written by
Anthony Miller

Digital Transformation for the CPG space

6 min read

Everyone goes digital. That’s the new normal now. If you are the famous barbershop around the corner and you don’t want to lose your usual customers, you should go digital. Or if you are selling carrots in your local market, you should undergo a digital transformation, too.

Why go digital?

Because people hang out online a lot more these days than they used to do a few years earlier. New data from USC Annenberg (PDF) about the digital lives of Americans state that the average American spends 24 hours a week online.

digital transformation

So, if CPGs want to follow customers wherever they go, they need to be ready for a digital transformation.

What is a CPG?

Let’s define CPGs first. CPG stands for consumer packaged goods. It’s an industry term for merchandise that people use up and replace frequently. Some examples of CPGs are food, beverages, cosmetics, and cleaning products.

digital transformation
Photo by Akshay Chauhan on Unsplash

Many of these products are really routine things that have been around for centuries. However, while brands may be the same, the market is not. The market is changing rapidly. People are finding new places to hang out online. Consumer habits and needs are changing really fast. That’s why CPG businesses might need to re-evaluate the situation to get more out of their interaction with customers.

CPG businesses have used quite a lot of traditional advertising tactics in their messaging. Let’s take Coca-Cola Polar bears commercial as an example. They had a series of cute TV commercials which was fine a few years ago.

Coca-Cola Polar bears commercial

But is this going to work now?

Well maybe. But the channels of delivering your message have doubled now. Now, you have e-commerce websites, social media channels like Twitter, Facebook, Instagram, Snapchat, you have different kinds of messengers like WhatsApp, Viber, Telegram, you have display advertising, etc.

With this in mind, it’s crucial to be able to spread your brand messaging across all possible channels both offline and online.

How to go digital?

There are a lot of answers to this question and a lot of steps to take to achieve the goal of digital transformation. You can start small, or you can think about a design, development and marketing budget and launch a fresh new CPG campaign online.

In any case, you have two things to start with:

1. Create a unified engagement strategy that includes social media, e-commerce website, IoT, mobile app, etc.

As a CPG business, you want to create a better user experience and build a loyal customer base. To do so, you need to think about a unified strategy that includes all those different channels like social media, microsites, IoT, mobile apps, a brand website, etc.

If these channels work together, they will help you get more targeted brand interactions. This way, you will be able to track user behavior and create a better user experience.

Of course, you might face a few challenges on your way. For example, it might be hard to determine the exact customer identity. A single person can have a Twitter account, a LinkedIn account, a Facebook account, Instagram, Snapchat, etc. It can get hard to keep track of all these digital identities.

digital transformation
Photo by NordWood Themes on Unsplash

People create and delete accounts or simply leave their old accounts. CPG businesses need to think about a way to track real users in real time without getting trapped in the web of digital identities.

2. Think about digital architecture: design and development

Strategy is one thing, implementation is another. You can, and you should have a unified digital strategy in place, but you should think about its implementation as well.

What does this mean?

First of all, it’s about the right design.

Do you need random design work? No!

Do you need consistent design across all your digital platforms? Yes!

So, you basically need UX and Visual design.

If you want to do a digital transformation, you should make sure that people recognize you. There are a few ways they can recognize you and those are the following:

  1. Through your visuals
  2. Through your messaging

So make sure you respect these two and keep them consistent. In addition, design should go hand in hand with development. Your brand website or mobile apps should reflect your messaging and your brand identity. So make sure to hire the right design and development team when you decide to take your CPG company digital.

3. Make use of emerging technologies

AI is sexy. You can hear the word combination “artificial intelligence” in nearly all kinds of startup pitch events. And the truth is AI or machine learning can actually help CPG businesses in their digital transformation. For example, integrated IT systems have helped smart factories to increase their production capacity by around 20%.

Big data analytics can actually help CPG businesses increase their product success rates and deliver personalized services.

digital transformation

Another direction CPG businesses can go in order to undergo digital transformation is IoT (Internet of Things). IoT is a sensor network of billions of smart devices that connect people, systems and other applications to collect and share data.

It is believed that by 2020, half of the everyday essential products will be auto-replenished through “connected home” through loT. Additionally, around 800 billion consumer products will experience smart packaging such as QR codes.

digital transformation

What about AR/VR experiences, you will ask? Like how IKEA used AR/VR apps to create that perfect experience for the consumer and to eventually convince them to buy? The same or nearly the same is going to happen to the CPG space. It is estimated that by 2020, 100 million consumers will shop in augmented reality.

digital transformation

Below is an example how an AR mobile app can enhance the shopping experience in a supermarket.

Going digital is a serious game, so you need to take your game to the next level!

A few key things to consider during this journey

The digital transformation for the CPG space is not going to be easy. You have to consider a few things first:

Rethink your marketing strategies

Going digital means shifting your attention from offline advertising to online and from outbound to inbound. So, make sure you follow the online advertising trends and techniques. Experiment with a few digital marketing tricks and find what fits your CPG business most.

Personalize the customer experience

Often, customers are eager to pay more money to receive a personalized product or service. Besides, 22% of consumers are willing to share some data in return. Data analysis can, in fact, enhance customization and personalization.

Direct-to-consumers e-commerce is on its rise. On the other hand, subscription-based services are becoming popular, too especially those “surprise me” subscriptions where consumers pay money for curated products or products that have been chosen for them based on their interests and preferences.

Keep an eye on industry dynamics

A recent report about CPG trends says that the consumer market is now made up of two types of consumers: survivalists and selectionists. The first type is basically more concerned about finding discounts and coupons. They thus opt for budget retailers.

The second type chooses products based on perceived quality which means that they are fine paying a bit more money for a product or service.

This shift in consumer behavior has created a little confusion for many brands especially those that consider themselves being between premium and discount. To avoid confusion, you need to keep a keen eye on industry dynamics and decide where you actually stand.

digital transformation

Final word

The CPG space used to have exciting traditional advertising campaigns. It’s time to undergo a digital transformation that will help get more customers and build brand loyalty. For this, you need a unified strategy and, of course, great design and development. The rest you can achieve through experimentation and data analysis.

digital transformation UX Innovation Experience design digital products