The Quaker Oats team at PepsiCo wanted to revive a “dusty” brand image and at the same time to launch a new Cruesli flavor in supermarkets. Quaker Oats new flavour campaign encouraged the public to help create and name a new flavour, on the Quaker Oats website. The winning flavour would then be produced at scale and launched in supermarkets with the winner receiving a prize of 10,000 €. However, the true winner was PepsiCo as they received a wealth of data from engaged consumers.
This campaign format was not new to PepsiCo. They’ve done this several times with Walkers and Doritos in the UK. However what was new, was how they went about it.
Instead of relying on purely TV ads and on-pack promotions, they leveraged social media and influencers to reach a wide audience. This campaign included online advertising, social media, TV ads, in-store marketing, and outdoor billboards. They also activated influencers on social media and agencies to reach a broader audience than they could reach. This multi-channel approach reached a diverse audience. All contestants submitted a new flavour and its name along with their contact details.
Once the Quaker Oats team picked the top 3 flavours, they not only asked their consumers to vote for their favourite flavour but also retargeted all the participants who had submitted new flavours, to pick their favourite of the 3.
Along with the announcement of the winning flavour, the Quaker Oats used the data they collected during the campaign to target all the participants to remind and motivate them to buy the new flavour. They also ran social media ads with the message, ‘Be the first to try’, along with an incentive, win the new flavour.
The social media campaign reached over 677,230 consumers, with a high level of engagement, 14%! Through the Agency they hired, they reached an additional 500k consumers.
According to the data provided by PepsiCo to the Mapp team, there were more than 50k submissions during the initial phase, which equated to more than 50k new contacts in their consumer database.
More than 400k votes were submitted on the winning flavour. The cost of getting the votes was 50% lower for the contestants who submitted entries than it was with new voters.
And finally, PepsiCo found that the ROI on interacting with prospects in their database was much higher than engaging and interacting with prospects on their database was far higher than ROI on less targeted campaigns. The positive association with the brand lead to a much higher conversion rate
And now, if you are wondering what the winning flavour was, it was Quaker Cruesli® Frambalicious. The flavour is still available in Netherlands and as popular as ever!
The fast moving consumer goods industry has relied on economies of scale for growth… until now. Ever since World War II, the FMCG industry relied on mass production of products to generate revenues and growth. Shortly thereafter mass production was accompanied by mass distribution. But a new generation of consumers and now, post pandemic priorities are putting pressure on these growth drivers as changed consumer behaviours drive further changes in how and where these brands are sold.
Historical five part model of value creation
A study by McKinsey, a few years ago, identified the five part model of value creation for FMCG companies. As mentioned previously, this model hasn’t changed since WW II.
Mass marketproduction and brand building: This enables the sector to achieve economies of scale which for very successful FMCG companies, translated to gross margins above ~20%.
Relationships with grocery chains that facilitate sales at scale: Securing in-store distribution with supermarket chains and convenience chains enabled FMCG companies to access and sell to a broad base of consumers than previously. Also, by partnering with their customers’ category teams, FMCG companies were constantly updated on new trends and needs.
New market entry: Entering new markets (a result of globalisation) contributed to 75% of revenue growth in this sector.
Constantly optimising their operating model for cost reduction: Over the last few decades the focus in this sector has been cost reduction. This led to offshoring, centralised sourcing and large scale sourcing contracts amongst others and have kept margins and costs within acceptable limits.
M & A as a means to leapfrog ahead of competition: This industry has long relied on M & A as a means to stay ahead of competition. FMCG companies then applied their distribution network and processes to scale the brands they acquired profitably.
However, the shift in consumer behaviour that millennials brought with them, which accelerated with Gen Z, necessitated a new way of working, which was in the making when the pandemic hit. The pandemic accelerated behaviours (like e-commerce and sustainability) and brought in new ones (work from home, health consciousness). The Ukraine/Russia crisis only exacerbated the complexity that FMCG companies and grocery stores need to contend with and highlighted how urgently the old model needs to change.
Four new growth drivers
According to a recent white paper by Cognosis, the new growth drivers in this sector are:
Agility: Over the last 18 months, it has become clear that to survive and thrive in the uncertain times we live in, agility is key. An agile organisation enables FMCG companies to not just adapt their supply chain to any situation, but also their sales channels and product offerings.
Shared purpose: This has been in the making for a few years now. However, today, purpose is a key driver for growth and value creation in this sector. According to the study, the role of a shared identity in navigating change is vital for employees, customers and suppliers of any FMCG company.
Forward looking: While this has always contributed to growth, today, it is more important than ever that companies invest for the future and not for the present of even the next few months. To date, large FMCG companies that thrived during uncertainty all had one aspect in common – they invested in innovation, marketing and in their processes to future proof their business, even during difficult times. In the last few years, the relentless focus on reducing costs to preserve margins and profitability has distracted companies from this.
Consumer centricity: While you may argue that this has always underpinned the model of value creation in this sector, to date FMCG companies have been customer centric (or channel centric) and product centric. User or consumer centricity is a relatively new entrant; ever since the term ‘User experience’ was brought into focus by technology start-ups.
The case for urgent implementation of the new growth drivers
The above 4 drivers will be critical for companies to thrive over next few months and years, given the new ‘forces’ influencing consumer/shopper decisions.
Previously the forces influencing consumer/shopper decisions were simple:
Budgeteering: This one element hasn’t changed and still influences shopper/consumer decisions.
Reliability: Mass production ensured that the quality of the brand was reliable and consistent. This was key for consumers as the era that preceded this was reliant on people making this individually for anyone who placed orders which resulted in inconsistency in quality.
Availability: Similar to findability, availability was all about being able to find the product on shelf. However, solving this, previously, was simple as sales channels were restricted to grocery stores. Now there are several different channels and ensuring your brand has presence and stands out, so your consumer/shopper can find it, is more complex than securing a listing with customers.
So what are the new factors influencing decision making? The new forces driving consumer and shopper decision making as found by Growth from Knowledge are as below:
Findability: The rising need to stand out amidst all the noise and availability
Fluidity: Fluid shopping occasions – new schedules, home delivery and flash services
Balance: Importance attached to health and wellbeing
Purpose: Shopping behaviour that combines lifestyle demands with sustainability and driving positive change
Budgeteering: Balancing a shrinking net income and lifestyle demands
How can you embed the new growth drivers?
FMCG companies are collaborating with an increasing number of innovation agencies and tech companies to put in place the processes needed for these new growth drivers. Careful change management is critical in ensuring that FMCG companies take their employees on this journey to inculcate the behaviours needed to embed these drivers into everyday decision making.
If you’d like to learn more about how to embed agility in your sales processes or to learn who can help with facilitating change within your organisation, email me on firstname.lastname@example.org
Coca-Cola is a long-term partner of the FIFA World Cup . The marketing mavens at The Coca Cola Company have created a number of memorable FIFA related marketing campaigns, appearing at stadium events since 1950. In 2018, in keeping with their strategy to appeal to a younger demographic, The Coca Cola Company decided to leverage augmented reality in their 2018 FIFA marketing campaign.
The brand celebrated the start of the 2018 World Cup with a football-themed augmented reality experience outside of Zurich’s main train station in Switzerland.
A unique augmented reality experience was created for Zurich Central Station. It gave passers-by the chance to demonstrate their football skills, using augmented reality to make participants feel like they were playing alongside Xherdan Shaqiri. Shaqiri’s footage was taken in front of a green screen and adapted to allow participants to play alongside him.
Participants watched a show of skill from Shaqiri before he ‘gestured’ to the participant to play a few shots against him. At the end of the experience, the user was prompted to take a picture. The Coca Cola Company then collected their details so participants could receive a copy of the photo and a chance to win a FIFA World Cup official match ball.
By creating a fully-immersive experience in a location with a lot of foot traffic and involving a high-profile and timely event, Coca-Cola ensured passers-by would want to participate, paving the way for social media amplification.
While the campaign itself was not large scale, the experience was set up outside Zurich’s main train station and was only on for 2 days, the campaign was so popular they had more than 1000 passers by stop and engage.
Why is this relevant now?
We have been writing about the current consumer mindset and what to expect in the next few months given the economic uncertainty. Experiential and augmented reality marketing campaigns like this have the potential to generate sales on a much larger scale today. As consumers are having to make choices between major spend buckets, including living expenses, entertainment and travel, an experiential marketing campaign is far more likely to engage your consumer and increase sales as compared to more traditional advertising.