Jon is a Director in Ipsos Marketing, working with global FMCG clients. Jon has a broad range of experience, with expertise in NPD, Brand Innovation & Forecasting.
Consumer goods companies should look to strategies used in emerging markets to weather the economic storms, writes Jon Weeks, Director in Ipsos Marketing.
Whilst some markets are already bearing a huge strain of the economic crisis, others teetering on the brink of joining them on the slope downwards. Regardless of what the politicians think, say or do, consumers are thinking carefully about how they spend their money.
Consumer confidence measured across Europe in June shows a continued struggle. In the UK is currently 12% rating âcurrent economic situation as âgoodââ, with even lower scores in Italy (3%) & Spain (3%).
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âIf a consumer in Spain only spends 17 Euros (ÂŁ13.50) when they go shopping then Iâm not going to be able to sell them washing powder for half of their budget,â Jan Zijderveld, European President of Unilever commenting to FT Deutschland.
Strategies that can be employed are those used in emerging markets, where smaller pack sizes and single serve sachets are available. Unilever is already bringing these insights to bear on their business across Europe.
A single serve sachet to meet haircare / body wash needs â already a common strategy in Latam markets, for those on lower incomes personal hygiene. Not only providing the benefit of a smaller consumer spend for each sachet, this also generates the benefit that consumption is a measured experience â you can only use whatâs in the sachet, rather than overusing from a bottle.
Smaller pack sizes across categories â Unilever has also indicated that it is applying this principle across categories. Consumers can still enjoy the brands they are loyal to, avoiding issues of trading down. This can create complexities in rescaling the packaging, changing production lines, and adding another SKU to the portfolio.
However keeping a customer in the brand rather than losing them to a competitor is still best â they would be no guarantee they would return when personal circumstances change for the better.
A clear understanding of how a consumer shops the category is needed, coupled with the consideration of the frequency of shopping. For example, if your customers are typically stocking up on their goods once a week, then making sure you have a SKU that meets this need as closely as possible can target economical shoppers.
What is the lowest size you can go? Single serve is only viable in certain categories, but thinking about the smallest pack size you believe is viable, and exploring the opportunity with consumers.
But there can be an upside to this if it works, through the opportunity of increasing the number of brand touchpoints with consumers. How many times a week do you think a consumer actually thinks about your brand? More often than not, itâs likely to be linked to the need or occasion, rather than the brand in an in-home setting: âI want a coffeeâ.
But with the smaller pack and fitting back into the weekly shop, being memorable again and again is needed to make it back onto the shopping list. You donât want to be listed as just the generic. You want to be named on the list, and distinctiveness & substitutability are needed. For some products this is inherent, as Marmite is very distinctive it would make the list, but âyeast extractâ would not.
Promotions should not be the sole way forwards, whilst in these tougher times encouraging consumers to switch, or participate in multi-buy deals may not always work. Multi-buy will be flawed if consumers cannot afford the extra outlay in the first place. Getting embroiled in a promotions war will only lead to consumers only shopping on deal, switching brands more readily and commoditising the category, storing problems for the future as this is a difficult cycle to break.
With the pressure on wallets showing no signs of reducing in the near future, be a brand that understands the strain that consumers are under, and make sure you make their list.