Four CPG strategies to maintain brand loyalty

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By: Wise Marketer Staff |

Posted on August 12, 2009

Four CPG strategies to maintain brand loyalty

In 2008 the average brand lost one-third of its highly loyal customers, according to the recent 'Losing Loyalty' study conducted by the CMO Council and Catalina Marketing's Pointer Media Network.

But, according to supply chain solutions provider JDA Software Group, the news for brand marketers is not all bad, as there are several strategies that CPG companies can use to grow market share and regain customer loyalty, despite a slower economic climate.

For example, for CPG manufacturers and wholesale distribution companies, focusing on efficient promotions for both value-based and premium product lines, as well as leveraging the overall strength of the brand, has become more important in trying to acquire and maintain today's discerning customers.

David Johnston, JDA's senior vice president, suggests the strategies summarised below to help CPG firms increase their market share and improve their corporate agility so that they can more easily adapt when the economy begins to rebound:

  1. Grow market share with value-based products Today's CPG manufacturers must compete with the price points that are associated with private labels. Most manufacturers have a value-based product line in place but this line is often not as heavily marketed or promoted as premium brands. However, because of today's consumer buying behaviours, manufacturers have an opportunity to grow market share and even capitalise on consumers that are "trading down" to lower-priced items or private labels. By investing in efficient promotional strategies that grow sales within value-based product lines while keeping the overall price competitive, manufacturers can prevent customers from switching to another brand solely because of price.  
  2. Set promotional strategies to support premium brands While it's no secret that today's customers are placing a premium on price, that doesn't mean that CPG manufacturers should abandon premium brands completely. In order to maintain a differentiated product offering, and to be ready to capture customers as they head back toward higher-quality products when the economy picks up again, manufacturers need to keep consumers engaged in premium brands throughout. Promotion optimisation solutions can help to determine promotional objectives for premium brands and predict the impact that these campaigns will have on revenue, margin, and unit volume.  
  3. Adjust shelf assortments accordingly Daily insight into demand at the shelf level also helps to support value-based and premium brand promotions. Another key benefit is the ability to detect market trends as they happen, and to adjust inventory and shelf assortment plans accordingly. CPG manufacturers that have access to current sales and consumer demand data can more easily identify shifts in consumer confidence as well as increases in sales of core product lines. Armed with this information, they can create contingency plans to put stock lines back into production and begin discussions with retail partners to adjust shelf allocations.  
  4. Consider expanding into private labels For consumers, private labels present the opportunity to purchase items of the same (or at least approximately comparable) standard as big brands at considerably lower prices. CPG manufacturers can take advantage of current market trends and evaluate the possibility of collaborating with their retail partners to produce targeted lines of private label products. However, these manufacturers should also be aware that starting a private label is rather a delicate balancing act and must not cannibalise existing brands.

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