3 ways consumer goods brands can avoid 'commoditization'
What does it mean to be a consumer goods brand today? Formerly reliant on brick-and-mortar stores before 2020, the industry pivoted heavily to online channels during the Covid-19 pandemic. Now, it's navigating a middle ground in flux. John Stauffer, managing director of strategic planning at Merkle, looks at how brands can avoid being mere commodities in this environment.
Merkle advise consumer goods brands on how to keep their approach fresh.
Direct-to-consumer strategies have risen dramatically in popularity, but despite DTC’s success, consumer goods brands must still rely on retailers for awareness and visibility. This is even more critical as e-commerce as a percent of total retail sales has come back to earth, now closer in line to the growth we expected pre-Covid.
Along with the challenge of being seen is the struggle to stand out. The last thing you want as a brand is to become a commodity: a useful and successful set of products that lacks the value (perceived or otherwise) needed for consumers to go out of their way to buy those products. Being front-and-center is easier said than done.
How do you prevent that outcome from happening? Avoiding commoditization comes down to three key areas.
1. Identify your value
Seemingly any product a consumer needs – wine and toothbrushes to headphones and shoes – is now available at their fingertips. To add to that crowd, retailers are launching and expanding their own house brands. Trader Joe’s and Walgreens sell thousands of products under their own name.
For the majority of brands, their journey should begin by answering this question: what is great about your product that would make people want to pick it over the Walgreens, Target, or Amazon brand alternative? A case must be made for both the product you’re selling and the channel in which you’re selling it.
There are three ways you can begin to answer this question.
Ask your customers
How often do you actually ask your customers how they feel about your brand or what value you provide? By learning more about consumers’ behaviors, you can better understand why they choose you.
Offer what others can’t
When trying to outshine competitors, tailor the experience. This could be offering subscription services so consumers don’t have to worry about running out of items, or allowing consumers to customize your products to their specific needs.
Brands can approach this from two directions. One is expanding the retail partnership through a store-within-a-store concept or leveraging 'buy online, pick up in store' to include leave-behinds, samples of your products, or offers for a future visit in customers’ orders.
The other way is to partner with other brands to get in front of a new audience, such as Nike and Apple’s fitness partnership that has led to new joint services like Apple Watch Nike+.
2. Build stronger relationships
You understand how challenging it has been for the consumer goods industry to collect, centralize, and activate first-party data the way retail counterparts have done. And yet, far too many brands are still unprepared for the identity capabilities needed to please consumers.
The obvious and natural use of all this first-party data is to better advertise and create more targeted, relevant messages that drive engagement and build loyalty. But this data can also help brands transform internally. By taking the deep understanding of your customers (as articulated through their data) and using it to better the brand, marketers can develop effective go-to-market strategies, new and better products, and more.
3. Focus on the experience
That value a brand provides cannot come from its products alone. Consumers now want emotional, engaging, and relevant relationships with their brands. The products have to be worth experiencing, of course, but the experience can make or break your brand.
To start down the experience-driven path to success, ensure you are telling the right story. Consumers are hungry for brands that are transparent and authentic with their ingredients, sourcing, and manufacturing process. All of these aspects are tools that help brands differentiate themselves.
Leverage technology for unexpected experiences
Sophisticated brands are taking experiences back, and using artificial intelligence and virtual/augmented reality to do so. The beauty and fashion industry has excelled in this area, providing mirrors for trying on clothing from home and apps to 'try out' various beauty products before purchasing. But technology advancements have to be more than just shiny objects. These features must make consumers’ lives easier.
Don’t try everything at once
The key is to start small and build your way up. Understanding your value proposition and building a first-party dataset are initial steps to orchestrating omni-channel journeys and capitalize on the moments that matter most.
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Merkle is a leading data-driven customer experience management (CXM) company that specializes in the delivery of unique, personalized customer experiences across platforms and devices. For more than 30 years, Fortune 1000 companies and leading nonprofit organizations have partnered with Merkle to maximize the value of their customer portfolios.Find out more