Beyond E-Commerce

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Valassis: Print key for grocery retailers, but social and digital expected to surge
Valassis: Print key for grocery retailers, but social and digital expected to surge

According to Nielsen, the Web is now the fastest-growing CPG sales channel, with over 10% of sales occurring online in select categories. Yet while CPG companies may have caught up with e-commerce, many still lag behind when it comes to understanding how to market to digital consumers. 

Marketers looking to truly engage digital consumers, not just to enable online purchases, need to start with five key principles:

1. Look Beyond the platform. It's not just the distribution channel that has changed. Over the past decade, the way customers move through the purchase process for any type of product or service has fundamentally shifted. Consumers have become increasingly suspicious of “push” marketing techniques—whereby marketers “push” information to people in an effort to influence purchasing decisions—opting instead to “pull” in their own information. Today's consumers often turn to friends and family for advice on what to buy, rather than to a company's website or ad campaign.

In a 2010 study, “The Consumer Decision Journey,” consulting firm McKinsey posited that the traditional way of thinking about how customers make purchase decisions—typically represented by a funnel, with consumers narrowing down their decisions over time as they are influenced by various factors—no longer bears a resemblance to the way customers make decisions today.

2. Meet consumers where they are. CPG companies that understand these new customers and meet them where they are stand to gain substantial market share. Those that don't will spend the next several years looking over their shoulder.

Customers “pull” more information these days because there's plenty of it available. There is no end to sources of relatively unbiased information, from the running commentaries of friends on social media sites, to crowdsourced product reviews, to plain old word-of-mouth suggestions. Not only have consumers become quite good at finding the information they're looking for, but they can do so from anywhere at any time.

According to recent Pew research, nearly half of all Americans are smartphone users. And according to the latest comScore report, four out of five of those 85.9 million people use their smartphones to research and make retail purchases.

CPG brands must start looking beyond the in-store experience and begin thinking about how to interact with their customers everywhere—at home, online, in-store, on devices, and on review and social media sites where customers might share their product experiences with others. It's no longer enough for a brand to release the occasional coupon on their Facebook page. Although such activities are worthwhile, they're the low-hanging fruit of digital marketing for CPG brands. To truly differentiate themselves, CPG brands need to connect with consumers on multiple levels by providing content and tools that are applicable to their daily lives.

Gluten Freely, a site recently launched by General Mills, is a great example. The site is content-rich with plenty of information and tips on gluten-free diets, not just product information. By providing an easy portal for gluten-free consumers, General Mills has connected with a new market segment while creating a great way to keep tabs on what products most interest this segment—both by tracking what customers search for on the site and by providing easy ways to post questions and comments.

ConAgra's “Give Every Night New Flavor” program, launched in conjunction with several retailers, is another good model. The company created a microsite offering recipes and all the products needed to prepare them; built in-store displays that showcased the recipes; provided digital coupons; and advertised both online and in print. The program delivered double-digit growth in units, dollars and profit over the prior year.

3. Understand how social networks—not just Facebook—operate. Social networks—both digital and physical—are constantly influencing consumers. Unlike the traditional advertising paradigm wherein the natural campaign “end” is a purchase, in today's digital world, companies need to ensure customer satisfaction long after the purchase date. If they don't, they could face a dip in sales if customer complaints start cropping up on Twitter and Facebook.

The key to truly understanding and embracing social media is to discover the fundamental human mechanics behind it. Once upon a time, social influence was mediated entirely by a kind of extroversion and sociality. It was the person who maintains fifty friendships who had disproportionate influence. There were both people who were very social and people who were influential experts in various domains. The Internet has in many ways been a substitute for both of those groups. It has created a node that has tremendous influence because we all go to the same source. Technology has provided almost a substitute for the person everyone knows or who everyone turns to for advice.

Technology has also broadened the influence of social connectors who remain by a factor of ten. If just a handful of these people decide the app a company has released is http://www.dmnews.com/earning-your-media/article/297148/cool, their brand suddenly becomes more visible to thousands of other potential customers without any additional expenditure or promotional activity.

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