On almost every front, the marketplace has become overcrowded. Growing competition, media fragmentation, increased product choices, and legions of socially connected consumers imbued with the power to make more informed purchasing decisions have all resulted in a customer engagement landscape that makes it extremely difficult to win brand loyalty.
Nowhere is this more apparent than in the state of the CPG marketing, and the new 2015 Catalina Mid-Year Performance Report on the Top 100 CPG brands has made this painfully clear. Most brands seem to be struggling to thrive in this environment and Catalina, a leading personalized digital media and customer loyalty agency, found that total sales volumes were nearly flat for the top 100 brands.
What’s more, 62% actually saw declining volumes.
After studying sales volume and loyalty changes of the top 100 CPG brands during a 52-week period that ended on June 30, 2015, Catalina found that total sales volumes declined 0.8%. More dramatically, however, were the performances of 62 of the top 100, which saw an average sales volume decline of 4.4%.
The study results also showed profound implications for brand loyalty, where in the average top 100 brand retained less than half of its most loyal customers. Beth Johnson, Catalina Executive Director of Special Projects, explained why this might be the case.
“Loyalty is a challenge for every brand and loss of loyalty via brand switching was certainly a major challenge to growth within the Top 100,” Johnson told Loyalty360. “Product proliferation is a key factor in losing loyalty. New products that are addressing evolving consumer preferences, mainly in healthier, less processed foods, are attracting the attention of consumers, who are responding with their wallets. One important response for CPG brands has to be to identify highly loyal shoppers and then reach those shoppers with relevant, personalized messages, and offers.”
Just as with brands in other consumer-facing industries, companies must remain attuned to the wants and needs of those customers who contribute to the majority of sales, or else they risk defection.
Catalina also found that 90 of the top 100 brands lost category share during the study’s 52-week period. What’s more, across all 14 mega-category segments in which the Top 100 compete, category growth significantly outpaced the performance of every brand.
The primary forces affecting the CPG landscape are increased media fragmentation, more product choice, and “brand shifting,” which is in reference to the number of consumers who abandon one brand to purchase the same category of product with another.
“It is becoming increasingly difficult to reach the shoppers who matter most to a brand in an era of media fragmentation, greater product choice and more diversified consumer preferences,” Johnson continued. “In response, CPG companies need to invest more in channels and media that can identify and engage the consumers most likely to care about their brand offerings and then they can measure the impact of that media by sales lift.”
The old rules of marketing have changed. All brands now exist in a dynamic environment that requires brands to find, adopt, and leverage a host of new customer engagement strategies going forward. In this way, the 2015 Catalina Mid-Year Performance Report presents a number of noteworthy findings that are curial for CPG brands to consider.
“These results are significant because they demonstrate the competitive challenges faced by major brands in today’s CPG marketplace, including the leading factors that are affecting sales volume,” Johnson concluded. “As a brand marketer, if you can pinpoint the drivers of growth, or declines, you can be more efficient in how and where you focus your marketing spend.”