Direct to consumer selling is "the most interesting” trend in consumer goods sales and marketing technology this year. So says Consumer Goods Technology (CGT) magazine and its research partner IDC Manufacturing Insights . The driver is the threat posed by retail private label products:
"The growth in private label ("customer as competitor”) is prompting CG manufacturers to seriously contemplate having a direct commercial relationship with the consumer. Although the direct-to-consumer journey will be a bumpy one, it’s absolutely a necessity if manufacturers are going to avoid being marginalized by growing retail power.”
Consumer goods brands have invested in their fair share of direct to consumer marketing (not sales), usually in the form of outsourced, short duration campaigns executed by agencies. With these efforts increasingly becoming digital in nature (web, email, mobile), it seems natural to extend relationship building efforts to facilitating actual sales, no matter the threat posed by private label.
Direct to consumer selling is conceptually similar to how CG companies can today reach formerly inaccessible downstream data from the point of sale to fuel knowledge-rich demand signal repositories (DSR). Downstream data happens to be another trend identified by CGT and IDC.
As noted by CGT and IDC, however, competing with private labels can be as much about communication as sales:
"…direct-to-consumer can be viewed either through the lens of fulfillment or communication.”
"…going directly to the consumer is only one option to combat private label. And a direct connection to the consumer may be less about selling the product and more about providing information through burgeoning social media capabilities.”
Unlike short term campaigns, the types of communication described by CGT and IDC should be based on an institutional knowledge of digital consumers across social media, direct digital marketing channels, and transaction and production data. Making this know-how actionable is equally important, while respecting the channels preferred by consumers.
A prized by-product of laying the foundation for these digital efforts can be a path to consumer insights for use in product development; CGT and IDC note that private labels perform best against brands wanting for greater innovation, making consumer insight another front in the private label battle.
With a combination of applications, data warehousing software, services and a diverse group of partners, Teradata is well positioned to smooth the direct to consumer journey for CG companies. If not facilitating sales, then certainly by providing the data and intelligence to drive consumers to choose CG brands over private labels.