Last week, Unilever announced it had acquired Dollar Shave Club. Tech Crunch carried an interesting article on the $1 billion acquisition and the challenges reputed & established FMCG brands face with the onslaught of innovative and emerging brands.
FMCG companies have been living in an era of mass marketing for over 100 years now. They have working on the premise that if they create a great brand and have an efficient supply chain, then the sale is done. Hence, over the last few decades, they have been working on building an efficient supply chain and ensuring the stocks are placed ahead of competition and replenished efficiently. As far as the customers were concerned, if they had a top-of-mind recall about the brands and if there was availability when they landed in a retailer's store, the sale was completed. However, digital disruption and democratization of technology is transforming the FMCG industry. Leaders like Unilever, P&G, Nestle, L'Oreal and the like have been reeling under this disruption.
The thinking of FMCG companies has to move from managing the supply chain to building a robust demand chain. The FMCG companies' supply chain approach is about 3P strategy- " Place, Push & Purchase". However, the demand chain approach requires a drastically different mindset which is a 3F strategy " Find, Fill & Fullfill". The customer behavior here is about "Discover & Buy" rather than "Reach & Buy". Also, it is no more about replenishing retailers'' stock but it is about replenishing customers' stock. This for FMCG companies turns their marketing thinking on its head. However, the customers are lapping it up, as they are able to get value & convenience like never before. This also throws-up new big data opportunities about customer purchase behaviour for FMCG companies as new direct-to-customer digital channels are emerging to engage with customers and they now need to understand the insights that arise out of these huge data sources.
The era of direct mass marketing is around the corner for FMCG companies and they need to serve these customers in new ways in the future.