard-pressed to find a beauty fan's Instagram feed that doesn't include a mention of the brand or its iconic products.

CPG Companies Need to Become Digital Disrupters

Ten years ago, when I completed a management consulting project with a CPG firm, the story was fairly predictable: we'd run the numbers, cut underperforming products, double down on winning ideas, work some new angles like limited editions or other promotions, and fight for store placement. Frankly, strong shelf placement and decent in-store ads supported by print campaigns and some word of mouth was a reliable strategy for launching a blockbuster product. It just took significant staff resources and enough lead time to generate momentum.

The entire landscape has changed. As McKinsey & Company summed up in 2017: "Consumer packaged goods, which were once purchased almost exclusively in stores, have moved into the 'digital battleground.'" Pre-pandemic, the trend was emerging; over the last twelve months and counting, it has absolutely exploded.

Supermarket News reports that 80 percent of consumers have shopped online for groceries at least once since the pandemic started. Overall, research from Acquia notes that 84 percent of consumers have used more digital channels, and 79 percent report that their engagement with brands has changed. Fundamentally, this has created a shift—48 percent of organizations created more content for customer engagement, suggesting a path to digital growth for CPG innovators.

Greater expansion to digital means that an industry long gridlocked by a few household names is now experiencing disruption. McKinsey noted that "meeting the online consumer demand—and perhaps stoking it, as well—are a rash of new pure-play competitors, some flush with cash from venture capitalists and private-equity firms." At the same time, big brands aren't standing still.

Offering a great level set on the situation, McKinsey continued: "To counter the threat of disruptors, and in response to constant margin pressure from retailers, many CPG companies are exploring ways to reach consumers directly through digital channels. And they're no longer content to send out static, one-way marketing messages, such as emails or banner ads announcing a special sale. Instead, they're looking to engage consumers in highly personalized, consistent interactions. Some CPG manufacturers are getting into the direct-to-consumer (D2C) game by scooping up fast-growing new entrants (see Unilever's $1 billion acquisition of Dollar Shave Club), betting on startups (Campbell Soup's $10 million investment in meal kit company Chef'd), or launching their own D2C initiatives."

Demand in the digital age is about bringing experiences, content, and brand interactions straight to the consumer. To quantify this, look at some quick industry data. According to D!gitalist Magazine, "IDC data shows that in the CPG industry, of the $35 billion in net growth over the past three years, only $1 billion has come from traditional, large enterprise players. Most of the growth in the consumer industry 90 percent over the next decade will be captured by companies that participate in direct-to-consumer models." How are brands getting this done?

Image attribution: Claudio Schwarz on Unsplash

The Strategy and Tactics of Digital Demand

It's actually an exciting time for marketing when you consider this: CPG companies are no longer constrained by having to reach consumers in the supermarket or through print advertising. In many ways, leaders who saw the potential for digital reinvention had their chance to implement over the past year. Instead, digital connections have opened up the possibility of creating demand in fascinating ways.

Market Research Shifts to Insights Engine

One of the key issues CPG marketers wrestle with is that going directly to the customer isn't totally linear. First, they have to think about what disrupting relationships with retail partners means, since most companies can't afford to lose those partnerships. Second, many companies simply aren't set up for self-distribution—and investing in these systems may not be a smart play. While COVID has demanded faster digital innovation and response, the road hasn't been simple. Neilsen research revealed six stages of pandemic-buying alone.

In order to compete, CPG companies need real-time, accessible intelligence on their buyers. Today's buying experience lacks the one-two-three coherence it once did. Planning a CPG marketing strategy is a bit like developing a plan to deliver a winning choose-your-own-adventure experience at scale, thousands of times a day, to millions of potential customers. Hence, we're seeing deeper investments in real-time analytics reporting capabilities and stronger feedback loops into marketing, product development, and other parts of the organization.

KIND snacks used TrackMaven social media reporting to better understand what draws the brand's core consumer to their products.

"We have to make sure that it's not just vanity follower growth. In other words, we have to make sure that we're not just gaining followers but then ultimately not convincing them to buy our products," said KIND Manager of Digital & Social Content Development Blair Hirak.

With input on what kind of content performs well across each social channel, KIND was able to use these insights to develop marketing strategies for each of its 22 unique product offerings that appealed to specific consumers on that platform.

Co-creating Products with Consumers

Consumers are being tapped earlier in the marketing process. Customer communities, product development market research, purchase intent testing, and more are becoming major investment centers. As digital research tools have supplanted expensive and logistically difficult focus groups, it's now easier to be agile and keep a conversation running with your customers.

Some brands are taking this to an even higher level with product co-creation experiences. In a nutshell, consumers get more input into products, and CPG firms get direct insight from the market. One event that immediately comes to mind is Frito Lay's annual chip contest. "Do Us a Flavor" invites submissions from around the globe for different flavors of chips, with those deemed best developed in-house and tested in the market. With buzzy social media engagement and audience creativity, the competition model has been showing CPG firms that giving consumers a greater voice in their product creation can pay off.

Meanwhile, brands like LEGO offers its Ideas site to invite round-the-clock contributions and ideas from fans. Co-creation can take the form of ongoing collaborations, establishing a digital ideas panel, creating a 24/7 submission site, or making a hard push for a competition. CPG brands that invite customers into the product creation process have a distinct advantage in today's fast-changing market.

Unique Content

Finally, brands are focusing on establishing entire content streams for customers. Food companies have deployed websites to support cooking and dieting. Cleaning companies sponsor organization challenges. Toilet paper companies even launched apps to help parents find the nearest bathroom—with user ratings—when they're out with the kids.

As Boston Consulting Group writes, "Customers will be drawn to pertinent content in relevant formats (with different ones resonating with each individual) across various points in the consumer journey." Today's CPG companies are entertaining, educating, embedding themselves in apps, and even planning ahead for voice recognition and virtual reality.

Brands are fueling these content experiences through data. To keep up with the personalization capabilities of DTC brands, consumer goods brand marketers need "a data strategy that they can execute at scale and campaign-tracking abilities across channels that can adapt in real time and enable a self-reinforcing cycle of tailored experiences," writes BCG.

What has content creation looked like over the past year? As noted above, Acquia research found that nearly half of brands accelerated content creation to connect with consumers. These rapid response digital techniques included:

• Expanding content production and bringing content to new channels to meet customers where they are.
• Developing relevant content initiatives on short time lines to meet changing demand. For example, King Arthur Baking expanded its recipes in response to the sudden spike in demand for baking-related information.
• Introducing new methods of connecting with customers, whether that means launching social media customer support or driving an uptick in virtual consultations for beauty, skincare and other products.

Where Do CPG Marketers Go from Here?

Digital marketing for CPG brands is a changing landscape with fierce competition, and the rules are shifting fast. So what's a motivated marketer to do?

First, invest in understanding the market. Analysts, consulting firms, and creative partners with decades of experience in this space have their finger on the pulse and can help you stay up to date. And while simply staying current isn't enough, it is the first step to taking a futuristic point of view and diving into innovation where you can outpace your competitors.

Second, look holistically at your streams and see where you are and aren't ready to serve customers. Product development, marketing, packaging, distribution—everything's up for exploration, and companies that master direct-to-consumer in a way that's right for them are poised to win.

Third, find ways to innovate your marketing and delivery. Develop better feedback loops. Solve a pain point with your service delivery. Create an experience like a pop-up event or a lab store that solidifies brand loyalty and helps you constantly get to know the market better.

Finally, invest in content. Direct-to-consumer means speaking to your customers, your prospects, and the market at large. Experiment and innovate. Put a sound foundation in place. Know that your customers are seeking information-and be the place they go to find it.

Creating demand is one of the biggest challenges marketers face when crafting a CPG marketing strategy. Digital marketing for CPG brands offers a new approach to raising awareness, creating excitement, and getting emerging products directly into consumers' hands.

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Featured image attribution: Andy Wang on Unsplash