Navigating the Latest Shift in Consumer Behavior: Trading Down

In the ever-evolving landscape of eCommerce, we at BOLD are continuously seeking to offer actionable insights that can aid our clients in staying ahead of the curve. A recent article from Retail Brew has sparked a crucial conversation around a trend we're all noticing: the slowdown of price increases and the broader consumer shift towards more budget-friendly options.

The dilemma now facing CPG brands is how to maintain and accelerate sales in a climate where every dollar counts. The key question to reconsider: What percentage of sales should brands be ready to reinvest in marketing and advertising to drive volume?

Broadly speaking, margin reinvestment has hovered around 15-20%, but in light of current market dynamics, CPG brands should be prepared to re-evaluate and adjust this number. With the right analytics, a margin reinvestment of up to an additional 10% could be justifiable, especially if it's channeled effectively.

This brings us to the pivotal decision: How should brands focus spending to maximize sales?

1.  Data-Driven Advertising: Utilize customer data to drive targeted advertising efforts. Precision here will ensure that increased ad spend doesn't just scream into the void but reaches the consumer ready to listen and predisposed to your category & brand. One example is CTV, which represents an excellent opportunity to reach the expanding cord-cutter audience with targeted ads.
2.  Promotional Activities: Align your promotional strategies with consumer needs and expectations. In addition to strategic price discounts, consider value-adds such as bundling, limited-time bonus packs, exclusives, and cross-promotional partnerships that enhance your brand equity.
3.  Customer Retention Efforts: It's not just about acquisition but also (as importantly) about retention. Investing in loyalty programs and retention campaigns can boost lifetime value significantly. Think about ways to show your consumers how much they matter. Do it in a way that is unique to your brand and personalized to enhance the customer experience.

Investing more profits into marketing and advertising might seem counterintuitive in the current state of trading down. But, with the proper insights, it’s a calculated risk that could pay off in accelerated volume growth, retention, and long-term brand loyalty. Like most things, it’s all about balance.

Maximizing Conversions: Optimal Media Channels for CPG Brands

In the digital era, identifying the best channels for media spend is as critical as the strategy behind the spend itself. For CPG brands looking to drive conversions and accelerate sales, the landscape of effective retail media channels has both diversified and become more complex. Here are three to focus on:

1. Search Engine Marketing (SEM): High-intent users often begin their journey with a search. Investing in SEO and paid search ads ensures your products are at the top of consumers' minds when they are ready to purchase.
2. Retailer-Specific Platforms: Platforms like Amazon Ads, Walmart Connect, and Target's Roundel offer precision targeting right at the point of purchase, leveraging their vast data to reach consumers already in a shopping mindset.
3. Connected TV (CTV) and Over-The-Top (OTT) Advertising: With the rise of streaming, CTV and OTT platforms represent an excellent opportunity for targeted ads. This is especially effective for reaching cord-cutters who are harder to reach through traditional TV advertising.

Brands should consider a multi-channel strategy that aligns with their target audience, product category, and customer journey stages & behavior.  Plans should include testing and learning to understand which channels deliver the best ROI, then continuously optimize. The key is not just to increase spend but to spend smarter by investing in channels most likely to convert browsers into buyers.

Ready to leverage these insights to bolster your brand's strategy in these challenging times?  Let’s talk.