Why FMCG Companies are Losing the Race for Customers
a new book by Peter Lorange and Jimmi Rembiszewski
The modern consumer is no longer attracted by single-minded, predictable and one-benefit-focused brand promises. The old-fashioned FMCG communication strategies based on television, radio and print with constant repetition have become outdated. From Great to Gone shows that what’s needed are ‘Lego’ strategies, whereby the marketing and communication strategies are built up by many key facets (like building blocks) and delivered to the consumer through a mix of various touch points. Most importantly, you need to leave consumers to put all of that together themselves.
There are major internal and external hurdles to transforming FMCGs successfully into FICGs – Fast Innovating Consumer Goods. It requires new brand strategies and flatter, more top-down than bottom-up, decision-making organisations and a 21st-century model for advertising agencies. Externally these companies need a new route to market through transformation of their old retail dependencies. Changes are also required in all communication delivery, reflecting modern consumers’ connectivity and unlimited access to information.
In the book the authors showcase what the winners of the 21st century have in common that has enabled them to become FICGs. New, unimagined models continue emerge, to which, with the authors’ guidance producers and retailers may develop their own sustainable responses.
Peter Lorange (l.) and Jimmi Rembiszweski
Why did you and Jimmi write the book, besides of the introductory statement that „it had to be written“?
Peter Lorange:A key driver/motivator for us writing this book is that while we observed that there was a new breed of consumers, now in the age of extreme computer literacy, many of the product offerings and the innovations remained as before. So, we wanted to write the book to stress that fast innovations today – often incremental – to serve the emerging new consumer is key. And, to communicate these innovations to them would be equally key – with modern web-based media playing a critical role.
Jimmi Rembiszewski: And, if you read the book, you will find that indeed most previously great fast moving consumer goods are struggling. They simply have no answers to the challenges of the 21st century. Clearly the “apples” and “facebooks” stealth march in consumer attraction and share of spending – and nobody has written about this.
You write that the biggest obstacle for innovation are established brand strategies. However, saying so you value marketing higher than the product. Is this approach not outdated, too?
JR: I agree, but our statement has nothing to do with prioritising product over strategy. For the past hundred years a proper brand strategy worked very well to define where and how to compete and what USP you needed. as you can see today this has become an obstacle and need to be replaced by a lego type strategy as we call it in the book.
PL:Indeed, if you say so. But as Jimmi says, we rather mean that key today is to identify the modern consumer, to innovate for him/her in a way that consumers shall appreciate and eventually communicate this to the consumers, typically via one-to-one, web-based communication. The result: You sell more, at a higher price, i.e. better bottom-line too!
Summarized: what is the biggest mistake an established FMCG-Corporation can make to be downgraded from great to good (or gone)?
PL: The biggest mistakes of established FMCGs: To discount, to hope to sell more – result, profitless growth, and not enough resources left for innovations, for cutting-edge products. This is a downward spiral!
JM: And that’s why they must change radically internally and externally. Mainly the entire value chain needs a radical review, regardless the shorter cost.
Don’t we overestimate consumers thinking that everybody wants its individual brand experience? We say: a Coke is still a Coke.
JM: Never can a consumer be overrated – only managers are overrated! The consumer gets more and more powerful. Not only in business but also how we see the political process changing with more power to the people as a result of the connectivity brought about by social media.
PL: definitely support Jimmi’s point of view, but with regard to your “Coke-methaphor”, perhaps yes. All we are saying is that what truly matters is to identify the emerging consumer – often relatively young, and relatively affluent. He/she is the one who should experience the brand – probably with relatively more focus on prestige, quality and ecological soundness.