Will CPGs gain loyalty from customer-centric efforts?

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By: Wise Marketer Staff |

Posted on September 14, 2006

Our friends at Colloquy have just published a white paper that explores how consumer packaged goods (CPG) companies are harnessing the power of loyalty marketing, explaining the obstacles these marketers have to overcome in shifting from mass advertising to more customer-centric marketing.

The 19-page report, entitled The Total Package: Do You Really Want a Relationship with Your Beverage Brand?, was co-authored by Kelly Hlavinka and Colloquy Network partner Leopoldo Gomez from GomezLee Marketing in The Dominican Republic.

Why such little progress?
According to the paper, the CPG industry has often been the "odd man out", even as brands in nearly all industries around the world have pursued loyalty marketing as a primary tactic.

Is it, the authors ask, because the CPG industry views the retailers who sell their goods as their primary market, rather than the consumers who actually use them? Or is it a lack of concern for the consumer? Or perhaps a lack of focus, a lack of expertise, or all of these factors?

The Nestle example
The report provides examples of CPG loyalty and relationship marketing efforts, and Nestle's Latin American and Caribbean region is profiled for using loyalty marketing techniques to reach out to individual customers with a programme centred on mothers, children, health, wellness and diet.

The report highlights that Nestle's relationship marketing efforts have actually brought about a lot of customer feedback, and are turning engaged customers into brand advocates.

Two main models
Citing examples of CPG loyalty efforts from Procter & Gamble, Tazo Tea, Huggies diapers, Moet Hennessey, Maker's Mark, Purina dog food and others, the paper outlines two main models that CPG marketers are pursuing, each with their own approaches, levels of investment, and possible outcomes.

  1. Relationship model
    The relationship model seeks to engage the CPG brand user in a direct, continuing dialogue with the mutual expectation of gain. The value proposition focuses on delivering relevant dialogue with tangible value - and that value is defined by the consumer, not the brand positioning. In exchange for this value, the consumer grants permission and volunteers information. Consumers respond to the programme stimulus by maintaining and/or modifying their purchase behaviour in favour of the brand sponsor - although measurement can be challenging. The intent of this model is to identify existing users and turn them into brand loyalists, collaborators and advocates.
  2. Retail-centric model
    The retail-centric model recognises the importance of the indirect sales channel and seeks to leverage the measurement ability of retail partners to identify, maintain and increase the yield from the CPG brand's best customers. The value proposition for the consumer is the same, although the tangibility of the value received is typically more economic and rational than emotional. In return for this value, consumers allow retailers to track their purchase behaviour, even though they are rewarded by the sponsoring brand. Increased share of customer in the given category, and potential insulation against brand defection, are the probable outcomes.

Download the paper
The white paper has been made available as a free download from the Colloquy web site (registration required) - click here.

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