Aug 9, 2024
It’s a challenging time for brands trying to maintain or build relationships with customers.
Consumers continue to brace for financial uncertainty. Despite slowed inflation, 71% say they are still feeling a day-to-day impact. Those who have made budget changes in the last six months said they saved costs by buying more store brand products and cheaper grocery alternatives and spending less on clothes, accessories, dining out, and leisure activities. To compete, brands must deliver clear and differentiated value propositions—for their product AND their brand—that align with consumer priorities.
Establishing or effectively maintaining connectedness with customers is especially challenging for CPG brands. In an era when consumers frequently discover and interact directly with brands online, that gap is widening. For CPG brands that have traditionally relied on retail partners and mass communication, establishing direct connection with consumers will require unique activations, mobile and social commerce, and strategic partnerships.
We see four primary trends happening industrywide:
Trust matters, especially during challenging economic times. In its 2024 CX Index, Forrester found that customer experience scores dropped for the third year in a row to their lowest levels since 2016. In fact, 22% more brands saw their customer experience scores significantly drop YoY. When purchase decisions carry more stress and consumers scrutinize every dollar, brands must uncover new opportunities, grounded in customer experience, to communicate their value.
Hydro Flask launched a trade-in program last year, which offers store credit in exchange for old, unwanted, or non-functioning Hydro Flask products. It provides shipping labels, which can be adhered directly to items, and customers receive a $5 credit for each product returned. The program helps used products get recycled properly, reduces waste, and contributes to a more circular economy. Also, customers feel good about their actions, which incentivizes them to purchase more Hydro Flask products.
Planters Peanuts recently launched an earned ambassador program to drive brand advocacy. Leveraging answers from a questionnaire meant to get to know creators better, Planters sent personalized tokens of appreciation to surprise and delight some ambassadors who promote their products to followers, like a Planters inspired cake. Planters also uses the answers to inform future opportunities for paid partnerships.
Both examples demonstrate clear investment in customer experiences that foster brand trust and build emotional loyalty. If price isn’t an area where you can win, demonstrate value by mitigating other customer pain points, which can act as an emotional equivalent to value-savings.
Expert tip: Focus on building emotional loyalty by showing customers you’re in it for the long-haul during uncertain financial times.
Direct-to-consumer is a channel strategy and no longer a competitive differentiator. For CPG brands, adopting these channels means seamlessly blending more customer-facing channels through ecommerce sites and social media. In addition to staying top of mind and capitalizing on discovery to make conversions, “Reaching Customers Everywhere” requires connecting in culturally relevant ways.
Retail websites and social media have become preferred places to start product searches, often over traditional search engines. More than half of U.S. consumers start their product searches on Amazon, and 48% of U.S. social media users are likely or very likely to research a product on social platforms before making a purchase. And when it comes to Gen Z, 51% worldwide use social media to look up a brand versus 45% who use search engines.
The opportunity for beauty products on Amazon is huge. Roughly 100 million unique beauty shoppers visit Amazon’s site per month. And it’s predicted that by 2025, Amazon is set to overtake Walmart as the top U.S. beauty retailer with 14.5% market share. Estée Lauder brand Clinique was one of the first brands to open a storefront in the U.S. Amazon Premium Beauty store and to (finally) have greater control of the brand experience on the third-party marketplace. Clinique’s Amazon storefront includes educational content and features, such as the Clinique Skin Analysis tool, and the ability to chat with a Clinique Ambassador.
Proctor & Gamble partnered with Group Black and world-famous TikTok creator Khaby Lame, to produce “Khaby Is Coming To America,” a show viewers can stream on ad-supported streaming service Tubi. In each 20-minute episode, Lame explores a different U.S. city and hosts guest stars including Alicia Keys, Jon Baptiste, David Beckham, and Steven A. Smith. This is part of P&G’s effort to engage more multicultural consumers. In the limited series, brands Tide, Crest, Febreze, and Bevel are all slated to appear.
E.l.f. upgraded its Roblox Up! experience, in partnership with Walmart, to allow visitors to literally purchase physical E.l.f. products from a virtual kiosk and also receive a “virtual twin” for their avatar. As part of the upgrade, a limited-edition E.l.f Up! pets hoodie, highlighting a commitment to cruelty-free products, was also available for a limited time. E.l.f. has been heavily investing in marketing on Roblox and other digital channels like Apple Vision Pro and Amazon Alexa. The company indicated that these efforts are paying off—since launching the Up! experience, the brand has seen over 12 million visits and a 96% positivity rating. E.l.f. also reported a 77% increase in net sales YoY and a 25% increase in its marketing budget for this year.
Breaking through in today’s noisy marketplace requires more than just active, direct engagement, it requires the deft use of your customers’ cultural passions and interests.
Expert tip: When shared beliefs meet cultural trends you can unlock participation between your brand and your customers.
While cultural relevance is critical for breaking through and connecting with modern audiences, campaigns must ensure they also convey authenticity through shared values.
Our research shows that 68% of respondents are likely to spend more on brands aligning with their values. This tendency is stronger among Gen Z and Millennials compared to Gen X and Baby Boomers. The need for shared brand values also extends to brand partnerships. We’re seeing marketing campaigns and product innovations show the brand is listening to its customers and engaging them and partners in authentic ways.
Laundry detergent Persil partnered with fashion designer Christian Siriano to host a 24-hour “Wardrobe Refresh Hotline” on TikTok Live, where he offered advice on fabric care, washing techniques, and restyling clothing. To effectively connect to younger consumers on social, the activation highlights a brand refresh and product reformulation designed to help consumers maintain “that New Clothes Feeling” by helping color last longer, and more effectively removing stains.
Stouffer’s Ultimate Spicy Nacho Mac is the latest in a string of employee-fueled innovations from Nestlé USA’s Open Channel program. Other examples that have come out of the incubator are Stouffer’s Mac and Cheese Bite-Fulls and Outshine Smoothie Cubes. The success of the program is attributed to being open to ALL employees, not just those at corporate locations and being “always on” with ideas reviewed as they are submitted. The program has yielded nearly “$200 million in incremental revenue” since its 2019 launch.
Through a partnership with Verily (a Google sister company), L’Oréal is piloting HAPTA, a handheld smart makeup applicator that allows persons with limited hand and arm mobility to apply makeup. Trial testimonials have proven positive so far; while a lipstick applicator will be first piloted, the brand plans to test additional makeup applicators in the future. The applicator uses technology originally designed to stabilize and level eating utensils. For the makeup applicators, a magnetic attachment allows for 360-degrees of rotation and 180 degrees of “flexion.” A “clicking” feature allows users to set and lock device positions in preferred settings.
Expert tip: Make partnerships part of brand strategy. Consider primary or secondary data available that can help identify brand alignment while using third-party data overlays to augment or validate potential partnership opportunities. Leverage the existing appeal and credibility of partnerships to tap new audiences and markets.
Consumers have access to more information than ever and are more mindful about the products they purchase. What’s more, this access and mindfulness comes on top of a shift towards holistic wellbeing that prioritizes multiple pillars of health—physical, mental, social, environmental, financial, etc. This mindset is now so mainstream that every industry, including retail, grocery, travel, hospitality, and CPG, must think of themselves as operating within and evaluated against the wellness category.
The rise in consumers taking GLP-1 weight loss medications like Ozempic is the latest trend impacting the food and beverage industry. J.P. Morgan Research found that current GLP-1 users purchased around 8% less food—including snacks, soft drinks and high-carb products—for at-home consumption over the last 12 months compared with the average consumer. This trend and others are leading consumers to look for added nutritional value in food and beverage products, including protein. Targeting everyday athletes “looking for a boost of protein in the morning to help reach their goals,” General Mills debuted its newest Wheaties innovation this spring, Wheaties Protein, which has more than 20 grams of protein in each serving, primarily coming from nuts and seeds. In comparison, regular Wheaties contains only three grams of protein. Food Institute data shows that interest in protein-enhanced foods primarily comes from consumers aged 25 to 40, and Technavio predicts there will be an increase in the availability of protein-based foods through 2027.
When it comes to sustainable products, quality and price are top purchasing considerations and many question whether their individual efforts make a difference in the grand scheme of things. Proctor & Gamble recently conducted research that found similar sentiments: 61% of people agree that consistently saving resources is time consuming, 61% agree it is difficult to do so, and 57% agreed that it’s not convenient. As part of its “Made Better, Made to Save” campaign, P&G tried to address and combat these sentiments. Using sensor technology inside homes to measure energy, water, and time savings when customers used its products for everyday tasks, P&G showed how its products can help consumers conserve resources. Results showed that Tide used with cold water saves up to 90% energy on laundry; Gillette Labs Razors reused over 5 years saves 80% of waste; and when compared to handwashing, Dawn Powerwash gets dishes done 5x faster and saves 50% of water.
Expert tip: Shared values can be a common language. Many consumers see brands as extensions of their own values and a lack of shared values is the #1 reason consumers stop buying from a brand. Consider how your brand can be more transparent about how you live out these shared values every day.
Considering increasing retail media power and increased digital connectedness, CPG brands are experimenting with and refining how best to connect to consumers. While having a holistic presence across digital and in-person channels is important, so is offering products that taste good, are affordable, and demonstrate transparency around feel-good marketing claims (including sustainability). Success is found when brands focus on value-based messaging; staying on trend technically and culturally; and brand partnerships, activations, or innovations that are authentic to shared brand and consumer values.
What are the key takeaways for your brand?
