Tag: Advertising

As far as I can tell this is the strategy of every large FMCG company – (Fast moving consumer goods – think supermarket and convenience stores).

• Keep prices low. Never take a price rise.
• Sell to who we’ve always sold to.
• Only make things the factory can make.
• Focus on volume, that’s what keeps the factory busy.
• Deliver short term quarterly profits.
• Innovate incrementally. Flavours, sizes, fragrances, colors.
• Only invest in a brand if there is an immediate return in sales.
• Buy media on mainstream channels. Interruption marketing.
• Buy startups who innovate in our category.
• Conduct significant research to test ‘everything’. Make all changes research suggests. Safety in research. Don’t be edgy.
• Roll out good ideas from one market (Country) in all countries.

And this industry wonders why it fails to grow, increase revenue or attract change agents. As someone who has worked in the space for many years, it’s time someone told the industry to forget everything they think they know. This strategy isn’t working. It’s why companies like Kraft foods have the same share price they had 10 years ago. That is zero capital growth. It’s one example of many large multinationals with a similar financial performance.

So far the consumer goods industry has been quite lucky. They’ve been insulated from the effect the web has had. But this is all about to change. Startups, innovators and Amazon will come. The squeeze is about to happen, and unless they reverse their strategy over the last 50 years, the future is not bright. In fact they need to flip everything they currently do:

The new FMCG strategy (for those who want to thrive more than survive)

• Innovate so that price is not an issue. Make stuff people will pay a premium for.
• Open up new channels of distribution. Over invest. Compete against their retailers.
• Make things people want. Focus on the design of the product, not compiling it. (Manufacturing)
• Focus on revenue. Ignore volume. Remove it from all tracking and all documentation. Report everything in dollars.
• Do not give the market forecasts. Report results on year end only once.
• Innovate dramatically. Embrace failed launches. Most fail anyway, so get more to market.
• Invest in brands without expecting a short term revenue boost.
• Build your own brand media channels.
• Set up startups in your category. Put them in a skunk woks facility. Different space for a new culture. Then sell the startup to your competitors. Do it again.
• Do not do market research. Only research what can be done & know how to do it. Invent the future for the audience
• Sack all global marketing & innovation teams. Innovate locally.

This won’t happen in most large FMCG companies. There is too much to protect. Things like reputations, executive bonuses and careers. The courageous few will try. But 10 years from now every FMCG will be asking what happened, just like information industries and the car industry did. The change is coming whether they like it or not.