Kellogg’s advises CPGs to differentiate online
Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.
Store-based consumer packaged goods companies need to make online direct-to-consumer (D2C) a pillar of their brand strategy, but should focus on highly-differentiated value propositions, according to Chris Perry, senior director of e-commerce for Kellogg Company.
In a presentation at the Path to Purchase Summit in Schaumburg, IL, he listed the “right reasons” for a CPG brand to consider D2C e-commerce: Long-term growth; test and learn; build capability; innovate and launch platform; and data ownership.
He noted that D2C models have already been launched or are being planned for launch this year by 44 percent of CPG companies, and e-commerce is projected to deliver 50 percent of CPG growth through 2025.
But the right approach matters. Launching a “me-too” e-commerce model that directly competes with existing e-commerce retailers can be risky. Although it may be good for long-term leadership, battling competitors on their terms within their preferred model may lead to some losses.
“Joining forces” by partnering with existing e-commerce retailers and marketplace platforms, according to Mr. Perry, is good for short-term growth and capability-building, but the downside is that it requires conformity to others’ models with increasingly limited control.
His foremost advice for CPG vendors is to “change the game” and launch a disruptive model on your own terms that is optimal for long-term leadership, competitive advantage and “challenger brand out-maneuverability.”
As an example, he noted that Bear Naked, a granola bar and ready-to-eat cereal brand owned by Kellogg, enables consumers to customize their granola mixes online. The mixes are packed in 11-ounce canisters and shipped free of charge.
“With test-and-learn initiatives like Bear Naked Custom-Made Granola, Kellogg’s is ‘changing the game’ by testing unique value propositions and best-in-class brand experiences that Kellogg uniquely can offer to its consumers,” he said.
Beyond customization, CPG brands can stand out with their own sites by offering exclusive assortments, educational content, customer reviews, consultations, rewards programs, tie-ins to social causes or a focus on customer service.
His final words of advice: “Customer service and delight drives loyalty. You need to be the leader. Don’t let your competitor sign up first.”
DISCUSSION QUESTIONS: How would you rate the direct-to-consumer (DTC) online opportunity for CPG brands? What advantages may CPG brands have over retailers in delivering rich e-commerce experiences?