- CPG sales are expected to hit $1.56 trillion in the United States in 2021.
- Weak brand loyalty is one of the biggest CPG marketing challenges to overcome.
- Align CPG marketing strategies with consumer behavior across all channels.
CPG marketing (consumer packaged goods marketing) used to be comparatively simple. Tell people that 4 out of 5 doctors recommended a product and that was good enough for them.
But, consumers no longer care what four random doctors think about a product. Instead, they listen to their friends, read social media comments, or take inspiration from their favorite influencers. Or, they may check the recommendations from their preferred product review website.
A CPG marketing strategy that fuels organic growth demands that your marketing activities are aligned with consumer behavior. Do this across multiple channels, and you’ll produce a strong, sustainable marketing engine.
Read on to learn about the current state of the CPG industry, trends, challenges for brands, and how to create an effective CPG marketing strategy.
What are consumer packaged goods (CPG)?
Consumer Packaged Goods (CPG)
The consumer packaged goods (CPG) market includes everything consumers use on a daily basis that need to be replaced regularly. Some examples are cosmetics, food, clothing, and household products.
Defining the current state of the CPG market
Competition is fierce in the CPG market. In the United States, CPG sales are expected to hit $1.56 trillion, with the major players being enterprises such as Unilever, Kimberly-Clark, Procter & Gamble, Pepsico, Coca-Cola, and Mondelez International. Each of these in turn boasts a portfolio of well-known CPG brands.
In addition to established brands, DTC startups have entered the CPG market, hoping to lure customers away from legacy brands. These disruptors cut out the middleman and sell their products with reduced pricing while building direct relationships. Birchbox, Glossier, and Grove Collaborative are prime examples of DTC companies that have captured a share of the CPG market.
And while revenue is up, costs are also rising. For example, prices for commonly used food ingredients like butter, sugar, and grains increased by 15% in 2021. Packaging material costs are also increasing. As costs rise in the CPG space, expect competition to intensify. Less profitable brands will struggle to survive while more profitable brands seize more market share.
Marketing teams battle for consumer demand
Consumer packaged goods marketing is caught in a perfect storm that makes it incredibly challenging to reach shoppers.
Ecommerce sales are booming, consumer attention is scattered, and digital advertising costs are ballooning. On top of that, real-time demographic insights from big data marketing platforms amplify competition and make it harder for CPG marketers to cut through the noise. And, to put it mildly, there is a lot of noise.
It’s estimated that consumers see somewhere between 6,000 – 10,000 ads per day.
In the past, companies could focus the majority of their CPG marketing efforts on one or two primary channels. However, attention is now fragmented between social media, YouTube, TV, podcasts, streaming services, and other online and offline media.
Addressing weaker brand loyalty
Consumers have an abundance of choice in the marketplace, so it’s more difficult for companies to build customer loyalty. According to InMoment, 50% of loyal customers will choose another company that better meets their needs. Additionally, 55% of customers trust companies less than they did previously.
To top it all off, McKinsey notes that the COVID-19 pandemic made customers even more open to trying new brands if they offered more convenience or value.
If companies want to stay competitive in the CPG space, then they must address weaker brand loyalty. In many cases, there isn’t much difference between similar products produced by competing companies. A Nature Valley granola bar tastes pretty much the same as a Quaker granola bar.
The importance of consumer insights in CPG marketing
New products and initiatives cost hundreds of millions of dollars to implement, so it’s critical to gather and analyze data at each step. Failure to get customer buy-in can be disastrous, as Coca-Cola learned when they rolled out New Coke.
The value of customer insights goes beyond product development. It also extends into marketing.
Marketers must use hard data to understand how their customers behave and react to messaging. Here are some tools that can reveal customer behavior:
- SEO tools like Ahrefs and Semrush help brands see exactly what their customers are searching for online.
- Content monitoring tools such as Buzzsumo reveal the most popular and shared content online.
- Social media monitoring tools like HootSuite and Mention help you uncover what your audience is talking about online (and what they are saying about your brand, too).
- Audience intelligence tools such as SparkToro reveal the most popular websites, YouTube channels, and podcasts for a given topic (or for those who visit a certain website).
- Behavioral intelligence tools such as Decibel, FullStory, and Contentsquare shine a light on your site visitors’ experience while on your website.
Your CPG brand can take those learnings and create content that aligns with those interests. Analytics tools can reveal how well content performs with customers, providing further insights into what consumers really want.
Consumers embrace digital
Historically, brick and mortar stores drove the most revenue in the CPG market. However, this trend has shifted in recent years. Now, a greater percentage of consumers purchase CPG products online, both from DTC companies as well as larger companies that expanded their online offerings, like Amazon Pantry.
The pandemic only accelerated this trend, with many people preferring to order from the safety of their homes. McKinsey notes that 75% of consumers in the United States tried a new store, brand, or different way of shopping due to the pandemic.
This shift in consumer behavior has forced legacy brands to pivot their marketing strategies and has opened the door for less established brands to make inroads to an otherwise crowded market. Savvy digital marketing is now absolutely critical.
The power of digital for CPG marketing
Rihanna’s Fenty Beauty brand offers an eye-popping example of digital excellence in CPG marketing. The company launched merely four years ago and already generates more than $550 million in annual sales. The brand achieved 132 million views on its YouTube channel in its first month alone. The website also plays a major role in the business. It ranks for more than 119K keywords in Google and attracts approximately 1.9 million in monthly traffic.
And CPG brands risk losing market share to digital-centric entities if they fail to focus on digital brand building.
For example, the website Byrdie crushed the traditional players in the beauty industry when it comes to Google organic search. How? The brand consistently publishes high-quality, optimized, long-form content.
In a Terakeet study of 3,168 non-branded beauty industry keywords that account for 9,393,580 monthly Google searches, Byrdie had more Google market share than any brand or retailer selling beauty products. The publisher surged to 1st overall in Google organic market share in the makeup market, for example, by growing its share by 5.7X from February 2019 to February 2021.
Achieving digital excellence
Simply put, digital is quickly becoming the new normal and CPG brands need to fully embrace the shift in consumer behavior.
The shift forces CPG brands to pursue digital excellence across the board. Buyers expect a cohesive, seamless omnichannel experience when interacting with brands, whether that’s on social media, through email, on a website, in an app, through a chat bot, etc.
Brands who fail to provide an outstanding digital customer experience will lose market share, especially with Millennials and Gen Z, who tend to be tech savvy and much more comfortable buying online than older generations.
In other words, brands must fully invest in digital transformation or they risk becoming obsolete.
Defining your CPG marketing mix
Now that you have an overview of current cpg marketing trends, let’s look at defining your CPG marketing mix.
Search engine optimization (SEO)
As we noted with Byrdie, SEO can be a tremendously effective CPG brand marketing strategy, even for newer brands that don’t have the established reputations of legacy brands. With so much of the awareness, research, and education stages of the buying process occurring via Google, SEO allows brands to be present at every stage of the buyer’s journey.
SEO is also extremely cost effective when compared to paid media. Google even acknowledges that SEO has an ROI of around 5.3X, compared to 2X for paid search advertising. If you’re looking for a low cost of acquisition and compound returns, you need a well-defined SEO strategy.
CPG content marketing
Complementary to SEO, content marketing helps you connect with potential customers throughout their journey. As seen in the content marketing examples above, this strategy also helps you capture online market share.
However, it’s critical to think of the value exchange when creating new content. In other words, it’s not about quantity, it’s about delivering as much value as possible to your target audience.
And don’t get bogged down in the bottom of the funnel. Expand your content strategy to include the awareness and consideration stages as well. Then, after you publish and optimize your content for organic search, amplify, share, and promote it to your audience!
Paid media is a quick way to get in front of your target audiences. In terms of paid media, you have a variety of options, including:
- TV advertising
- Paid search
- Display advertising
- Sponsored content
- Social media ads
- Magazine advertising
- Podcast ads
- YouTube ads
- Native advertising
- Celebrity endorsements
Paid media can be especially useful when used in conjunction with something time-sensitive and short-lived, such as a limited time offer, new product introduction, specific marketing campaign, etc.
With such a large portion of the world’s population involved, social media should certainly be included in your CPG marketing mix. Start by identifying the social media platforms your audience uses most. Boomers and Gen X tend to prefer Facebook, while Millennials and Gen Z tend to gravitate toward Instagram, Snapchat, and TikTok.
Once you’ve identified your primary platforms, begin actively engaging with your audience. Share content that’s relevant and valuable to them and not primarily focused on your products. Respond to comments and address any issues that come up. The most effective brands know that social media is a two-way street.
Even with the increasing shift to online shopping, in-store promotions are still an effective marketing strategy. For example, paying for in-store end cap displays can help your products stand out among the sea of competing and non-competing products all around the shopper. Anything you can do to have a more effective shelf space is typically worth it.
Another effective in-store promotional idea is sending a coupon code to customers that must be redeemed in stores. If a person is willing to go to a store in person, you can be almost certain that they will purchase the product. And as an added bonus, in-store shoppers are more likely to buy additional products while they’re in the store.
Mobile promotions that can be added to a digital wallet (like Apple Wallet) allow CPG companies to engage with consumers in the place where they spend a huge amount of their time: their smartphones.
Not only do these types of promotions allow CPG brands to create highly targeted messaging directly for the customer, if the customer saves the offer to their wallet the brand can trigger personalized notifications based on factors such as a specific time or location. And if the promotion is redeemed, the coupon can then be automatically marked as expired or dynamically updated with a new one, creating ongoing conversation between the brand and the customer.
Co-marketing allows brands with similar audiences to combine resources and benefit from exposure to the partner’s audience. For example, Red Bull and GoPro teamed up to create videos that combined Red Bull’s extreme sports footage with GoPro’s action cams, resulting in millions of views.
CPG brands that team up with other brands for joint marketing campaigns can reach a greater number of people than they could on their own. It’s essentially the opportunity to double your audience for the same cost.
Influencers can help a CPG brand achieve a more personal connection with the target audience, making the individual feel like there is a real person behind the brand. Influencers are able to promote products, share sponsored content, or collaborate with brands in a way that feels more like a genuine recommendation of the product than a message directly from the brand.
Industries that rely on visual appeal, such as beauty and food, can especially benefit from influencer marketing since so much of it happens on social media platforms.
The collaboration seen above between DJ Khaled and Stride gum is a good example. As you can see in the video, DJ Khaled gives the gum a personality and brings the brand to life through his channel takeovers.
And don’t feel the need to work with only mega celebrities. It is often more effective to work with smaller influencers. Although they may not have the same number of overall followers as someone famous like DJ Khaled, their audience will likely be more engaged and loyal.
Online communities can be an excellent way for CPG brands to engage customers and build loyalty. They offer a place for members to share expertise, recommend products, and engage in discussion around various topics of interest.
Communities also provide brands with the opportunity to engage with their customers on a regular basis and respond to any issues that arise.
Glossier is a prime example of a CPG brand building a highly engaged community that cares deeply about its products. Though they have millions of followers across multiple social channels, they constantly engage with their audience. They respond to comments, create hashtags for fans to use, and even invite followers to suggest future consumer products.
For all you dog lovers, Blue Buffalo is an example of a dog food brand that developed an app for its dog loving audience to connect and build relationships among the community members. The app also enables dog owners to connect to vets as well as to ask trained staff questions about Fido.
CPG Marketing spend optimization
Initially, your marketing spend may focus on driving immediate returns, like paid media and time-sensitive discounts.
Over the long-term, however, you want to optimize your spending so that you’re investing in those things that have the highest ROI, such as SEO, content marketing, and community building. These are CPG marketing strategies that may not have an immediate payoff, but produce consistent and compound results down the road.
The CPG market is crowded and competitive. And your audience’s shopping behavior has been drastically impacted by the pandemic. If you want to succeed as a strong CPG brand, your marketing needs to cut through all the noise and stand out. It needs to be agile, and adapt to the times. Your brand should be allocating its budget not only for what will move the needle today, but also for what will build a strong brand over time.
CPG marketing FAQs
Brands will spend an estimated $1.56 trillion in the U.S. on CPG marketing in 2021.
The most impactful CPG marketing channels include SEO, PPC, social media, mobile promotions, and influencer marketing.