How We Work : Blog

Continued from Part 1

What’s next?  Selling through the Internet (even for low margin FMCG goods), and creating small product runs targeted at niche audiences (Asia Pacific Brewery’s Archipelago Brewery), will be among the many strategies adopted to seize the initiative that was so easily given up decades ago.

When (not if) this happens, the biggest losers will be the big box retailers who will find themselves in direct competition with the manufacturers.  The question is “How should the retailers view and evolve their relationships with the manufacturers in this increasingly customer-centric world?”

Retailers should leverage the end-customer reach they have to establish win-win relationships with manufacturers.  Historically, retailers have not efficiently used available shopper data.  This data presents a golden opportunity to get partners (manufacturers) to buy into their frequent shopper and loyalty programs.  For FMCG companies, this strategy is efficient and makes sense for several reasons:

1.      Creating a direct channel is expensive; 

2.      Relationship strategies are long-term and resource-intensive; and

3.      Standard, standalone loyalty programs are not practical given their generally high-volume, low-cost environment and lack of means to track transactions.

Involving FMCG partners in the program fray allows the retailer to build better customer relationships through more relevant and targeted promotions.  At the same time, as they drill down to analyze the purchasing behavior at the individual shopper level and offer more impactful research data to FMCG partners, we are opening up the possibilities of more innovative and exciting marketing initiatives.

By focusing on the customer as the ultimate bottom line, retail channels and FMCG manufactures can both come out winners.

Earl

First published in Marketing Magazine December 2006 issue