By Paul Kanwar on Apr 25, 2019 7:11:00 AM
Today’s consumers want instant product information – so they can check if the milk in their chocolate bar is safe or if the chicken curry they are about to purchase contains allergens. With higher levels of scrutiny of supply chains globally, CPG brands are turning to smart packaging to help track items from farm to fork to bring transparency to consumers.
While traceability has often been the primary reason why consumer products are initially tagged with serialised tags, product digitalization provides a major opportunity for marketers - built around loyalty and direct customer engagement. For CPG brands looking to deliver creative consumer experiences and build direct, fulfilling relationships with their customers, product digitalization is a game-changer.
Smart packaging is a form of intelligent packaging which opens a digital channel for products to capture and share information, plus interact with other devices. Smart packaging provides opportunities for brands to create two of the most critical contributors to purchases - loyalty and advocacy, through increased touch-points and direct interactions.
In its ability to connect brands directly with consumers, smart packaging is transforming CPG marketing practices in five distinct ways:
1) Direct-to-Customer Relationships
The consumer-packaged goods industry has historically relied heavily, if not solely, on retailers to sell their products, with limited details about who their end-consumers are let alone their post purchase behaviours. In-store promotions still remain the most common tactical tool in a CPG brand’s armoury, but as the uplift is often driven by heavy category users, growth in market penetration is out of reach.
After the sale is completed, the best marketers want to be present at the point of consumption. A serialised QR code on-a-pack opens a door to this moment as this is the time for a brand to start a conversation. Brands can take advantage of this opportunity by turning the conversation into a value exchange through giving end-consumers a small gift, a thanks-for-their-time, and ask for feedback - all essential steps to signing up the customer for further rewards and benefits.
This is the purpose of your loyalty program - a retention effort built around your brand values, rewarding customer participation such as sharing experiences, and encouraging re-purchase. Throughout the program, digitalized products continue to link the physical and digital worlds, an invaluable tool to track transactions in real-time. Listening, learning and improving the loyalty offer will gradually build one-on-one relationships between brands and consumers at scale.
2) Branded Solutions for Better Experiences
With digitalized products, consumer brands can now do a whole lot more than digitally duplicate what’s already on the product labels; they can deliver unprecedented tailored and targeted direct-to-consumer experiences.
To leverage the opportunity, CPG brands have to move from simply selling a product to developing branded solutions that deliver a service around the product. A great example of this is the Tide Spin on-demand laundry and dry-cleaning service that Procter & Gamble trialled in Chicago.
Consumer products, from detergent and hairspray to tortillas and alcohol, are already delivering category-relevant experiences to their consumers. With smart packaging, consumers get real-time access to product/service/information when they want, and wherever they want. This combination of physical product with digital information will change how consumers perceive brands and ultimately, how they engage with them.
3) Content as a Layer of Engagement
With connections established between CPG products and their consumers, smart packaging needs a way to keep their customers interacting. While a loyalty program is effective at encouraging and rewarding certain behaviours, the right engaging content is vital to make every interaction a positive and entertaining experience. Imagine this content as a layer of engagement on the digitalized product.
Matching and then delivering specific content to a particular person has always been a challenge for brands. With smart packaging, content delivery can be optimised for each audience – maximising its relevance – for higher levels of engagement and more memorable experiences.
Diageo’s QR-code connected whisky bottle, for example when scanned by a smartphone, can conveniently serve the consumer promotional offers such as discount on a future purchase, provide suggested cocktail recipes, and supply exclusive content. Ads can then be served to the consumer according to their needs and product usage, enabling highly-targeted ads at a contextually relevant time.
4) Rich Customer Data
Direct access to customer data has often been a challenge for CPG brands. Historically they have sold through retailers, limiting their ability to capture deep transactional data. Yet with digitalized products, the link between a specific customer and a specific package means that every exchange can be attributed to a particular customer – thus generating a lot of valuable data on each and every consumer’s behaviour.
Digitalized products are able to provide granular data on consumer spending patterns, behaviour and the most influential touch-points. Gaining such detailed insight in real-time has powerful applications. Campaigns can be fine-tuned for better results, content tailored for maximum impact, or consumers targeted with relevant promotions to increase conversion rates.
How brands use the rivers of data feeding in from smart packaging will lead to inevitable questions about privacy and security. Brands need a transparent approach to how they’re using data and ensure there is a clear value exchange. Consumers will need to feel they’re receiving something both tangible and relevant as a reward, in exchange for sharing their information.
5) Delivering Trust & Transparency
Trust and transparency are the top brand values in the digital economy. Because consumers now have higher expectations of brands — around how the brand enhances their lives, their community and society – brand marketing should be open about topics that have a broader societal impact: the environment, community and supply chains.
Smart packaging is among the group of technologies which can help with the governance of supply chains and provide consumers with the timely information they need in order to trust the brands they are buying from.
Italian food firm Barilla, for instance, has worked hard to create traceability in its supply chain. By scanning a QR-code, consumers can view all the stages of the production process, from farm to fork, via a linked website. Details are provided about the origin of the durum wheat varieties together with background detail on the harvest, milling and movement through the supply chain to Barilla’s plant in Parma, Italy, through to the point-of-sale.
Smart packaging and product digitalization is all about data and insight. It gives CPG companies the power to understand their supply chains in detail and gives brand marketers the ability to see how people are consuming the products in the context of their daily lives.
By combining these insights, brands can win consumers’ attention and continual engagement. They can build services and products which synchronise with consumers’ lives making their presence vital and their brand valuable. This is the exciting opportunity being offered by digitalized products.