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What is the Future of FMCG?

21 October 2019

Impact factors are quickly changing the FMCG market landscape and the traditional ‘mass branding’ model is beginning to lose its grasp on the market. Mass branding is when businesses create a basic product,sell it through basic channels and use basic advertising with the aim of selling a large quantity of products at a low price (high sales at a low cost).

But this model’s success has started to stagnate as a result of a variety of modern-day factors. We are now seeing that a more niche form of branding is on the rise and branding is becoming more targeted to specific consumer groups. In response, we are seeing brands using more targeting marketing to sell their products to these groups.

A series of impact factors are facilitating this shift away from mass branding and are shaping the future of FMCG. Here they are…

1.      Technology

The rise of technology has enabled consumers to very quickly and easily search for specific products. Sites such as Amazon and Google have made it easier for individuals to search for their specific product needs, and they offer a platform for upstart companies to easily market their products to potential customers. These e-commerce giants, or online shopping sites enable consumers to access a wide variety of products right at their fingertips. When searching for products, consumers want to see content they truly care about.They want to invest in a product with a story. Therefore, more niche targeted products are stealing the attention of customers. And now these products are as readily available as products sold in mass retailers, consumers are experiencing a shift in their preference to invest in niche products offered by start-ups, as opposed to investing in CPGs.

2.      The Millennial Triumph

Millennials typically prefer newer, more exciting brands and brands with a purpose that they can get on-board with. Millennials do prefer more innovative products, but they are less focused on the product and more focused on service and convenience. They are investing their time and money in products that are created around lifestyle choices that they can identify with.Sustainability has become a key factor that millennial consumers are focusing on when investing in brands. Mass producers are not often concerned with sustainability, and therefore sustainability-focused upstarts are winning sales once again!

Social media has played a large part in the stagnation of the success of mass branding. Social media has enabled start-up/niche brands to market their products to targeted audiences via online platforms. As a result,we are seeing a rise in digital challenger brands. Consumers are able to directly interact with brands via commenting and messaging to find out more about their products. This gives brands a much more personal feel and offers consumers a platform to share reviews on their experiences with the brand. Just another reason why the success of mass branding is beginning to stagnate.

3.     Rise of Small/Local Brands

Small brands are currently stealing the spotlight. In response, larger companies are having to defend themselves against the success of these smaller brands. Mass branding focuses on speed to market, meaning that brands often lose out on valuable innovation time. This ultimately results in basic branding and marketing, and therefore less consumer appeal and sales.Smaller brands, however, seem to focus less on speed to market but more on their innovation process before their products even hit the market. This means that their product is nailing the market as soon as it arrives. Smaller brands are smart and focused. Mass brands are fast in getting to market, but they are not always right once they get there.

These local competitors offer products that are locally relevant, and consumers are always keen to support local businesses. Small and local brands are another reason why the future of FMCG is likely to see a further shift away from the mass branding that has shaped the FMCG market for over a decade.

4.      Lifestyle Gurus

Health and wellness has become a key part of life for many consumers, with most preferring healthier products offered by health specialist brands. Whilst usually more expensive, health conscious consumers are willing to pay more for a product that promises excellent health benefits. Purchases of these types of products are on the rise, as an alternative to similar products that do not offer the same health benefits. As a result of this, the future of FMCG will perhaps see sales of these types of products increase and replace sales of similar mass branded products that fail to distinguish themselves from the competition with health benefits, excellent marketing or a rich brand heritage.

Therefore, the future of FMCG seems to involve the continuation of a shift from mass branding to a more niche form of targeted branding. But how can businesses ensure they remain relevant in their categories?

Going forward, in this changing FMCG landscape, businesses need to ensure that their brand is relevant by creating an innovative product and utilising marketing and advertising to consolidate their presence in their market. Investment in content, analytics and artificial intelligence are good ways to ensure that your brand remains active and present in markets. Consumers are no longer satisfied with the basic mass branded products and are instead seeking exciting products that serve a real purpose to them as the individual.Niche brands and products are beginning to find their place in the FMCG world,and it seems that us consumers are loving it!

If you're seeking you're next role, or are a business on the hunt for excellent talent, give us a call on 0845 2000 741 for a confidential chat with one of our expert recruiters. For more updates on all things FMCG give our page a follow!

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