Focus on Consumers - Not Customers

In the CPG world, the terms consumer and customer are commonly conflated. However, the distinction remains important. The consumers of your product are your reason for existence. Consumers find your brand's value proposition appealing, as it fills a need, want, or emotional purpose. Almquist et al. (2016) describe these needs, wants, and emotions as the elements of your brand value. It's the reason that consumers shell out their hard-earned money to purchase your brand.

In contrast, your customers (i.e., big box retailers or online marketplace) are the intermediary in this relationship between your brand and consumers. Their relationship to the consumer is mostly transactional, as they distribute, market, merchandise, and distribute the product to consumers. For the most part, they do little to build a consumer connection to your brand, other than display your product prominently and executing your trade promotion. They are interested in selling as many as 40,000 SKUs housed in their stores quickly, and at healthy product margins. It's impossible for retailers to juggle the brand value connection to the consumer, and the execution of high-volume store operations.

You may be thinking, thanks for the CPG 101, but what's your point? Well, the point is that it's easy for brands to lose sight of this in their day-to-day activities. In CPG, there is a powerful pull to keep big customers happy, as the sales teams at CPG organizations sell to customers, not consumers. Consequently, decisions about distribution, pack sizes, price, and even existential product attributes like flavor can be influenced through the lens of your biggest customer. While that may make short term economic sense, it could lead a brand to go down roads that consumers may not value over time. Moreover, this predicament can be exacerbated by the indirect nature of wholesale distributors, which adds another communication barrier between the brand and the consumer.

The antidote to this problem is knowledge about your consumer. A brand should always know more about their consumers than the retailer. I can help your brand leverage your consumer consumption data and primary and secondary research to better understand your consumer.

Let's talk about it!

JimSwallow@AnalyzeBrand.com

References:

Almquist, E., Senior, J. & Bloch, N. (2016). The 30 elements of consumer value: A hierarchy. HBR.org. https://hbr.org/2016/09/the-elements-of-value