Promotions – Evaluating & implementing them

The last few weeks, consumers have been switching to less expensive brands and those that they perceive as better value. This includes consumers switching to low priced brands and products on promotions.

During times like these, i.e economic recession combined with decreasing disposable income, companies often turn to promotions as a means of increasing revenue. However, as more companies turn to promotions and the number of promotions in stores increase, consumers begin to factor in these lower prices.

They get so used to it that they become reluctant to purchase products at the regular shelf price. This also results in margin dilution. However, promotions can also attract new customers, boost sales volumes and generate awareness, if planned and executed effectively.

‘If planned and executed properly’ is key, as according to a paper by promotion optimisation institute, 72% of promotions do not break even. Not only do 72% of promotions not break even, but 22% of them also perform worse than if no promotion had been implemented at all.

Lets look at why

Most promotions run year after year, with only slight changes, if any, to the promotional mechanics. Given the fast changing times we live in, it can be dangerous to assume that the same promotion will be effective year after year in the same store.

This assumes that socio economic factors and the demographics around these stores do not change and competitors will react the same way as they did previously. And we all know that this is rarely the case. We have all changed jobs, houses, where we live, the restaurants we frequent, the brands we buy, when and where we shop and in general, our life routine.

So why do we assume everyone else remains the same when we analyse promotions for effectiveness? I have been a victim of this thinking as a commercial finance person, early in my career, too. We assume the same conditions and uplifts as the year before when assessing promotional effectiveness for future periods. Also, we assume that all consumers react the same way regardless of the neighbourhood and their socio-economic make up. Again, this is rarely the case.

Example, a 50% off promotion for a consumer staple generates a lower sales uplift when implemented in an affluent neighbourhood than in others. This is either because consumers would have bought the product without the promotion anyway or because a lower price is unlikely to motivate them to switch from competition. So it is key to understand the demographic and socioeconomic make up of shoppers at each store or each cluster of stores (stores can be categorised for socio economic make up) when promotions are evaluated. As this changes over time, it is important to re-visit the calculations and assumptions each time a promotion is considered.

Store level data needs to be considered

Companies should review store level data to understand the best promotions to implement. 

Other factors such as store level weather forecasts, social media sentiment/mentions, traffic data and so on, influence the effectiveness of these promotions. So take these factors into account too, to evaluate promotional effectiveness. For example, the overall revenue uplift from implementing a promotion for a beer brand when it’s raining will be far lower than when implemented when its warm, sunny and dry. Weather conditions around each store may vary and so need to be evaluated individually or in clusters. In fact, in this case, consumers are far more likely to stock up for a warm sunny day anyway, which means you lose a full price sale in the future.

The promotional uplift often results in fewer sales in the days that follow. Finance and sales teams at companies often consider cannibalisation of other SKUs that the company sells, during these promotional periods. But they rarely consider how the promotion impacts full price sales of the same product in the future.

Timing of promotions is another important variable to consider. Most companies know they should run promotions for special occasions like Black Friday or Back to School month. But in some countries, pay week is a very important time. If your target consumers are cash-constrained, then receiving a pay check means it is “shopping week”. That’s when promotions make a big impact. 

Evaluate promotions over a longer period than just the promotional period

When looking at promotional uplifts and incremental value generated, look at both the specific promotional period and the impact across the next 6 months. Also, the incremental volume from these promotions should ideally come from competition or through increasing the category volumes. 

If the aim is to reduce stock levels or deplete stocks that are close to expiry, you may not need to look at this. However, it is still important to know the impact of the promotion implemented to understand what you can expect in the next few weeks and months. 

In the next few months, an increasing number of brands and supermarkets will be rolling out promotions on their SKUs to meet customer expectations of value. When evaluating promotions, check to see which quadrant they fall into.

Stay away from the red quadrant! If you are seeking to drive volumes to get rid of excess stock or stock close to expiry, the orange quadrant is the place to be as promotional initiatives in this space drive volumes at the expense of profitability. However, if you are looking to increase value for the business, the right hand side is the place to be (the two green quadrants for those who are right/left hand side challenged, like I am!).

It goes without saying that the top right hand corner is the place to be and is home to the winning promotional mechanic(s).

If you have any questions or comments on how promotional initiatives should be evaluated or would like to learn how store level evaluations can be done at scale, email me on veena@salesbeat.co.

Climate change and FMCG sales

Climate change in the form of extreme heat, hurricanes, flooding etc. presents an inherent risk to FMCG companies. It disrupts raw material supply and logistics (roads buckling, flights unable to take off and ships tossed about), resulting in price increases.

British Retail Consortium and NAACDs published studies that establish that every one degree change in temperature results in a 1% fluctuation of sales. However, companies and retailers are still not prepared for this.

The recent heatwaves in Europe and the resulting out of stocks and overstocking of certain SKUs at stores, are proof that inventory management technology has not yet caught up with the problems of today. So how exactly does climate change impact demand?

Obvious examples of climate change impacting sales

Ice-Creams, beer, white wine, rosé wine, chilled carbonated beverages, barbecue ingredients and products, picnic food, sunblock and sunscreen are the obvious ones that retailers stock up on when there is a heatwave.

According to Majestic Wine in the UK, during this last heatwave in July, Rosé outsold white and red wines by more than 172,000 bottles in that week alone. One bottle of Rosé wine was sold every 12 seconds!

Research firm Kantar said, ‘Sun care sales were up 66% and ice cream 14% in the four weeks to 10 July’.

During cold waves, pasta, pasta sauces, soups, baking ingredients, red wine, spirits, lotions for dry skin, flu medications etc experience increased demand.

Regions at risk of experiencing tornadoes, cyclones, hurricanes or storms, or where there are flood warnings in place, are likely to see increased demand for basic necessities like tinned & frozen food (incl. vegetables), packaged soup & pasta mixes, toilet paper, soaps, shampoo and household cleaning products.

Some not so obvious ones

However, there are a few not so obvious SKUs that experience increased demand as a result of unseasonal weather. The impact is not immediately seen and so maybe masked by other factors.

For example when both temperatures and humidity levels are high, there is a delayed increase in demand for anti mould & anti fungal products, shampoos, body soaps, conditioners, anti frizz hair products etc as consumers use more of these up at home during this time.

Another not so obvious one is a (delayed) increase in demand for allergy medications following a period when the weather is hot and humidity levels are low. Pollen count and dust levels impact demand of this product too.

Planning for unseasonal temperatures and weather events

While inventory teams and FMCG sales people may be making plans for barbecues and outdoor picnics when these heatwaves hit, several times, they do not translate this into their work lives.

And, when they do, they need to make guesstimates of the right levels of stock of these products at stores. This is because their demand planning system is unlikely to have taken this heatwave (or cold wave/other weather event) into account.

However, you know what you do as a consumer. It is not a stretch of the imagination to assume others are likely to do the same. Use this knowledge to help prepare your supermarket/FMCG company to ensure there is enough stock of impacted SKU to meet demand/delayed demand.

Follow the weather and ensure you do not order too much of one SKU assuming seasonality still holds. An example is ordering a container load of red wine in December assuming robust Christmas sales, when warmer, unseasonal temperatures are expected for Christmas.

Also, check out our blog on how you can anticipate changes in demand in a VUCA world.

If you have any questions or would like more information on how you can better prepare for demand changes driven by climate change, contact me on veena@salesbeat.co



Regaining consumer trust – a 2022 focus for many FMCG companies

According to a recent report by Deloitte on the state of the Consumer Goods industry and key imperatives for 2022, increasing transparency helping in regaining consumer trust was top of the list for several companies.
Trust and transparency are intrinsically linked. Consumer goods brands that are not open and transparent are at risk of losing consumers’ trust, according to nine in ten executives that Deloitte surveyed. According to the report, most consumer goods companies are making an investment to increase the level of transparency for consumers and other stakeholders.

Increased transparency requires meaningful insights to be derived from raw data

For consumer goods companies to be transparent to all stakeholders and consumers, data needs to be sensed and captured.

The data collected should be shared and processed with other data sources to derive meaningful insights. Sharing an abundance of raw uncleaned data is likely to result in the opposite of what these companies are trying to achieve.

According to Deloitte’s report, intelligence, artificial or otherwise, is needed to do this effectively.

This includes supply chain transparency

55% of the execs that Deloitte interviewed for this report, cited out of stocks of products as a key reason for losing consumer trust. Another 48% cited stock outs of certain flavours/varieties/pack sizes of the brand as a key reason for losing consumer trust. Out of stocks at stores cannot be solved without transparency across the product value chain. Furthermore, it is critical that retailers and consumer goods brand owners work with the same demand/sales predictions to collaboratively ensure that there is enough stock produced, bought and stocked at stores, to meet demand.

Increased flexibility in stocking

Increased supply chain transparency enables consumer goods brand owners as well as retailers to be more flexible with their stock keeping policies. Most companies these days follow a just in time stock policy. However, when there are production related constraints like raw material supply issues or shortages or labour constrains at manufacturing sites, it enables consumer goods companies to make an informed decision to keep more stock(raw materials and finished products) when possible for future contingencies.

If the constraints are on the logistics side, it enables retailers to make an informed decision to stock more in their warehouses to ensure they do not run out of stock.

Without an understanding of expected consumer demand based on real time data combined with where there are constrains in the value chain, it is impossible for the different stakeholders to make a decision on what needs to be done.

Consumer trust and supply chain transparency

Speaking of stakeholders, consumer goods companies need to regain consumer trust by increasing supply chain transparency. By increasing supply chain transparency and ensuring availability of stock at stores, consumer goods brands and retailers can regain the trust they lost with consumers who experienced availability issues at stores.

What’s more, it gives consumers confidence in any sustainability claims the brand/retailer makes. According to the execs interviewed by Deloitte, 84% of them feel that consumers lose trust when brands don’t meet consumer expectations on ESG initiatives.

If you’d like to learn more about how to increase supply chain transparency and derive meaningful insights regarding demand from available data, email me on veena@salesbeat.co

Mayonnaise – how Hellmann’s became synonymous with giving new life to food

Hellmann’s, Unilever’s line of condiments, position themselves as solving a problem, not selling a product. Most food & beverage brands differentiate themselves from competition on taste & quality/use of ingredients. In the world of condiments, this is difficult as most consumers perceive this segment to be functional.
The Hellmann’s unique marketing strategy team at Unilever understood this and have long positioned their brand as one that encourages creativity in cooking and food. Over the last 3 or so years, they have been championing solving the food waste problem at home using Hellmann’s mayonnaise.

Bring out the best

In 2019, Unilever launched the ‘Bring out the best’ campaign in UK. The campaign by  Ogilvy UK & Unilever asked people to get leftovers from their fridge for Hellmann’s to transform into ‘new’ meals using their range. David Hertz, a celebrity Chef, transformed people’s leftovers into five-star meals using the Hellmann’s range.

Bring our the Best Campaign in the UK, 2019

This campaign is a great example of embedded marketing, where the potential of the product is incorporated into a strong social message. Not only did it receive organic coverage from news outlets, it was popular on social media too.

Previous success

Ogilvy and Hellmann’s had previously done a similar campaign in Canada in 2018, which informed Canadians that they waste enough food every minute to feed a stadium. In the advert, they showcased feeding a stadium full of people with food waste from grocery stores.

Delivering a fully integrated campaign pinned on the message, ‘more real food for real people’, the brand created a mini digital site where people can find food rescue tips, recipes and facts on food waste.

Feed a stadium campaign – Canada, 2018

The campaign earned 13.5MM+ impressions & influencer content achieved 2MM+ organic impressions (3.5x the industry benchmark). Their mini digital site with educational tips on reducing food waste had a view-through rate of +80% above industry benchmarks.

2020

Based on the success of their campaign in Canada and also the ‘Bring out the Best’ campaign in the UK, they launched the ‘Turn nothing into something’ campaign in Canada in 2020 and the Fairy Godmayo ad in the US in time for Super Bowl.

Turn Nothing into Something ad in Canada
Fairy Godmayo ad in the US – launched in time for Super Bowl, 2020

In 2020, as an initial step towards the larger vision to reduce food waste, the brand started the Hellmann’s Food Relief Fund. This has already saved 1.2 million pounds of food waste from farms and redistributed this food to communities in need. 

Embedding sustainability in the brand’s DNA

The Hellmann’s initiative, “Make Taste, Not Waste”, is part of Unilever’s “Future Foods” ambition, which launched globally in 2020 with two key objectives: to help people transition towards healthier diets and to help reduce the environmental impact of the global food chain. One of the key “Future Foods” commitments is to halve food waste in Unilever’s direct global operations from factory to shelf by 2025.

This initiative was also lauded by Daniel Balaban, Director of UN in Brazil who mentioned, “The idea is an extremely important wake-up call on food waste”.

Not only does Hellmann’s have a focus on food waste but they are leading the way in terms of how they are sourcing the plastic used in their bottles and caps. In 2018, they started making their bottles 100% recyclable.

Embedding the food waste cause deep into the brand’s image, has helped Unilever breathe life into what is otherwise a commoditised condiment. They have tapped into a segment of consumers who will stay loyal to the brand due to the causes the brand stands for, which is crucial for the year ahead.

FMCG conglomerate shake up underway?

On 21 June 2022, The Kellogg Company announced that they were planning to separate into 3 different businesses by end of 2023. As soon as this hit the news, I’m sure investors and employees of other companies are wondering which conglomerate might be splitting up next. According to Bank of America analyst, Bryan Spillane, the big food breakup “is already underway”. However we, at Salesbeat, think the FMCG conglomerate break up is what is underway.

Why now?

So what is happening now, that is accelerating M & As and separations? We’ve just come out on the other side of a longer than expected pandemic, which had a larger than expected impact on lifestyles and consumer buying behaviour. While certain trends accelerated during the pandemic, new ones emerged and solidified at an accelerated pace too. Remote working and remote education being two of those. While remote education is unlikely to continue in the short to medium term, remote working is here to stay.

As a result of remote working, a new trend/behaviour came into being – living outside the city. Pre-pandemic, everyone wanted to reduce their commutes and live close to work. Healthy snacking was a trend that accelerated during the pandemic and is one of the reasons why the Kellogg split happened.

Another reason for this is the rapid increase in supply chain costs. In this context, companies need to double down on efficiencies so savings can be realised in other areas. And one of them is the route to market.

What about economies of scale?

While you may think that these companies benefit from economies of scale, you’d be right, but only when it comes to manufacturing. When it comes to sales, marketing and strategy teams, each category is likely to have a different team. Also, transport and logistics costs are likely to be separate from other categories.

So FMCG conglomerate break up helps companies focus on growing sales/distribution of distinct categories that share both the route to consumer and manufacturing technology. For example, holding a portfolio purely in the snacking category or in the breakfast cereals category.

So let’s look at some of the other companies under discussion.

Unilever

Unilever is one of the few FMCG companies that owns brands across very disparate categories. The own and sell brands under the Beauty & Wellbeing, Personal Care, Home care, Ice Cream, Condiments, Soup and Plant based meat categories.

Not only do these categories not share the same route to market, but they also have different teams managing the various brands. Furthermore, these categories most likely have raw materials from very disparate suppliers which are manufactured in very different manufacturing entities.

Nestle

Another large Food & Beverage conglomerate that owns brands across very different categories ranging from Pet food to Coffee & Coffee makers.

While brands in the same category may share similar routes to consumer, manufacturing sites and suppliers, brands across categories do not.

General Mills

General Mills has brands across very different food categories and also in Pet food. Their food portfolio includes brands in categories ranging from tinned vegetables (Green Giant) to Baking (Pillsbury, Betty Crocker etc) and from the snacking occasion (Larabar, Bugles, EPIC, Yoplait etc) to ice cream.

FMCG companies with diverse portfolios that are not likely to split are:

PepsiCo

PepsiCo is another company that has come under scrutiny for the very different categories their brands fall under. However, PepsiCo is one of the few companies whose strategy took this into account to convert into a strength. There was a concerted effort from the PepsiCo team to create one route to market. This is one reason why splitting PepsiCo up does not make strategic sense for the company.

Mars

Mars is an FMCG company with a portfolio that ranges across confectionery, pet food and Food (Uncle Ben’s, Dolmio etc). While the same rationale as Nestle and General Mills applies to Mars too, it is unlikely that they’ll spin categories off into separate companies. This is because they are still a family owned business. As long as the family still believes in the company owning brands across disparate categories to manage their risk/return, they are likely to lean into this.

A case for not splitting some of these companies up

In the last 20 years, we have seen the creation of FMCG behemoths where the driving rationale has been more about portfolio diversification and less about lower costs from scale benefits. As long as these different categories and functions are treated as completely different business units for decision making, investors can still benefit from a portfolio of brands across categories during uncertain times. Similar to how a portfolio of stocks spread across companies across various industries help investors manage their risk, FMCG companies and their shareholders maybe able to benefit from a diverse portfolio if managed right.

Conclusion

5 years from now, it’ll be interesting to look at the mergers, acquisitions and divestments in this space and how these companies fare in the long term. While we could argue many different ways for and against splitting these companies up or investing in/developing new categories to manage risk, we live in times so uncertain that the benefits may go either way.

The power of data – reviving Quaker Oats in Netherlands

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.

The Campaign

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 results

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!

Sources of information: Mapp & Parlez.

Growth drivers in FMCG – a paradigm shift

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 market production 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 veena@salesbeat.co

Coca Cola & their use of augmented reality in marketing

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.

Retail & customer experience

Customer experience in retail, is the overall journey of the consumer from the moment he or she sees your store to the moment he/she leaves. Due to the prevalence of social media and e-commerce, this journey now includes your website, reviews left on the internet by your previous consumers and online customer service experience.

According to a recent Price Waterhouse Cooper study, 73% of shoppers said retail customer experience is more important to them than price, or quality. Not only did they value positive customer experience, but they found that it influenced their decision on where and what to shop more than advertising did. More than 40% were even willing to pay more for a better customer experience.

No wonder retailers are paying attention to customer experience and there are several start-ups in this space.

Historically retail execution in FMCG (which we’ve covered in previous blogs starting with retail execution, continuing to the first and most important P, Product and ending with Proposition) ensured great customer experience in store. These days, while this still generally holds true, there are more elements that influence customer experience.

So how can you improve customer experience?

Your customer experience strategy should be based on your customer’s journey from when they arrive at one of your stores all the way through to post-purchase. Are there opportunities to interact with your products and services? Is your store inclusive and accessible? How customer friendly is your customer service team and the customer service process? What is the online experience of your store/e-commerce site like for your consumer?

Contactless as well as range customisation for location are key aspects for retail customer experience these days. Ever noticed that the range in each Zara store you step into is different from the rest? By analysing the products most relevant for each store location and stocking products that customers seemingly want at a local level, you can dramatically optimise operational efficiency, reduce returns and increase sales. Now, more retailers are following the trend Zara has set including Sephora and H & M. By customising assortment for each location, retailers can boost brand loyalty and provide a streamlined & relevant customer experience.

Social responsibility & Convenience

These days, supermarkets (ASDA, ALDI, Morrisons, M & S Food, Waitrose) and convenience chains (notably, SPAR with their Eat 17 collaboration) with stores that have packaging free aisles, have also seen an increase in new customers. And now with the increase in prices of day to day groceries, packaging free options may prove to be more affordable than packaged versions due to lower price increases and so may appeal to larger groups of people than just eco-conscious consumers.

Location (for quick impromptu visits), fast delivery and timing of delivery slots have been key drivers of convenience, which has emerged as a very important element of customer experience post pandemic.

Timing of delivery and availability of delivery slots is one of the key reasons Walmart is partnering with Drone Up to deliver grocery orders to parts of Arizona, Arkansas, Florida, Texas, Utah and Virginia.

Social & live sales in e-commerce and in store

Another emerging trend is live shopping. An increasing number of retailers are looking at implementing live shopping solutions on their e-commerce sites. We have now come full circle from door to door salespeople selling FMCG brands to self serve supermarkets and now back to sales people presenting their brands and SKUs online for sales. Not only are several retailers developing homegrown solutions for this, but they are also partnering with start-ups like Shoply and Vurdere.

There are several FMCG companies that have partnered with retailers to display their marketing/sales content on screens below/next to the shelves with their SKUs taking online sales/marketing content to its logical conclusion. For example, Muller partnered with ASDA to display their marketing content on screens close by/below the shelves displaying their products.

There are several CX initiatives by supermarkets that we haven’t covered in this blog. These are simply a few that stood out. If there are any supermarkets or convenience stores in particular that have grabbed your attention with their CX initiatives, please email me with details at veena@salesbeat.co so we can include them in another blog or cover them in our podcast.

The changing world of customer experience in FMCG

Forrester Research defines customer experience as “how customers perceive their interactions with your company.”
Customer experience in FMCG starts with how customers become aware of a brand/company and ends with any interactions with the company’s team for returns, damaged products etc. This includes any activities the brand team or company may undertake to increase awareness and encourage intent to buy. Eg: sampling campaigns, surveys, free product, in-store promotions etc.

Customer centricity aka customer experience aka CX is becoming an increasingly important business KPI in FMCG companies and retailers.

Why is CX becoming increasingly important in FMCG?

When customers (consumers) have positive experiences while interacting with a brand, they tell others about their experience. They do this through reviews on retailer/brand websites or on their social media accounts. This is free word-of-mouth advertising for the brand. Positive customer experience can also encourage brand loyalty and repeat purchases. 

But how do you improve CX if you don’t sell to the end consumer?

This is the case for many FMCG companies that sell their brands through distributors, supermarkets & convenience stores. For these companies, retail execution is key to unlocking superior customer experience. They employ various strategies including ‘shop in shop’ concepts, interactive brand discovery on screens, samplings/tastings, product experiences and brand videos. In-store brand ambassadors (sales people) who are knowledgeable about the brand who consumers can talk to and learn more about the range are extremely effective. Brand ambassadors can not only sell effectively to consumers, but they can also act on/pass on to relevant brand teams any feedback the consumer gives.

However, the pandemic has accelerated change in how consumers/shoppers buy and experience brands. Previously, it was important to have a great brand website and an e-commerce portal. Now it is vital that consumers are able to access the brands without travelling to a store.

A few recent CX stratagems employed by brands

Below are a few examples of superior CX which have generated considerable interest from consumers and have translated to sales in these challenging times.

‘Lumi’ by Pampers:

The Pampers team came up with Lumi as a way to address the plentiful worries a new parent has. The goal wasn’t just to sell Pampers. They understood the worries that new parents have about their baby’s sleep routine and created an app that acts as more than a baby monitor. Lumi monitors their baby’s sleep patters, tracks diaper wetness to alert parents and provides actionable insights on how to sleep train their baby. Lumi is all about the baby and providing the baby’s parents with peace of mind.

By making the baby’s comfort and development the core of the Lumi app/monitor, Pampers has delivered a truly superior customer experience that will encourage new parents to buy Pampers diapers. The ones that work with Lumi are only 4 cents more expensive per diaper than regular ones.

To top this all off, the Pampers website is all about expecting mothers and the baby. While there is a section on ‘products’ that lists the Pampers range, most of the website is about the various stages of pregnancy, and about babies and their development. You cannot get more customer centric than that!

Heineken Silver in the Metaverse later launched in real life

Brewed with pixels, Heineken Silver is the world’s first virtual beer. Heineken launched its ‘digital’ beer inside the company’s virtual brewery. According to the company, the beer is made of the finest, 100% computer-generated ingredients, brewed with Binary Coded Hops grown by NPC (non-player character) farmers.

Heineken partnered with self-taught street artist, J. Demsky to design parts of the virtual brewery. According to several attendees, the launch event was (intentionally) bizarre, later confirmed by Heineken.

Bram Westenbrink (from Heineken) said, “We know that the metaverse brings people together in a light-hearted and immersive way but it’s just not the best place to taste a new beer.

Our new virtual beer is an ironic joke. It is a self-aware idea that pokes fun at us and many other brands that are jumping into the metaverse with products that are best enjoyed in the real world.”

In an ironic twist, Heineken took Heineken Silver from the Metaverse and launched it in real life last month.Taking this further, Heineken unveiled a series of FRTs – For Real Tokens – collective art pieces by Spanish artist, J. Demsky, poking fun at the NFT culture during the launch event.

Heineken was not afraid to poke fun at themselves with the launch of Heineken Silver in the Metaverse. By sharing this experience with their loyal consumers and providing an unforgettable experience for new to Heineken consumers, the brand built strong rapport with their consumers.

Launching Heineken Silver in real life showed they listen to their consumers and is a key element of CX.

AB Inbev’s digital horses and their vision of Metaverse beer which can be delivered in real life

AB InBev moved into the virtual Ethereum based game horse racing platform Zed Run. According to Lindsey McInerney, “brands should parallel in the metaverse what they do in reality”. 

With its history of sport sponsoring, especially horse racing, AB InBev was eager to be among the first to start one in the metaverse. They moved into the virtual Ethereal based horse racing (game) platform by an Australian start-up. The virtual horses on Zed Run are ‘breathing non-fungible tokens’. While users are able to name their horses, how their horses behave on the track is defined by algorithms based on characteristics such as their bloodlines, just like in real life.

According to Adformatie, Stella Artois created a set of unique horse breeds for Zed Run, with Stella Artois-themed skins and a 3D racetrack. According to Forbes, these unique horses were sold for millions of dollars for the digital races.

This creates an entirely unique customer experience for the target consumers for Stella Artois and Budweiser. They have created a new of way of reaching their target consumer and providing them with an unforgettable brand experience.

According to McInerney, the vision is to some day have people from different parts of the world attend the races together, buy a round of beer at the races and have them be delivered in real life, so friends can virtually attend an event and have a drink both virtually and in real life.

By creating new ways for people to get together and bond, AB Inbev is providing its existing consumers with an unforgettable experience that they are unlikely to forget. Also, they have created an innovative channel to reach their target consumer and encourages trial.

There are several other brands leveraging technology to create unique customer experiences. If there are any brands in particular that have grabbed your attention, please email me with details at veena@salesbeat.co so we can include them in another blog or cover them in our podcast. The next Salesbeat blog will look at how retailers are leveraging technology for superior customer experience.