Competition in the Consumer Packaged Goods (CPG) industry is as strong as ever, and legacy brands within the industry need to fight harder than before to keep up. As their competitors and overall consumer needs evolve, CPG legacies are forced to find new ways to stand out.
So how are legacy CPG brands stepping out of their decades-old growth strategies and into the digital era? Let’s dive in.
Gillette Gets Direct
Direct-to-consumer (D2C) brands are major game-changers in the digital era.
What is D2C? D2C is a form of marketing that ditches intermediary advertising (like commercials or radio ads) and even traditional stores to directly promote a product or service to the consumer.
In fact, one of the biggest trends among CPG companies of all sizes and ages is having a strong direct-to-consumer commerce presence. According to Shopify, almost half of manufacturers (48%) are turning to D2C channels to increase revenue, and 87% of manufacturers rate D2C channels as highly relevant.
After witnessing the success of D2C models of competitors such as Harry’s and Dollar Shave Club, Gillette has since hopped on the D2C bandwagon. Gillette On Demand, the brand’s own D2C model is similar to competitors in the way it allows customers to buy razor blades as needed or to create a custom subscription fitting their needs.
The biggest benefit of D2C marketing is that this method monitors customer responses to the products or services. This allows legacy CPG brands to have a customer-facing presence while obtaining meaningful buyer insights that they wouldn’t have access to through sales with traditional stores.
In addition to access to shopper data, D2C models allow brands to test out new products more quickly and to personalize engagement with consumers.
Quick Tip: If you’re ready to expand your business to a D2C model to cut the middle man, you’ll need to begin focusing on creating strong brand awareness.
D2C brands are largely successful because they do what it takes to reach the right customers across all channels. This means heavily investing in research and data to ensure they’re targeting those consumers that will be most likely to convert to loyal buyers.
AB InBev Incorporates Artificial Intelligence
If the name “AB InBev” doesn’t immediately ring a bell, how about “Budweiser,” “Stella,” “Artois,” or “Corona”? AB InBev is the producer of these popular brews that have been staples in the beer industry.
Though their beers are well-known and loved, the brand has begun investing in data-driven initiatives to improve the beer’s taste and the brand’s relationships with customers.
AB InBev’s first instance of machine learning is, SenseAI, which uses AI to help brewers improve the quality and flavor of the brews. Using real-time analytics, the system measures data collected during the brewing process. It then uses this data to ultimately predict the quality of the final product.
AB InBev is also using AI to build more sustainable relationships with customers. The legacy brand now uses machine learning with a system named ABCredit to help its customers (the distributors and outlets that sell its brands) determine how much stock they will need in advance (i.e. a type of machine learning called predictive analytics).
AB InBev’s global director of innovation, Andrew Green, told Forbes the brand aims to use the tech they develop to enable more customer success.
"It's a cool project that's taken inspiration from the financial services and fintech that we see out here in Silicon Valley … we're selling beer to retailers, but we're also looking to help our retail partners and customers build their businesses too,”
AB InBev is just one example of how brands can leverage their unique data not available to competitors to form stronger connections with other brands and partners.
L’Oréal Shows a Commitment to Tech
In order to keep up with new brands in the digital era, legacy CPG companies are investing in being the first to produce cutting-edge technology as they become more and more digitally-minded. L’Oréal — for instance — showed its ability to adapt by standing out with its commitment to seeking new technologies in the last few years.
Stepping toward a more tech-focused future, L’Oréal unveiled an “innovation center” in Paris in 2017. The state-of-the-art center was created to serve as a center for startups to pitch their brightest ideas. From artificial intelligence to augmented reality, all pitches were welcomed.
The grand prize? A chance to work hand in hand with the haircare legacy.
L’Oréal’s chief digital officer, Lubomira Rochet, says the brand focuses on innovation and supporting up-and-coming entrepreneurs and tech as a way to provide consumers with the new digital experiences they crave.
“We’re seeing a strong consumer appetite for digital experiences like virtual makeup, diagnostics, online beauty consultations, live broadcasting, and personalization,” said Lubomira Rochet, L’Oréal’s chief digital officer. “Open innovation supports the growth and development of new entrepreneurs and brings new ideas to our brands.”
As consumers’ wants and expectations evolve over time, brands will need to find new ways to satisfy those needs with new technology.
According to Accenture’s Shaping the Future of Retail report, CPG brands that invest in tech and digital advancements are likely to gain $2.95 trillion in revenue and efficiency savings (defined as value) over the next decade.
Whether it’s by improving the supply chain, anticipating demand, or using predictive analytics to better understand and anticipate customer needs, investing in the right data strategy will pay off for CPG brands in a big way. Lineate helps legacy companies re-architect their databases so it's easier to access and use. We also build data orchestration platforms to ensure marketers can find and reach customers — all from the same platform.
Let’s chat about how we can help your legacy brand connect more meaningfully with customers. Get in touch today.