How Data-Driven FMCG Brands Enable Price Resilience and Revenue During Hyperinflationary Periods

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Typically a non-issue, inflation is now a pressing concern for top management.

 

According to J. Walker Smith, Chief Knowledge Officer of Kantar, less than 40% of the CEOs surveyed in the Conference Board of Global CEOs said their companies are “well prepared” for an inflationary marketplace. 

 

While there is a large risk for consumers to switch to cheaper alternatives, the increase in input costs is too huge a burden for most companies to simply absorb.  

The truth is that retailer house brands become stronger in this inflationary period. Over time, they have become serious competition for your products, having invested resources to improve quality and consumer benefits.  

But to make the right business decisions, you need data, particularly customer data. This makes data collection a compelling priority for FMCG leaders.

 

This article articulates the key reasons why data-driven organizations will win and, in the process, become a price-resilient brand.  

Customer Insights Enables Strong Performance Marketing ROI

Collecting data gives you the ability to segment customers. You can identify your most profitable customers and reward them with personalized offers and experiences.

 

Conversely, you stop serving unprofitable customer segments and redirect resources to promising segments.  

In an inflationary environment, consumers become brand agnostic and switch towards cheaper alternatives. Retailers have been investing heavily in their house brands over the past decade, making them real threats to your brands.  


That is why making data-driven promotions and pricing campaigns prevents consumers from switching. Optimizing promotions and pricing are a key part of your revenue and brand equity strategy. 

Amazon recently launched a new service called Store Analytics which highlights the need for customer insights to optimize promotions and advertising. 

Customer Insights Facilitates the 1:1 Relationship your Customers Crave

An Oracle study suggests that 86% of buyers will pay more for a better brand experience but only 1% feel that companies meet their expectations. Collecting customer data allows for a more personalized and better customer experience.

 

This granular and deep understanding of products and customers gives you a better chance of consumer retention and sales growth. 

The challenge right now for FMCG brands is to ensure a frictionless omnichannel experience. Most consumers start their research online before purchasing the product in the physical store.

  

This means your brand should be able to identify these faceless offline customers through a robust customer data collection system which facilitates that relationship building that your customers crave. 

 

Having these critical first-party data allows you to have that 1:1 customer engagement. Consumers will always choose the brand they feel connected to. 

Nespresso is a fitting example of a business that collects and uses first-party data effectively. Each sale is linked to a specific user and allows them to do targeted performance ads that get them superior ROI on their performance marketing.  

Real Time Data Collection Enables Business Agility in a Highly Competitive Industry

Through real-time data collection, you can figure out the price points and promotional activities that your customers will be keen on. These optimized marketing campaigns create capital efficiency resulting in a strong ROI.  

Data collection is a strong enabler for your business as it broadens your marketing and advertising channels. The insights you derive from it allow you to move customers down the purchase journey faster and increase the customer’s lifetime value. 

 

You get a clear sense of how individual products are doing, allowing you to make the correct adjustments in pricing and promotions. You can improve the average order value per customer and implement personalized promotions driven by past purchases data. 

You can easily move to spaces where your customers are spending considerable time

 

For example, the growth of WhatsApp to over 2 billion users globally has created hundreds of brands having their own WhatsApp communities allowing these brands to go direct to customers.  

Diversify and Establish Control Over Your Distribution Channels

Getting in-store transaction data offers an opportunity to improve your distribution channels. This is a strong defensive measure because it allows you to sell across different channels, lessening your reliance on one specific sales channel and being at the mercy of retailers.  

 

An example case study would be Olaplex. They sell across various sales channels including major retailers like Sephora.

 

At the same time, they also sell through their website which gives them full access to the buying habits of their customers.

 

When they launch new products, Olaplex sells first on their website before releasing it to their other sales channels. They also partnered with salons to help drive brand awareness.  

You can determine your top revenue-generating channels and channel more budget into those profitable distribution networks while phasing out the poor-performing channels.

 

This allows you to maximize revenue and take control of your finances through data rather than relying on hunchs and intuition.  

Knowing exactly which retail channel works for your brand is a straightforward way to grow your margins and ensure market leadership because you will be able to do targeted promotions catering precisely to that retail channel.

 

It is better to concentrate on your profitable sales channels rather than be everywhere and diluting your revenue maximization capability in the process.  

Product Innovation as a Path to Price Resilience

Finally, it is imperative to work on product innovation. Innovation allows for differentiation and helps achieve price resilience.  

 

By collecting in-store data, you can consistently adjust your product pipeline based on changing consumer behavior and attitudes.

 

Whether customers are looking for value or premium products, the data you collect will help you make the right decision so you can protect market share and profit margins.

Cetaphil is the go-to-brand for skin care products for consumers with sensitive skin. In this segment, there are few competitors for Cetaphil.

 

This differentiation means they do not have to compete on prices and allows them to maintain their premium feel.

 

Cetaphil was able to rise from 4th to 3rd place in popularity behind CeraVe and Neutrogena.

Olaplex was listed in 2021 and was valued at $15 billion soon after. JuE Wong, the Olaplex CEO, believed in letting consumer data drive innovation.  

 

Collecting data is all about being consumer-centric. It gives you the opportunity to offer superior products and experiences which leads to the creation of brand advocates.

 

Brand advocates go all out for your brand and serve as powerful support during an inflationary crunch.  

The Future Belongs to Data Driven Organizations

This will not be the last time we will have high inflation. Take the first step to becoming an inflation-resilient organization by investing in customer data collection. Mine it for insights that lead to innovative products and market leadership.  


In this digital economy, data-driven companies win. Think Amazon.  

The FMCG Marketer's Guide to First-party Data Collection

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