Would CPG Brands Compete with their Own Channels for Customers?

AdAge writes an interesting article about going beyond online ads to eCommerce opportunities for CPG brands. Will it pay off? Services are easier to deliver online. A few product dot-bombs in the early 2000s made us keenly aware of that.

One of the companies mentioned in the article is Alice.com. Their model is to connect customers to companies directly. But this is not their main story.

According to Rebecca Thorman, PR and communications manager, the secret sauce behind the consumer value prop is what they offer to consumer packaged goods (CPG) manufacturers. CPG manufacturers are faced with the growing challenge of how to connect and interact with consumers in efficient, targeted and value-added ways. 

Retailers (like Target, Walmart, etc.) account for such a large portion of CPG sales - and hold all the data - that manufacturers are in the dark about who exactly they should be targeting. The retail "middle man" knows exactly what consumers want (and profit from it with private label brands), while manufacturers spend billions of dollars on advertising and marketing to figure it out.


Ms Thorman says that with Alice.com, manufacturers are now able to acquire the consumer data and insight they need for product development, marketing strategy and loyalty programs. Programs such as electronic couponing, sampling, focus groups and targeted offers help manufacturers reach out in the most efficient way to the correct audience. With such clear insight into consumer behaviors, Alice is able to disrupt the traditional retail market:

1) Alice provides an open platform for consumer packaged goods (CPG) manufacturers to sell directly to consumers
2) Transforms mass-market advertising dollars into direct consumer value
3) Gives CPG manufacturers highly targeted ways to reach consumers and personalized relationships


Will the value prop move the needle for P&G? The techniques used to acquire the consumer data and insight they need for product development will have to conform to future FTC and legislative guidelines.

How will this impact P&G's expectations? We won't know until long after the rule making - once it's been tested in court. Of course, in online terms, that's an eternity. The new FTC disclosure guidelines are one thing. There's a ton of privacy legislation in the pipeline, too. That could impact the industry's primary advantage over mainstream media: objective metrics.

What concerns me about this scenario is that if regulation becomes too cumbersome, the small operators will disappear, thus leaving only large companies - and that’s not healthy, either. The ideal world would see a balance of privacy and regulation.

The fundamental question P&G raises at this time is whether their online activities would compete with those of its retail channel. Their online investment will need to pay off to continue and with the regulatory challenge all online businesses will be facing, it may be indeed a tough road to profitability.

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Read more of Valeria Maltoni’s Customer Conversation

Valeria Maltoni helps businesses understand how customers and communities have changed marketing, public relations, and communications - and how to build value in this new environment. As a communicator with 20 years of experience, 10 of which online, she specializes in marketing communications, customer dialogue, and brand management. Valeria has come to define modern business as a long and open conversation. Conversation Agent is recognized among the world's top online marketing blogs.

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