Maximizing opportunities: The role of market research in CPG strategy
Digital disruptions have significantly altered how brands and consumers interact in the CPG industry. Companies typically launch products that appear to be suitable for consumers. CPG brands, for their part, rely on comprehensive market research; like a market assessment study to make products available to consumers based on their needs and preferences.
What is market assessment?
One of the first and most important steps in the development of any market product or service is market assessment. Any business needs to figure out the attractiveness and dynamics of the current market scenario within an industry, and eventually, offer answers that are necessary to make decisions and strategies for both the short term and long term.
Challenges faced by the CPG industry
1. Shift towards online shopping
There is an increased shift towards online shopping with a lot of consumers limiting their visits to brick-and-mortar stores. Online distribution channels are expected to grow by a whopping 8.3% CAGR from 2020 to 2027. The consumer now has access to several reviews and ratings about products, competitor offerings, and prices. This could be much more influential than anything else in their decision-making process. Given how consumers can search, and filter product results as per their preferences, CPG brands are constantly challenged to find inroads to influence their consumer’s behavior in a strategic manner.
2. Health and wellness
Consumers have lately become more health conscious. Their consciousness towards healthy products has increased over the past few years. Shoppers are constantly looking to switch toward fresh products rather than pre-packaged products. This is driving a major impact on sales. 80% believe fresh food is healthier for them than packaged or processed food that is marketed as healthy. Secondly, consumers want CPG products to have some added benefits like energy supplements, vitamins, etc. While this trend poses challenges for CPG players it is at the same time opening new opportunities for category expansion.
3. Private labels and brand loyalty
CPG brands are facing increasing competition from private label brands as consumers always look for good deals and are cautious about spending. Brand loyalty of these premium brands may be at threat as private label brands offer a lower price point and do benefit from perceived affordability. Price pressure is also a challenge for CPG brands, resulting in lower margins.
4. Ethical responsibility
In addition to how good a product is, the CPG brand’s reputation is also dependent on other factors like transparency, sustainability, and ethics. This is because shoppers are getting more conscious about their ethical responsibilities. With the web making information accessible to all, finding out whether or not your brand is aligned with their ethical values is just a few clicks away.
5. Reducing marketing budgets
CPG companies have reduced their marketing budgets. Budgets are the first thing that get scrutinized whenever the economy suffers a downturn. However, to remain competitive in the market, marketing budgets should not be reduced, as this may result in lost sales.
How a CPG market assessment study can help
Market assessment in CPG provides a comprehensive understanding of the company’s consumers, competitors, and other stakeholders. All these aspects provide a detailed overview of its product offerings in the market. Making business decisions and developing business strategies require an in-depth knowledge of market dynamics, trends, drivers, and barriers.
Whether a firm seeks to expand its business, increase its customer base, or launch products, market research in CPG proves instrumental. It helps offer a crystal clear view of market dynamics, competitor landscape, and consumer dynamics.
A case in point
A leading food and beverage company wanted to assess its market opportunity in Russia for flavored milk and convergence drinks and analyze its growth potential in the said country in comparison to other countries. It also wanted to identify Russia-specific constraints and drivers which could help them in preparing a market entry strategy.
Netscribes studied the Russian flavored milk and convergence drinks market in detail, including size (based on revenue, type, flavor, packaging, etc.), consumption patterns, trends, challenges, and the competitive landscape. In addition, we studied 12 other countries that account for a major share of the global flavored milk and convergence drinks industry and conducted a comparative study of Russia in contrast to the 12 other countries, to identify the opportunities in Russia. The parameters for comparison included size and growth in the markets, per capita consumption (in USD and liters), average price, and type of products available in different markets, along with best practices and success stories.
The company gained a comprehensive understanding of the Russian market with a detailed analysis and was able to assess and work towards untapped opportunities.
Read more: Success in F&B Market Assessment: Navigating Industry Complexities
Benefits of CPG market assessment studies
- Offers a quick snapshot against current market conditions
Comparing market assessments to benchmarking activities, market assessments are not quite as broad, expensive, or time-consuming. Additionally, for CPG companies market research and assessment make it simple to find possibilities and locations where the company is gaining a tangible bargain.
- Aids in defining tactical operations for the organization
An organization can take several tactical steps to get more value for money without having to engage in negotiation with a service provider. This is provided the firm is aware of possible areas that can be optimized with focused efforts. As an illustration, consider the demand for project-related resources and if those tasks may be completed overseas.
- Rethinking the future
A market evaluation study can be beneficial both, in the short and long term. It helps your firm contemplate its service delivery model and consider changes that could influence and impact your service providers. An example in this light would be – say your company wishes to implement a new IT service management (ITSM) technology to increase openness and also needs information at its fingertips, to make well-thought-through business moves.
- Set expectations at every level
Market research and analysis prove to be a helpful reminder to the community of service providers. It helps them know the significance of having services and costs in line with their CPG client’s expectations. A service provider may take their retention for granted, given a tenured relationship with the CPG firm. Here’s where a market assessment proves to be an eye-opener. It helps CPG players continually invest in productive relationships and helps service providers be on their toes to actively manage their clients’ evolving demands.
- Considers business demands
It is often far simpler to spot issues with service suppliers than internal ones. To optimize the value of the services being offered, CPG companies should consider how it should relate to the community of service providers and its major strengths and limitations. These can be identified through a comprehensive market assessment exercise.
How we can help
Netscribes provides robust CPG market research services and assessment solutions for global businesses and other leading industry players. We combine local knowledge with in-depth analysis from senior managers, industry experts, administrators, and key opinion leaders. These KOLs come with the experience of working in over 57 countries, after undergoing rigorous verification.
Fortune 500 firms and high-potential startups partner with us to deal with disruption, understand shifting consumer behaviors, leverage technological advancements, and accelerate corporate growth. To know how we can help your CPG business conduct an effective market assessment study, contact us today.
Based on insights by Suchita Biswas, Senior Manager, Research and Information, Consumer Team.
