It’s a slightly different blog this week.
No random story to kick things off. No tenuous link to how that relates to the FMCG world.
Instead it’s more of an opinion piece. It’s triggered by two things. Firstly, some data that was shared recently. Secondly, by a mindset that has come to dominate the FMCG industry.
The data was shared by Kantar Worldpanel on Linked In. It said that 3 out of 4 brand buyers only buy the brand once.
The data covered 13,200 FMCG brands across 12 countries in 2024. On average 73% of brand buyers bought the brand once a year. Less than 10% of brand buyers bought more than 3 times a year.
This led to the following conclusion (we’re paraphrasing)… Most of your brand buyers will only buy you once. Therefore growth will only come from getting new buyers. So, don’t bother about the ones who already buy you. Focus on the ones who don’t.
This reinforces the “How Brands Grow” view of the world. The one that says penetration is the only thing that matters. That you will only grow your brand if you get more buyers.
Many FMCG companies have drunk the penetration Kool-Aid. They think the only way they can grow is by increasing penetration. So, they focus on the things they can do to increase penetration.
One of the easiest (and most often used) things to do is … more price discounts. It often works. More shoppers buy you. Your penetration increases. But as the Worldpanel data says, most of these buyers will only buy you once. When you’re on deal.
Next time they might buy a competitor. Probably whichever is on deal. Then the next time, they buy another competitor. Probably whichever is on deal.
This shopper is in everyone’s penetration number. But they are contributing little value. Just another shopper who buys you once.
It’s like a FMCG merry go round. You attract riders. They have one ride. Then jump off again. Onto the next ride. Then the next.
Penetration is, of course, important. No buyers means no sales.
However, the penetration obsession means that brands have become very good at getting shoppers to buy them once BUT very bad at getting shoppers to buy them more than once.
It means that brands are all playing the same game. The Penetration Game. Chasing new buyers. Moving them from brand to brand. Attracting shoppers who will only buy you once.
But what if instead of playing the game you changed the game?
What if instead of focusing on the buyers you DON’T have, you focused on the buyers you DO have?
What if you got all the buyers who buy you once, to buy you twice? If you did (based on the Worldpanel data) your volume would increase by 75%.
How..?
Well, what if your communication focused on giving shoppers a reason to try your brand AND continue buying your brand? The best shopper communication (think Actimel, Fairy) uses one consistent message to do both.
What if you had a more consistent pricing strategy? One that meant that most weeks you were the same price. Not up and down like a yo-yo via deals. A price that more shoppers would be comfortable buying you at, rather than waiting for you to be on deal.
What if you did the same for new products? Set a base price that shoppers are prepared to pay week in, week out. Not a base price from which to promote.
What if you used promotions to reward shoppers for loyalty, not promiscuity? Gave them incentives to buy your brand every time. What if you encouraged them to buy across your portfolio, instead of buying one of your products once?
What if, when you launched new products, you focused as much on driving repeat as you do on driving trial? Prompting shoppers to buy for the first time AND an incentive to buy the second and third time. To build the habit of buying. Trial is good. But repeat is essential. The new product graveyard is full of products that were bought only once.
These are just a few “what ifs”. There are plenty more.
You’ve been told to play the penetration game.
But when everyone plays the same game, everyone gets the same results.
Shoppers who move from brand to brand. That buy you only once.
So, don’t play the game. Change the game.
Feel free to forward. Have a great weekend. Speak to you in a fortnight.