CPG TECH- About

Rendering of Search Activity on the Web

CPG TECH is about new digital and e commerce technologys and how they are impacting the consumer self health care market.  More and more purchases of consumer helath care are going to the online channel it is now more important that ever to take advantage of these growing and changing technologies to insure products are positioned for growth.

This is a picture of activity in on the web  as mapped out by a company called the OPT project  It is using over 5 million edges and has an estimated 50 million hop count. Hop count is It is the number of routers a packet passes through when routing to a remote network. I like it because it really does capture the massive amount of activity that takes place on the web.

Welcome
This site will try to address and post some of the tech news that will impact the consumer packaged goods industry, consumers are more and more choosing to buy consumer health care products through the internet, advancements in search, social media and mobile applications will continue to drive purchases of consumer health care products

Companies that in the past were satisfied to have their e commerce platform consist of Drugstore.com, and Amazon.com are beginning to see that brands can be sold very efficiently to the consumer by creating a relationship or conversation with the consumer. What they are finding is that the consumer on the internet is engaged in the relationship with a brand from the outset. In the past interruption television ruled the day and the game was based on creating the need.  Now consumers are starting the relationship and a strong active relationship initiated by search. Brands must strive to reach the consumer in ways beyond advertising and must be transparent , fresh, and provide some benefit beyond just product performance. A relationship must be struck and the brand must give something in the relationship firs.

 

E-Commerce the Great Equalizer

 

Online commerce  has become the great equalizer for consumer packaged goods, an emerging brand no longer has to invest the tens of thousands of dollars in inventory and upfront advertising to launch a product. New products can develop a presence online and use that traction to eventually migrate to retail once some they have a foundation of customers. The cost of entry has declined over the past 10 years such that there is a new market for a variety of brands willing to invest in finding their customers and adding value to their lifestyle beyond just the brand delivery.

Pre build your audience:

Success in e commerce  is not confined to smaller brands, consider the recent launch of Align the new probiotic introduced by Procter and Gamble. Since the notion of probiotics is new to the American consumer P&G decided against a full scale traditional launch, rather they developed the business on line where they could meet and engage consumers who asked for information on digestive health through search they made the first move.  P&G sold directly to the consumer and only after a foothold was gained online  did they move to retail, and even then they did not launch on a national basis but rather had a scaled launch across classes of trade.  What is new is that the conversation and the relationship with the consumer started long before retail distribution was secured.   Now widely distributed Align will be supported with a reported $30M in the back half of 2009, combine that spending with the customer base they carefully cultivated in the years before national launch and we have a market maker. Consider how popular search on Probiotics has become over time:

 

Using search, targeted content advertising and CRM strategies CPG healhtcare brands will have that is needed to launch products  directly to the customer with very low start since the advertising is spent with the growth and not ahead of the growth.

For classical CPG companies the long term strategy should include a robust long tail effort,  or an apparatus that can systematically introduce brands to the consumer  in a number of categories and segments thereby achieving a presence throughout the tail not just at the head.  After all the if you support the long premise successful companies will sell less of more in the future.  and achieve a presence throughout the tail.

 

Some things to think about:

 

There are some potential pitfalls of this approach that need to be mentioned.  First is the price point, online products tend to to best and are most efficient at a price point of over $49.00, much like the special packs that have been created for warehouse clubs in the past brands will need to develop web only offerings so that the consumer can see a real value in shopping on the web, and provide the price point that enables strong search presence.

 

In the end it is as it always will be create products with a meaningful point of difference, advertise that point of difference, and make it available at reasonable price. Two of the variables have changed over time and advertising can be replaced with communicating your message across multiple platforms, and price points will continue to climb, however the first remains the same create product with a meaningful point of difference.  Good Selling to you.

 

In future posts you will see daily updates from around the the online world of new developments that will impact the CPG business.  Thanks and I hope you enjoyed this first post.