The aim of this blog is to help readers understand and appreciate the various challenges that Brand Managers in the FMCG industry tackle on a daily basis when marketing and/or selling FMCG products. Let’s start with a quick introduction, followed by a swift overview of the challenges:
Investopedia defines FMCG as follows:
“Fast-moving consumer goods are products that sell quickly at relatively low cost. These goods are also called consumer packaged goods. FMCGs have a short shelf life because of
– High consumer demand (e.g., soft drinks and confections) or
– Because they are perishable (e.g., meat, dairy products, and baked goods)
These goods are purchased frequently, consumed rapidly, priced low, and sold in large quantities. They also have a high turnover when they’re on the shelf at the store.”
6 Common Challenges Brand Managers Face When Marketing and/or Selling FMCG Branded Products
- How to Create Brand Architecture and Establish Brand Awareness
Brand awareness choices are hard, and each carries its own pros and cons. An example of an initial decision to be made is to either go for an umbrella branding (think LG) or brand each product separately. The Brand Architecture (the science of how brands and sub-brands in a company’s portfolio are related to each other) of P&G pits Tide and Ariel against each other in the market, while both are in-house brands. The advantage of umbrella branding is that the brand credibility overflows from one product to the other – if you trust an LG refrigerator, why not go for an LG air conditioner. The con applies in the same way; if you didn’t like the fridge, you’ll wave the AC goodbye as well.
Branding each product separately involves more capital raising each brand off the ground. There is no parent brand to fire them up and boost their brand reputation. However, one is open to exploring new target markets and experimenting with the price range – there is no need to stick to any previous approach since the connection between the brand and the parent company is not established in the minds of the masses.
The challenges go much, much deeper than this, and there are many other ways to create a brand architecture, but we hope you got an overview of the tough Brand Architecture choice that Brand Managers make even before proceeding with multi-channel online and offline promotion for Brand Awareness.
- How to Establish Reach
Reach simply means if the product is available everywhere, at all times. Building great brands has to be complemented with a robust logistical infrastructure if the product is to contribute significantly to company revenue consistently.
Brand Managers work on huge datasets, conducting complex data analysis to set up the distribution flow while managing costs, and optimizing them wherever possible. A BM in a food-producing company will look at
- The total number of warehouses
- The total area of each warehouse
- The number of trucks available to carry the goods to the destination
- The holding capacity of each truck and its expected fuel usage
- The wages of the drivers and the cost of fuel
- Truck maintenance cost
- Other factors such as optimal routes and seasonality also come into play. Bear in mind that most of these calculations are derived through exhaustive data exploration; only some are readily available
Once the numerical values are achieved, Brand Managers proceed to identify cost and process inefficiencies and look at ways to plug them.
As Dwight D. Eisenhower, the 34th president of the United States of America, underlining the importance of reach, once said, “You will not find it difficult to prove that battles, campaigns, and even wars have been won or lost primarily because of logistics.”
3. How to Manage Price
Pricing is a sensitive issue. Underprice, and bottom lines go for a toss. Set too high a margin for the product, and you won’t be able to penetrate into new markets or sustain in the existing ones.
Pricing in FMCG depends on multiple factors, some of which are explained:
a) The demand for the product in the market and the customer’s willingness to pay for a particular product. The demand/willingness-to-pay price curve helps locate the optimal price peak w.r.t to quantity and w.r.t revenue generation as well. The customer’s willingness to pay is usually based on the price perception a customer has of the product
b) Existing market price – that of competition. This is one of the safest approaches to take when launching a new product in the market, for obvious reasons
c) The approach of the company also plays a part. Apple uses a price skimming strategy where it initially charges high but adopts lower prices as competition, say Samsung Galaxy, begins to enter the market. Conversely, we see streaming platforms adopt a price penetration strategy in the Indian market over the past few years, where they charged super-low prices for a wide library of content, and built upwards from there.
d) Managing price across channels is yet another challenge for Brand Managers today. The same product competes against different competitors on different channels, with customer behavior and expectation varying channel-wise too. Determining channel markups and avoiding price conflicts are subject to deep data analysis and exploration.
4. How to Manage Customer Experience and Promotional Strategies across Channels
Just like pricing, channel-wise CX and strategy management are heavily impacted by channels. Retail stores offer a completely different experience to the same customer as compared to a D-Mart or Reliance Smart. Smart cross-channel strategies are important to create a consistent brand experience for the customer, no matter where s/he chooses to interact with the product. Brand Managers create a budget and undertake a marketing campaign covering social media, website, paid ads, and more. It’s the whole marketing exercise that Brand Managers are responsible for.
Such cross-channel strategies go beyond simple brand awareness and product value communication; there are multiple upselling and cross-selling opportunities that need to be exploited.
5. How to Manage Product Life Cycle
Product Life Cycle is understood as the series of stages that a product goes through, right from being introduced to the consumer till it is discontinued. These stages are broadly classified as Introduction, Growth, Maturity, and Decline. Various models such as the Product Life Cycle curve and the BCG Matrix Model are used for product planning and control. Especially in FMCG where products are sold quickly and at lower costs, with limited and continuous distribution, is it very important to understand the stage at which the product lies in its life cycle, and devise a value-creation model for consumers that simultaneously generates revenue for the brand/s.
6. How (and whether) to Diversify Existing Brands
Capsule Case Study: In 2001, ITC found itself in a precarious position when the Government of India introduced stringent measures to curb the usage of cigarettes among the masses. This included the prohibition of the sale of tobacco products to individuals below 18 years and a ban on media advertising. Even surrogate advertising was banned. To diversify from cigarettes, ITC invested a whopping Rs. 5 billion in non-tobacco-related businesses in 2001, including Branded Packaged Food, Greeting Cards & Gifts, and Lifestyle Retailing.
A point to note is that ITC’s diversification strategies were operational since the 1970s, and the events in 2001 proved to be an immediate catalyst for ITC’s diversification approach. As the case stands, ITC’s revenue in Q1 2023 in the non-cigarette FMCG segment was Rs. 4,458.71 crore, a sharp rise from Rs. 3,731.40 crores just a year ago.
Brand Managers play an instrumental role in such change management strategies. This comes from exhaustive data exploration, analyses, hypotheses testing, and an understanding of ground-level realities. From primarily cigarettes to juice, biscuits, noodles and what-have-you, Brand Managers at ITC made sure that diversification strategies led ITC to not just survive, but thrive against many odds.
Conclusion
There are many other challenges faced by Brand Managers, like managing seasonal demands, improving the efficiency of marketing activities, handling Target Audience lifecycle, looking for ways to spread beyond original Target Groups, and more. Each of these activities demands that Brand Managers have a pragmatic outlook and well-honed data analytical skills.
We at Explorazor are making the lives of Brand Managers easy by allowing them to obtain one-stop access to their data. On Explorazor, Brand Managers can work on an integrated and standardized dataset that helps extract data cuts in seconds, allowing hypotheses testing at a much faster rate than what BMs are currently accustomed to. The time spent switching between tabs, sheets, and pivots is effectively eliminated, laptops process data much faster, and what’s more, everything is downloadable as CSV for further analysis. There are many other advantages for Brand Managers and Insights teams as well.
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