Unleashing the Power of DTC: Transforming the CPG Industry Through Direct-to-Consumer Strategies
- Vikas Kumar
- June 26, 2023
- BLOG, MEDIA & ENTERTAINMENT
- CPG Businesses, CPG Digital Marketing Market, Digital Marketing, Direct-to-Consumer, Direct-to-Consumer Strategies, DTC initiatives
- 0 Comments
Overview
Consumer packaged goods (CPG) brands typically communicate with their customers through channels like brick-and-mortar storefronts and online shopping portals. However, because of this channel-based strategy, CPG companies may suffer from changes in the channel, like those that occurred with retail outlets during the pandemic. Additionally, CPG Businesses avoid having a direct interaction with the final consumers, lack information on the consumers, and are unable to promote to them directly.
CPG companies are now realising that investing in direct-to-consumer (DTC) models — alongside their retail and e-commerce channels — helps them to build direct relationships with customers, cultivate trust, collect first-party data, and personalise the customer experience across different brand channels. This is necessary for them to remain relevant and advance with digital transformation in the changing marketplace.
Three Major Elements for CPG Companies for Successful DTC Launch
The Rise of DTC Marketing Strategies in the CPG Industry
Along with the quick advancements in technology that makes this marketing technique possible, it has become more and more popular. This includes the capacity to conduct secure, encrypted transactions, the proliferation of smartphones, faster and easier access to the internet, and social media.
Comparing direct sales to standard CPG techniques, there are a few benefits. First, it enables businesses to cut out intermediaries, which boosts profit margins. These savings can then be used to purchase new items and services for customers.
Because of its affordability and ease for customers, selling directly to them is a common practise. D2C has particularly affected the CPG sector post-COVID. Around 64% of consumers globally made regular direct purchases from businesses in 2022. When lockdowns occurred all around the world, D2C was already on the rise, but many customers realised the benefit and haven’t looked back.
Traditional CPG brands may view this as a challenge, but many see it as an opportunity. Since DTC technique is generally low-risk and has a large potential payout, it is a good addition to existing portfolios.
Major CPG Companies Using DTC Market Strategy to Increase Customer Engagement
CPG companies may become more economical, data-driven, and nimble by developing new products for DTC brands, categories, sectors, and themes, particularly in emerging countries. They can direct a portion of their budget towards lower spend channels rather than allocating a quarter of their income to marketing. They can develop close bonds with customers, fostering trust, gathering first-party information, and customising client experiences across many brand channels.
Some long-established CPG firms, including PepsiCo, Clorox, AB InBev etc. are already launching their own DTC brands. This is a clever, low-risk technique to test out new products and markets without having to drastically alter a major corporation. If DTC initiatives are effective, they can coexist with conventional channels and support corporate objectives.
Author: Suryansh Verma
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