Consumer goods firms must adapt to new trends

15 July 2010

NEW YORK: Social media, sustainability and developing economies like India and China are the main "emerging opportunities" for consumer goods firms, according to a new report.

In a joint study, the GMA, the trade body, and PricewaterhouseCoopers, the consultancy, stated that the FMCG sector "registered consistent, across the-the-board performance in 2009" despite the recession.

However, declining purchasing power in the US and Western Europe and maturing markets for items like soft drinks and snacks have made "brand-building all the more challenging."

One way of reaching audiences around worldwide in via portals like Twitter, YouTube and Facebook, which are all "humming with commentary about companies, products and services".

Although these sites provide vast amounts of data and the chance to directly interact with shoppers, such as through co-creation, obstacles relating to privacy and brand integrity remain.

"You need a way to tell your story," said Bert Alfonso, cfo of Hershey. "And if you are going to tell your story in a world of blogs and streaming video, you better be able to communicate digitally."

Among the leaders in this field are Best Buy, which established a "Twelpforce" to aid customers on Twitter, Kraft, which boasts a popular iPhone app, and PepsiCo, which has launched the Pepsi Refresh Project.

"Social media now becomes the TV,” PepsiCo's global chief investment officer, Robert Dixon, said. "That's where consumers are receptive to engage the brand."

"So the brand develops its campaigns and marketing programs, and we need to make sure that we've got the capability underneath to supply those to the digital domain."

Measurement is another key issue, and Doug Chavez, senior manager of digital marketing at Del Monte, said the "richness" of feedback and specific actions are preferable to simple metrics like clickthroughs.

"I'd rather have fewer people going to our Milk-Bone 'It's Good to Give' page on Facebook and sharing with the community there - which shows their engagement in the story," he argued.

Sustainability is another priority for companies and customers, with Procter & Gamble's Future Friendly campaign, aiming to educate 50 million US households about eco-friendly behaviour, cited as an example.

Anheuser-Busch InBev has also announced plans to reduce its usage of water in its brewing processes, and PepsiCo has set broadly equivalent goals covering its operations.

Elsewhere, the GMC/PwC report suggested "Asian consumers appear willing and able to open their wallets to an unprecedented degree," as the region's middle class continued to grow during the financial crisis.

A nuanced approach is required in this area, as P&G found when it introduced a low-cost variant of Pampers which struggled to gain traction in China, where parents tend to opt against disposable nappies.

In contrast, General Mills' Wanchai Ferry dumpling brand was developed in partnership with a local entrepreneur and has sought to meet the distinctive needs of Chinese shoppers.

"We began with a dumpling, a product form that is indigenous to the local eating habits, and we expanded to a full range of dim sum offerings," said Don Mulligan, General Mills' cfo.

"This is a product that a Chinese grandmother would have spent all afternoon making by hand. Now middle-class housewives don't have the time for that - but they do have the money to go out and buy it."

While adapting goods for individual contexts is important, there are some commonalities observable in different geographies, according to Shantanu Khosla, managing director of Procter & Gamble India.

"Consumers in rural India are very similar to consumers in rural China and Mexico. This scale allows P&G to invest in innovation for these consumer clusters," said Khosla.

Data sourced from PwC; additional content by Warc staff