Growing a business is similar to gardening. You nurture it, spend hours taking care of each plant, and do your best to ensure its survival. And just like how every plant has different needs to grow, there are different ways to grow a business.
The FMCG industry is one of the most competitive industries in the world, with a market projection of $15 Billion by 2025. To survive and thrive in such a competitive environment, growth-focused FMCG companies have to learn from the successes and failures of the industry’s biggest players.
Here are 7 of the biggest lessons in the FMCG industry.
#1 — Don’t Underestimate the Importance of Innovation
Innovation is the key driver in generating more revenue in the FMCG industries. That’s why companies must constantly develop new products and services that capture consumers’ attention. Leveraging innovation gives you with an edge in the industry by increasing your profitability, productivity, and growth.
To make your products more innovative, you can focus on the following:
- Create products that serve a new purpose or solve a new problem
- Improve on existing products by making them better in terms of quality, design, or packaging
- Create products that are unique in terms of taste, scent, or appearance
Coca-Cola is a great example of an FMCG industry that uses innovation to its advantage. Over the years, Coca-Cola has developed several innovative products, such as Ginger Coke, which launched in Australia in 2016.
The limited-edition flavour was the product of consumer research which revealed a high crossover between cola and ginger ale shoppers in Australia. Doing so helped Coca-Cola capture the attention of its Australian consumers and drive revenue growth for the company.
#2 — Prioritise Marketing Efforts
A common mistake that FMCG companies make is underestimating the importance of marketing.
The most successful FMCG brands have excelled by combining digital and social media marketing efforts. FMCG companies that don’t have a solid digital marketing strategy risk losing out on potential customers to their competitors who actually have invested in gaining a foothold.
A great example of a company that excels at marketing is Unilever. The company has over 500 brands in its portfolio, including Cheetos, Quaker Oats, and Tropicana. In 2020 alone, Unilever invested around $7 billion in marketing, against $57.942 billion in revenue.
The company is also very active on social media, with over 100 million followers across its brands’ social media accounts. Indeed, Unilever has effectively integrated its digital and social media marketing efforts, which helped them reach a wider audience and promote its products more effectively.
#3 — Build Trust Through Transparency
Over 94% of consumers say they prefer brands that offer transparency.
To get a hold of the majority of consumers, you want them to trust your brand—and being transparent about your products and manufacturing processes is a good way to do this. Therefore, FMCG brands need to be open and honest about what goes into their products and how they manufacture them.
Doing so allows companies to build trust with consumers, leading to brand loyalty and, eventually, higher sales. PepsiCo is a great example of a company that has built trust through transparency.
The company regularly publishes reports on its progress in terms of sustainability and environmental impact. It also provides detailed information on the ingredients used in its products and the manufacturing process. This allows consumers to make informed decisions about the products they buy and whether or not they want to support PepsiCo.
PepsiCo’s transparency efforts helped the company build a strong relationship with its consumers, which resulted in higher sales and brand loyalty. As a result, in 2021, PepsiCo’s annual revenue was $79.474 billion—a 12% increase from 2020.
#4 — Dominate the Local Market
Small businesses may not be able to go toe-to-toe against large multinational companies. But there’s one arena in which huge FMCG brands can’t compete with small businesses–and that’s being a local brand.
Local brands have the advantage of being familiar to consumers and tapping into the local market. So, focusing on dominating the local market is a way to succeed.
For example, Australians love their coffee and are very loyal to local coffee brands. Case in point, Starbucks failed in Australia because they couldn’t compete with domestic brands and didn’t understand the unique needs of the existing Australian coffee culture.
In order to dominate the local market, FMCG companies have to understand the local culture. Then, they can tailor their products and marketing efforts accordingly.
#5 — Work With A Team You Can Trust
In the FMCG industry, it’s especially vital to have a team of reliable professionals because of the fast-paced nature of the industry. Companies have to be able to adapt quickly to changes in the market and the needs of consumers. And having a team that you can trust will make it easier for you to make quick decisions and implement changes effectively.
As a growth-focused company, you need a strong team that can work together and support each other. As much as it’s costly to hire professionals to be part of your team, working with experts you can trust is vital to maintain the quality of your products and services.
The bottom line is if you want to succeed as a growth-focused FMCG company, you need to surround yourself with a team of reliable professionals who can help you achieve your goals.
#6 — Understand Your Customers
It’s true, 42% of growing companies die because they focus on solving interesting problems instead of serving an existing market need. They are too caught up in creating products they believe their customers want rather than what they actually need.
In short, you don’t want your business to be too product-centric—you need to bring your ideas back down to Earth and make them more customer-centric.
A great way to understand your customers is by constantly communicating with them. To get feedback from your customers, you can use the following:
- Surveys
- Social media discussions
- Customer service channels
Make sure you listen to what they say so that you can adjust your products accordingly.
An excellent example would be Nestlé. They eschew offering a single mass marketing mix to all their customers, in favor of separate marketing plans for each of their target markets. This tailored targeting has helped propel Nestlé into the ranks of the world’s leading FMCG companies, with a revenue of $95.70 billion in 2021.
#7 — Understand Your Competitors
As the old saying goes, “Keep your friends close and your enemies closer.” In the FMCG industry, it’s vital that you’re up-to-date with what your competitors are doing and be one step ahead of them.
Some ways you can stay ahead of your competitors are by:
- Offering similar products at lower prices
- Creating unique products that competitors don’t sell
- Improving customer service
You can also use your competitor’s weaknesses to your advantage. For example, if they don’t have an online presence, that’s an opportunity for you to focus on digital marketing and tap into that market.
A great example is how Fonterra, a New Zealand-based FMCG company, outcompeted its rivals by focusing on digital marketing. Fonterra was one of the first FMCG companies to launch an e-commerce platform in China and focus on selling their products online.
By understanding the growing demand among Chinese consumers for premium milk from Europe, they were able to reach a wider audience and grow their business. In 2021, Fonterra’s revenue was 20.6 billion New Zealand dollars.
Grow Your Business With The Right Strategies
Running a business in a very competitive industry like FMCG is no easy feat. But, if you want your FMCG company to succeed, there are certain lessons you can learn from the giants in the industry.
Adopting the strategies of successful companies and learning from their failures will help you create a solid foundation for your business. From there, you can start to build your FMCG empire and achieve long-term success.
It’s no secret that the ability to innovate and adapt to changes is pivotal for FMCG companies to remain competitive in the years to come. And there’s no reason why your company can’t be an industry leaderーbut only with the right people leading your business.
At ELR Executive, we’ve spent the last two decades cultivating connections with the best professionals in the FMCG industry to help you succeed in this fast-changing world. So, if you’re ready to move your way up in the industry, we can help.
Reach out today to see how we can help you find the leadership you need to succeed.
