4 Lessons You Can Learn From Online Reviews
By Kara FinnertyDec 8 2020
Social Listening Platforms, Q4 2020
Published August 26th 2016
The changing tastes of consumers have always played a large role in the CPG industry.
Market saturation and low consumer switching costs make it an incredibly competitive space.
A 2016 survey by McKinsey split CPG brands into leaders and followers. They found that the winning companies are twice as likely to view advanced analytics as critical to business strategy.
Those companies have built insight engines, with the tools and models to deliver insights from country level down to store level. These consumer insight engines inform decisions across the organization and refresh their insights on a monthly basis.
Social intelligence can play a vital role in building these departments, surfacing consumer insights for the CPG industry to assist in a number of difficulties brands are facing.
The traditional CPG giants have found that things aren’t all going their way lately. Their size used to give them a huge advantage. The economies of scale in manufacturing meant that they could produce goods cheaper than the competition.
They could spend huge amounts of money on TV adverts that would reach into millions of homes. Added to that, these firms had established relationships with stores, ensuring their products would always be highly visible.
Now, consumer markets are changing fast, and the grand old firms aren’t necessarily set up to be agile enough to deal with it easily. Start-ups, like Brandwatch client Dollar Shave Club, are ‘disrupting’ the industry by shipping cheaper razors direct to the consumer. The brand now controls 5% of the American razor market.
CPG firms should leverage social consumer insights to stay attuned to shoppers’ needs. The globalized world is changing too, with middle-income countries no longer assuming that western products are superior.
The Economist has reported that local brands are proving more attuned to shoppers’ needs than the traditional large CPG brands, particularly in middle-income countries with higher growth economies. Since 2004 these emerging economies have seen a boost to local brands. In many cases, these markets have found that local brands are more adaptive to the needs of the shopper.
The McKinsey report shows that over the past four years, large CPG brands sales have remained stagnant, growing on average 0.3% per year. In contrast, midsize companies have grown sales by 3.8% and small companies by an impressive 10.2%.
The giants of the industry may find it difficult to keep up with fast-changing consumer markets, but consumer insights can help the consumer packaged goods industry to keep pace with their customers. Consumers increasingly want to purchase from brands that align with their cultural identity, and social intelligence can help brands understand the views of different customer segments.
With the speed at which information moves around communities, fast-moving trends and micro-trends need to be identified with an agile tool. Traditionally, larger brands may have acquired startups or developed their own version of the latest hot product. The risk is to then discover it was a fad. Consumers are fickle and tastes change quickly; CPG brands need to constantly take the pulse of the market.
Trends might not just be restricted to products, however. E-commerce has the potential to drive change in the CPG industry. AmazonFresh has caused concern within the industry, with McKinsey reporting that 29% of leading CPG firms have links to Amazon, and other retailers besides. Understanding the desire and frustrations around these newer forms of shopping will be key to perfecting the offering.
Got our first Amazon fresh order yesterday. Pretty impressed. So far, the experience has been better than Fresh Direct & Instacart.
— Amit Jotwani (@amit) August 10, 2015
Consumers are always looking for the next item, to stay ahead of the curve and find the latest trend. Brands can use sentiment analysis to gain an overview of what their customers like and dislike about products.
Bringing human analysis into the mix can reveal deeper insights. An understanding of product and brand associations can be gained by searching for adjectives that are commonly used in conjunction with a product. This can help brands to understand desires, frustrations, sentiment and emotions around products.
With smaller, localized, and more agile players entering the market, competitive analysis has never been more important.
The barriers to entry are smaller for startups. They can begin by outsourcing production, with online advertising and social media influencer campaigns spreading knowledge through word of mouth. If a startup succeeds here, they can then look to move into bigger stores and increase distribution.
These companies are able to respond quicker and be more innovative due to their smaller size, but the larger brands have the resources to implement sophisticated insights engines.
Consumer insights can assist the CPG industry’s marketing efforts by helping to understand the consumer more fully, becoming customer-centric in the process.
A growing problem for large CPG brands is the eating away of their market share at both the economy and premium ends of the market. If a shopper wants a basic, cheaper product he or she can go to Aldi or Walmart for store-brand goods.
If they want to pay more for a product, a traditional big brand might miss out too. The last few years have seen an explosion in handcrafted, artisanal, rustic goods, as if we’re all living in a twee rural village in the seventeenth century. This trend has helped the smaller brands gain a solid foothold in the market space.
@Hallyyyyyyy egg warmer, hat for a hamster, or hold on to it and recycle it by sending it back to us during the next Big Knit.
— innocent drinks (@innocent) August 22, 2016
A CapGemini survey reveals that over 50% of CPG brands are using consumer insights to support their marketing campaign. They highlight an example where another Brandwatch client, Unilever, discovered that conversation around Ben & Jerry’s ice cream peaked on Thursday and Friday, but sales spiked on Saturday.
Using this knowledge meant they could run adverts only from Wednesday to Saturday, increasing their digital influence and improving the ROI of their marketing spend.
With threats coming from multiple angles, social intelligence can be a vital part of the research mix for surfacing consumer insights for the CPG industry. It allows brands to stay ahead of the latest trends.
Companies need to know their perceived strengths and weaknesses today andwhere to focus their attention tomorrow.