brandcentric blog

Will consumers habitually buy and replenish non-perishable food, household cleaning and HBA items online, en masse?  That’s the question the founders of Alice.com asked themselves when thinking through their business model.  I think the answer is definitely maybe.

It all comes down to assortment, convenience and price.  Fulfill these three wishes and a segment of the population will happily work with Alice.com as their go-to source for non-perishables.  I honestly can’t see my parents (mid to late 60s) using this service, nor my sister (married w/ 2 kids, but traditional bricks retail shopper) logging onto Alice to reorder some Tide laundry detergent.

But my household (and hundreds of thousands of households like mine) could be all over this.  For example, just last weekend we ran out of diapers for our 6 month old.  Late on Saturday night we placed an order for Pampers diapers and Pampers Sensitive wipes on Diapers.com.  What a pleasant suprise to see the Diapers.com delivery box sitting on our doorstep first thing Monday morning as I left for work.  Talk about convenience.  And it’s tough to beat the price of diapers on Diapers.com.   The assortment of products is good too.  The service works well, is cost-effective and allows us to try new items when we want to.

But how can Alice.com support free shipping for relatively low ticket items?  That’s where the CPG marketer value proposition comes into play.  Reality is that CPGs like P&G aren’t banking on channels like Alice.com to drive big volume today.  The real near-term power of this channel is to establish direct connections with consumers and, more importantly, drive a deeper level of shopper insight.  Behind the scenes of Alice.com, I’d suspect, is a pretty sophisticated set of shopper behavior engines that mine deep, detailed consumer insights and reports.  At scale, these insights could be pretty valuable to big CPG brands to better understand shopper behavior and propensity to buy through a new channel of distribution.  For this insight, consumer products manufacturers may happily subsidize the “free shipping” offer that is so attractive on Alice.com

Should be interesting to see how this service does – both in terms of consumer adoption and CPG advertiser support!

Brett Goffin from Google spent some time with Bob Houk, Executive Director of Trade Promotion Management Associates (TPMA), discussing how and when the trade promotion discipline will adapt to the digital world.  Some very interesting opportunities for sure.

As Bob and Brett discuss, the trade promotion discipline is deeply rooted around driving value for both trading partners — manufacturers gain more prominent placement for their products, while retailers monetize lucrative in-store marketing vehicles.  This fair trade has taken place for at least the last century, and even more recently both parties have doubled down their investments to scale shopper marketing initiatives.

But taking this a step further, how do multi-channel retailers monetize available trade dollars in their online storefronts?  Will manufacturers realize the same value from a “virtual” end cap as they do for a physical end cap?  The industry consensus points to a resounding “yes”, and this model is starting to take shape.  Don’t be surprised to see a case study or two on this subject at an upcoming TPMA event.

For a primer on trade promotion marketing, an overview of  Bob Houk and the TPMA, and a quick history lesson on the Robinson-Patman Act, check out Part I of the video series.

This is a clever little application that I can actually see providing value to busy families on the go.  A recent writeup references an iPhone app and BlackBerry app are also available for added convenience.  This quote from the Charmin brand manager pretty much sums up the strategy for sitorsquat.com:

“Our goal is to connect Charmin with innovative conversations and solutions as a brand that understands the importance of bringing the best bathroom experience to consumers, even when they’re away from home,” says Jacques Hagopian, brand manager for Charmin.

Excellent!

I’ll come right out and say that I am an avid supporter of points-based rewards programs for CPG brands.  If planned and executed properly, rewards program can reach your most valuable consumers and measurably drive incremental volume.  At SoftCoin, we designed and implemented a number of highly successful rewards programs for Welch’s, NASCAR, Nestle, DPSG, P&G and others.  These programs were engaging, reached a mass market audience, and were rich with data and insights.

But for any CPG marketer pondering a points program, there are three things you’ll want to make sure you really get right: optimizing purchase validation, assembling a solid rewards catalog and mining the database.

The most scalable method to validate purchase is via secure, on-pack alphanumeric codes.  Sure, there is an up-front capital investment in equipment to apply the codes (~$25k to $100k) and there will likely be a short-term disruption to the production line, but this is really the way to do it.  The MyCokeRewards program has been using secure on-pack codes for 3+ years now, so the business case exists.  Other methods include tracking purchases through a store club card (doesn’t scale beyond that one retailer) or via credit card data (bad if you are strong in C-store distribution given the bias toward cash transactions).  And whatever you do, don’t digress with mail-in UPC code redemption.

The rewards catalog must be relevant and compelling to get your best consumers excited about participating.  There should be a mix of digital asset rewards (music, special content) and some cool aspirational prizes.  There should also be enough redemption opportunities to keep consumers engaged, without breaking the bank so to speak.  NASCAR offered a highly coveted “pit crew captain for a day” reward that money simply can’t buy along with a number of other lower level digital assets.  Talk about resonating with a core audience and really driving consumption.

Finally, solid analytics and segmentation are essential to getting the most out of these programs and driving the right behaviors.   Big CPG points programs can easily attract 2 million+ unique / authenticated consumers, so expect to see a broad array of behaviors.  A core set of heavy users (as measured by code entries and/or self-reported survey response), will sit alongside a  long tail of single code entry consumers.  Developing the right analytical framework to reward heavy consumers for their loyalty and encourage casual consumers to buy more is essential.  Brandweek recently highlighted that loyalty program participants are 70% more likely to actively recommend a product, so segmenting and supporting the brand champions is key.

Web-based loyalty programs are excellent vehicles for CPG brands to drive, measure and reward consumer behavior.  If designed properly, these programs can deliver profitable results.  Just pay attention to these three key areas before moving too far down the path of execution.

This is a great presentation on digital promotions and the role they play in the marketing mix for CPG brands.  The key takeaways here that I have also observed from own experience include:

1. Now more than ever, consumers are responsive to online promotions.  All the data I have seen supports this reality.

2. Integration, integration, integration — into the broader media plan, into mobile, via social media, onto packaging.  The digital promotion carries the conversation beyond the initial dialog.

3. Online promotions can be messy and wrought with legal complications.  Hire a good promotion attorney to keep you out of hot water.

Thanks to Team Digital for posting this to SlideShare.