Let’s start with a poem.
It’s called “First They Came.” You might be familiar with it.
First they came for the Communists,
And I did not speak out
Because I was not a Communist.
Then they came for the Socialists,
And I did not speak out
Because I was not a Socialist.
Then they came for the trade unionists,
And I did not speak out
Because I was not a trade unionist.
Then they came for the Jews,
And I did not speak out
Because I was not a Jew.
Then they came for me,
And there was no one left
To speak for me.
The poem was written in 1946. The message still echoes today.
It describes something that starts small. Then step by step becomes bigger.
The moral is to speak up and act early. Because later on there may be little you can do about it.
So, how are we going to link this to the FMCG game…? OK, here we go…
The same (with much less serious consequences) is true in the FMCG world. We often do things to solve short term problems. Increase price. Run an extra promotion. Launch a new flavour or variant.
These can be a short term fix. We maintain margin. We protect market share. We retain shelf space.
But then we often have to do it again. Then again. Then again. Then before you know it, your price is way too high. You are addicted to the promotional drug. You have a long tail of underperforming SKUs.
Things that start small can become BIG.
So, what are the watch outs and how can you avoid them?
Pricing. You have probably been climbing the price increase ladder in recent years. Input prices have gone up, so retail prices have followed. Shoppers might not notice the first time. Many won’t the second time. But at some point your price is 25% higher. Then most of them will.
So, get on the front foot. Reframe value for shoppers. Tell them what they are getting for their money. A jar of coffee that says how many cups you get. A box of cereal that says how many breakfasts you get. A snack that says how many lunchboxes it can be used for.
For many brands a choice framed on price means you lose. A choice framed on value means you can still win.
Promotions. You need to hit your target this quarter. The easiest ways to do it? Run an extra promotion. You need to do the same the next quarter? Run another promotion or do a deeper discount. Each time, you need to do more. Increasing frequency of promotion. Increasing depth of promotion. But all you’ve done is trained shoppers to buy you on deal. To play the promotional game.
So, change the game. Do different things. Mix up the frequency. Mix up the mechanic. Give shoppers different (non-price) incentives to buy. Do time-limited activities. Do differentiated activation. Reward shoppers for loyalty not promiscuity. Give them a compelling reason to buy you when you’re not on deal. A reason to buy you this time and every time.
Make promotions an additional reason to buy your brand NOT the reason.
Range. You started with a tight range. That covered the key needs. The most popular flavours or variants. Then your competition launched a new product. You launched something similar. Then a new entrant came in. You launched something similar. Then you wanted your own new news. You launched something else.
A category that was easy to shop became much harder. More products in the same (perhaps less) space. Trying to protect a long tail of products that shouldn’t be there.
So, you need to be more ruthless. Ruthless with your current range. Pick the winners. Ditch the losers. Give more space to the products that shoppers want to buy. Be ruthless with new products. Focus on launching products that are different. That drive category growth, not just move money around. That will be there for years, not months.
Have less. But better. Launch less. But better.
Look out for the warning signs. They start small. They can become BIG.
Act now.
Whilst you still can.
Feel free to forward. Have a great weekend. Speak to you in a fortnight.