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Walking the Talk of “Experience”: The CPG Paradox

Much has been written about the fall of traditional CPG brands. It is a bit of a paradox because right now unemployment is low, wages appear to be growing (New York Times), and the new tax laws promise a future with more disposable income. (Trading Economics) It seems that the time is right for consumers to buy things. (eMarketer Retail) So, what’s going on?

In a word, it’s all about the experience. Consumers can now choose from a variety of purchase channels and select the experience that fits their needs and lifestyle. Perhaps the traditional brand-based companies should take their cues from some of the recent successes in ecommerce, retail, and food service. Organizations that are winning are enhancing their human relationships and protecting their experience.

Three Ways to Build a Product Experience

If you sell a commodity product, become the distributor.

Traditional CPGs don’t own the end-to-end experience. Disruptors like Dollar Shave Club saw that gap, capitalized on it, and built a new, simplified business model that gives them close-to-full control. They’ve cut out the middleman and gone direct to the consumer and built authentic, compelling customer relationships that include outstanding service.

Traditional CPGs are playing catch up (McKinsey), but ultimately will benefit from shifting a chunk of their selling strategy to a direct-to-consumer model if they keep it frictionless and real. Some, like Unilever, are staying ahead of the curve by acquiring the competition; their $1 billion acquisition of Dollar Shave Club in 2016 was one of the early deals that “anecdotally shows that no company is safe from the creative destruction brought by technological change.” (NY Times)

Battling with Amazon? Offer a physical experience.

Big box retailer Best Buy was on a downward spiral with no end in sight due to a highly volatile marketplace. Amazon, the company’s competitor, partner, and would-be vanquisher was undercutting prices and offering a purchase experience that couldn’t be matched. Instead of competing with Amazon on its own turf, Best Buy re-imagined its secret weapon – the human experience. It price-matched Amazon and began using its physical and human capital to build long-term relationships with lots of extras rather than one-time transactions. (Bloomberg

Stores are now “showcases” featuring technology boutiques for Apple, Microsoft, Google and others. And, in addition to its Geek Squad, Best Buy now has in-home consultants who act as personal technology officers. By changing consumer expectations of what a big box experience could be, Best Buy is claiming new competitive space. A retailer who didn’t embrace today’s experience economy? Toys R Us.

Don’t join the price wars

Chick-fil-A and Starbucks aren’t known as the cheapest eats around. They don’t even show their pricing in ads or communications. These brands just own the fact that their prices are premium. And, we’re willing to pay it.

In a world where many products and services have become a commodity, Chick-fil-A and Starbucks recognized that brands that create an experience customers value – regardless of price – have a competitive advantage. To keep winning, they’ll go to extremes to protect their edge.

Take Starbucks, for example. Earlier this year they closed more than 8,000 stores in the United States for an afternoon to conduct racial-bias education geared toward preventing discrimination in stores. That’s nearly 175,000 people who received training. (Starbucks) Sure, the company took this drastic step in response to a crisis situation, but what was at stake was more than just transactional sales. It was about protecting the experience.

According to executive chairman Howard Schultz, the training was meant to reaffirm the company’s commitment to creating a safe and welcoming environment for every customer. For Starbucks, the bottom line really is the bottom line. If we don’t feel comfortable and welcome in the Starbucks near us, we’ll simply find a (cheaper) cup of coffee elsewhere.

Today’s savvy consumers have control of the who, what, where, when, and why of their purchases. They’re willing to pay for the experience they want. Walking the talk of building and nurturing relationships by creating an authentic brand experience is no longer optional.


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