Consumer trust isn’t easy to come by. The past two years have exacerbated the situation, as major CPG (consumer packaged goods) brands face unprecedented supply chain shortages. Customer trust in once revered CPG brands is also beginning to wane due to greenwashing –– creating an untrue impression about a company’s sustainability practices –– as an increasing number of major companies get called out for doing just this.
There was a time when consumers knew exactly what they’d get from trusted CPG brands. But with pandemic-induced supply chain issues, greenwashing, and a surge in online counterfeits, brand recognition no longer ensures consumer trust… or continued sales.
An increasing number of consumers are seeking value over brand recognition. In this environment, CPG brands need to find ways to create the perception of value, or risk joining the race to the bottom – i.e. becoming an industry where the lowest price always wins. And, in the race to the bottom, suppliers and retailers always lose.
Fortunately, there are plenty of ethical, honest ways for CPG brands to create the perception of value. It all starts with the supply chain. Let’s delve in.
What is a CPG brand?
Before we get into industry specifics, let’s define what a CPG company actually is. CPG (consumer packaged goods) brands create packaged items for daily consumption or use. Think packaged food, household essentials, pet supplies and cosmetics. Since CPG products are often orally consumed or applied to customers’ bodies, it’s always been an industry based on trust.
Consumers need to trust that the products they’re buying are safe for consumption by themselves, their pets, and their children. Since most everyday purchasing decisions are made unconsciously, it’s been easy for certain CPG brands to achieve market dominance and stay there. The success of a CPG brand was once a self perpetuating cycle –– the more customers trusted a certain brand, the more it caught on, the more the company could afford to test and advertise, and so on.
Brand trust is at an all time low
But the pandemic made people desperate, and desperate people commit crime. There’s been a terrifying surge in counterfeits in recent years. In fact, over 50% of customers purchased a counterfeit product in 2021 alone. What’s even scarier is that most people who purchased counterfeits were satisfied with the product quality, which means the trust that once came with a strong brand name means less than ever. But 39% of consumers that have a less than rosy counterfeit experience say that, once they purchase a counterfeit, they’ll never trust or buy from that brand again.
Sudden shifts in purchasing behavior have also made it difficult for CPG companies to accurately predict demand when making purchasing decisions. Many of the biggest CPG brands have reduced the number of SKUs they offer to protect margins. But discontinuing trusted products can also erode customer loyalty. So brands are stuck selling their products on rare, highly controlled websites that nobody can find; or risking their reputation on online marketplaces where they’re directly competing with counterfeits of their own products. Neither is a very sexy option.
CPG companies risk their reputation by greenwashing
The demand for CPG companies to be perceived as sustainable, humanitarian, and transparent is a real one. So is the penalty for brands that are caught singing a tune of sustainability that their operations don’t match. Major CPG brands are facing mass criticism for making false sustainability claims. Lawsuits citing false sustainability claims are increasing in number as consumers and environmental protection agencies become more discerning.
CPG manufacturers have learned that simply providing a warehouse address and an online mission statement is no longer enough. Without a comprehensive supply chain transparency report to back up the mission statement, alluding to brand ethics/sustainability measures that exist only in theory can have an adverse effect.
Building consumer trust in an industry gone mad
Realistic counterfeits aren’t the only threat to CPG brand equity. Private label brands and online startups are giving legacy CPG retailers a run for their money. So, the question becomes, how can trusted CPG brands properly market the value of their products to compete with the lowball pricing or generic and counterfeit goods? Transparency is key.
Few CPG brands recognize that their ability to create a transparent, honest sustainability report and to create an agile supply chain can both come from the same source: a PLM solution that enables them to interface with external suppliers. The same software that enables CPG brand decision makers to chat with suppliers, shipping companies, retailers, and end consumers will help compose an ongoing sustainability report based on real product data. And those critical product data points can be compiled and shared in seconds on the right PLM platform.
An honest path forward for CPG companies
As you’ve seen, the path to consumer trust for CPG brands is riddled with challenges. The solution? Quickly accessible product data points and open lines of communication. By creating an ongoing internal dialogue with suppliers, shipping companies, retailers and end consumers, CPG brands can eliminate miscommunication. Thus preventing inaccurate product data from being published. Critical product data can also be used to communicate the value of purchasing products at full-price. So, the race to the bottom is no longer a real threat.
But what about the counterfeit issue? An agile PLM solution gives CPG companies a greater level of control over new product launches. Once products are entered into the PLM software, retailers and suppliers gain complete visibility into the location of that particular product. So they can focus on capitalizing on sales, rather than cannibalizing their business with counterfeits.
The right retail PLM can also help CPG companies communicate about where and when counterfeits are identified. So they can take swift action to eradicate counterfeits from online marketplaces. Customers get safe and authentic products; suppliers and retailers can respond immediately when something is amiss.
Surefront’s agile PLM is the answer to the product transparency problem that’s plaguing modern CPG brands. And Surefront is the only product lifecycle management solution on the market that lets suppliers and retailers interface with external suppliers.
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