For the consumer products industry and its many low-involvement products, digital business transformation is tantamount to a real "make or break" situation
Imagine this: A printer cartridge is empty and you are looking for a quick replacement. In the past, you could have looked directly at the manufacturer for a suitable cartridge, as this guaranteed that the quality and compatibility would fit 100 percent. However, the original cartridges were very expensive, as the manufacturers subsidised the device price. In the age of Amazon, this belongs to the past. With its Amazon Basics products, high-quality, "low involvement" goods such as printer cartridges, batteries, cables, towels or household appliances, the platform has positioned itself strategically. It uses its position to specifically set its own brands, thus eliminating the need for expensive branded products.
Sovereignty over brand choice is lost
With voice interfaces such as Amazon’s Alexa or Apple’s Siri, retail platforms are acquiring larger market shares with a continuous change in consumer purchasing behaviour. The keyword here is convenience. It is often easier to use the voice interface to ask Alexa to search for something on the web, than to use a keyboard to start a Google search. Even if manual Google queries continue to play a role, voice search will only become more popular.
With growing brand awareness, it is clear why the customer does not ask, "Alexa, show me printer cartridges from Canon". Instead, he asks, "Alexa, I need an ink cartridge for my Canon printer". He no longer formulates his inquiries to a product in a problem-oriented manner, as he would in a conversation with a consultant. The result: Alexa looks for the product of her own brand, Amazon Basics, and orders it directly.
In the medium term, this is a big problem for traditional FMCG manufacturers. They lose sovereignty over the visibility of products to platforms like Amazon, which push their own ranges towards customers. In this way, they are increasingly competing with their own brands in the digital platforms. The FANGs (Facebook, Amazon, Netflix and Google) reinforce this. Not only do they present the products, but they also use their direct, digital customer access to generate profound data and consumer insights with which they continuously optimise their processes, products and placements. That is a real competitive advantage over the stationary trade.
The need for a new and holistic brand strategy
If consumer goods manufacturers do not react quickly to these developments, they will lose their position with their customers very quickly. This will prevent them from further enhancing the brand awareness built over decades. At the end of the day, it is all about goods and low-involvement products that satisfy the basic needs of a consumer. For instance, a consumer might not care whether he buys a cable from Hama, Apple or Amazon Basics, as long as his problem is resolved simply, quickly and economically. With a focus on convenience and usability, they determine what is offered to them and at what price across digital platforms. Therefore, it is essential for FMCG brands to create benefit that goes beyond mere product benefits, and serve the consumer’s needs holistically. Otherwise, they will soon be nothing more than a community of producers who lost their interface to the customers through large platforms.
Moving towards an 'Experience Brand'
The key solution is a fundamental transformation of consumer product brands from purely product-centric to holistic, ecosystem-oriented strategies, which create sustainable brand experiences and strengthen direct customer relationships. Now’s the time to take the necessary steps in this direction. Else, they might lose their relevance in the realities of their existing customers and disappear from the market. This whole approach requires a paradigm shift in how manufacturers create a shopping and brand experience that leads them each time, keeping in mind two key steps:
By following these two simple steps, decision makers in the consumer goods industry can continue to play a significant role in their consumers' lives in the coming future.
The author is Group Vice President at Publicis Sapient.