The Rise of Blind Spot Marketing Channels in 2018
Published March 19, 2019
In years past, Consumer Packaged Goods (CPG) brands have treated their marketing processes as an afterthought, because most packaging happens “behind the scenes” before the products land on store shelves. However, as consumer needs evolve, trends have shifted—and digital marketing strategies, which used to be industry-optional, are now a necessity. The majority of CPG and secondary packaging manufacturers were not prepared for this drastic shift, which contributed to the rise of unanticipated blind spot marketing channels.
In the CPG industry, a blind spot channel is an area of consumer marketing where relevant details and opportunities are largely overlooked, giving new companies a chance to rise and fill the proverbial gaps. These blind spots are evident in a number of erroneous decisions, from a poorly-planned campaign that unintentionally cuts off an entire potential consumer market to a marketing plan that focuses too much of its funds on R&D. In order to be fixed, these blind spot marketing channels must first be seen. We’ve compiled some helpful information on practical ways CPG brands can overcome these substantial shifts in consumer behavior and the resulting blind spot channels we watched develop last year.
Identifying the Consumer Shift
The rise of blind spot channels is the result of a combination of social and economic factors primarily expressed in consumer demand for lower prices and more convenient purchasing options. As high as 90 percent of the top CPG brands experienced losses this past year, with the exception of fast-moving, online CPG brands: these saw sales increased by 32 percent, according to a recent Nielsen study. Due to this shift in consumer behavior, an increasing number of stores are choosing to channel funds into providing more private label goods and more affordable products.
Unlocking the Potential of Unmeasured Channels
With growth slowing in measured channels like food, drug, and convenience outlets, companies are turning to unmeasured channels such as natural foods, e-commerce, and local markets. As consumer purchasing behavior shifts, these unmeasured channels are seeing significant growth—for example, the natural channel grew 8.9 percent in 2017. Changing consumer mindsets suggest that these unprecedented shifts are coming at the expense of measured channels as consumers seek more local, affordable, and convenient products. As the CPG industry continues to evolve, breaking into these unmeasured channels may just be the key to growth in 2019, and beyond.
Tapping Into the Potential of Convenience
Opportunities to increase profitability are everywhere if one knows where to look. And right now, CPG brands should be looking to the companies who are already capitalizing on shifting consumer needs. The monster CPG retailer Amazon rose to the occasion and increased its market share by 2.1 percent in a twelve month period (ending June of 2018). The key to the success of adaptable CPG retailers in an otherwise descending market is the ability to see the blind spots traditional CPG retailers are missing. Ecommerce growth isn’t slowing down any time soon—in fact, it can only increase from here—and consumer demand for more affordable goods will follow. In order to keep pace with the constantly evolving demands of consumers, companies can take cues from the success stories of businesses like Amazon.
As more companies begin to organize CPGs for ecommerce platforms, name brand recognition has become less of a deciding factor in the consumer processing path. Case in point: Private label-dominated companies like Aldi and Trader Joe’s saw sales increase by 11.7 percent from June 2017 to June 2018. The market is fractured—smaller CPG companies can now compete on a more level playing field, thanks to the explosion of ecommerce business and the willingness of consumers to trade big name brands for more affordable store brands. The most important takeaway here is that consumer needs are diversifying, and the old methods of doing things won’t cut it moving forward. As companies resistant to change and eternally blind to key marketing channels begin to fall by the wayside, new, more nimble, innovative players will be ready to step in and meet previously unmet needs.
Know Your Blind Spots are Covered in 2019
As providers in the CPG industry, it is vital to maintain flexibility and take a chance on changing in an ever-evolving consumer climate. As we learn to identify and evolve with blind spot marketing channels, the CPG industry will be better prepared to move forward confidently, eager to join the demanding ecommerce market in 2019. Want more tips on how to succeed in the CPG industry? Check out our blog, or contact INSITE today.