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Once you’ve worked in marketing for let’s say, over two years. You come to realise that there can be tribal divisions between FMCG marketers, Retail marketers, and B2B marketers. So what are the actual differences between these three tribes (FMCG, Retail, B2B), if there are any, and what are the similarities?

FMCG Marketing

FMCG Marketing definition: Fast-moving consumer goods (FMCG) or consumer packaged goods (CPG) are products that are sold quickly and at relatively low cost. Examples include non-durable goods such as soft drinks, toiletries, over-the-counter drugs, processed foods and many other consumables. Think of your average corner store or supermarket.

From a consumer psychology perspective FMCG marketers need to ensure that their brands have built a high level of brand awareness, and brand recall. What this means, is that when you go into a corner store looking for a drink to satisfy your somewhat-out-of-control sugar addiction, lot’s of people think the category “soft drink”, and voila, on the shelf in front of them are three kinds of Cola. Coke, Pepsi, and Sugar Daddy Cola.

So, we already know you won’t buy Sugar Daddy Cola, because you have zero awareness of it, and you can’t recall it’s brand attributes, and it’s imagery is meaningless to you.

Pepsi, you have awareness of it, you can recall the brand, and you know basically what it’s brand image is about. But, you don’t feel favourable to Pepsi! The last you heard they did some awful piece of social advertising which got negative reviews starring one of the Kardashians. Not too mention it was during a Pepsi commercial that Michael jackson was set on fire somehow.. So  I know about Pespi, but f*ck Pepsi.

Coke, iconic Coke. I have awareness of Coke, I understand the brand image (fun, social, cool, zero guilt), and I can easily recall it when I’m soft drink shopping. Plus, my perceptions are positive, Coke makes me feel good emotionally. So we buy the Coke.

So what does an FMCG marketer do?

They often spend ENORMOUS sums of money building their brands so that when shoppers walk into retail shops they are aware of their brand, they can recall it based on what they’re going in to buy (e.g. Coke is synonymous with the Cola category, but Sugar Daddy? Not so much), and the brand imagery is favourable/likeable, and ideally resonates with the shopper.

And if it resonates with the shopper, the shopper will buy it, which puts money in the pockets of the retailer, which means your brand stays on shelves, and everyone in the supply chain is making money (except the consumer of course).

Needless to say, some brands are done better then others.

But of course, if your brand is new, or there is a low level of awareness for your brand, or your brand is a less favourable than your competitors, there are ways to gain market share.

  1. Rebrand – build your brand again, and promote it’s new attributes/personality. It can differ from the market leader, or it can be similar. The choice is yours. Following the leader isn’t always a bad strategy though, so don’t feel you HAVE to reinvent the wheel. But then again… This is of course, where you would invest time in market research such as questionnaires and focus groups.
  2. Go cheaper – Battle on price. Be cheaper than the competition. This can act as an economic incentive, after all people do also shop with their wallets too not just their hearts, never lose sight of this fact. If you can encourage shoppers to buy your brand by dropping your pants on the price for a specific period of time (one week? one month? Every second weekend a month for a year?) then you can win brand loyalty, recall, and experience. Effectively switching a customer from a competitors brand to your brand. After all, an FMCG marketer wants shelf space in a retailer, BUT the retailer (who is the FMCG marketers direct customer) would prefer to have products on customers/end-users shelves.
  3. Go more expensive! – position your product as the upmarket version of competitor brands. Either through inputs and quality, or brand positioning. Thus, you can increase your price and increase profits. Although the volumes might be less, because you’re making more money… who cares? And trust me, retialer LOVE high margin product.
  4. Other promotion – similar to going cheaper, perhaps encourage the customer switches to your product by running an “enter-to-win” type promotion, a “buy 2 get 3” promotion, so one and so forth.
  5. Samples – Just get customer using your product! Who cares if it costs you some money or samples. E.g. post cat food to letterboxes, offer samples in the supermarket. The aim of game is to “switch sell” the customer into your brand/s. Getting them to use your product (albeit for free for a limited time) can be a good start.

In a nutshell that’s what you should be concerned with in FMCG, and a few ideas of how to do it. In FMCG, often they sell very cheap products (like a can of coke), so they want to sell large volumes to large quantities of consumers… and quickly! Hence FAST MOVING consumer goods. Also, food products can have a short shelf life so they need to move through them quickly.

B2B Marketing

B2B Marketing definition: B2B (business-to-business) marketing is marketing of products to businesses or other organizations for use in production of goods, for use in general business operations (such as office supplies), or for resale to other consumers, such as a wholesaler selling to a retailer.

First of all, usually a part of FMCG marketing involves some degree of B2B marketing. For example, Uncle Ben’s rice needs to build it’s brand in the eyes of the customer, but also it needs to do good business with the supermarket or corner store that it sells into.

B2B marketing is incredibly varied, some examples would be selling coffee beans to Kraft foods (which they in turn sell to a retailer, who sells to the end-user). Microsoft, who sell software packages to schools and universities (who in turn charge students fees), John Deere who sells tractors to a farmer (who ploughs his fields and sells his produce to a market, who in turn sells it to end-user), television channels who sell advertising time-slots on FMCG companies or retailers (who advertise product and brands to customers hoping they’ll buy it, or build brand awareness).

B2B marketing is varied, but you will NEVER be selling to an end-user directly. Needless to say, you can still build your brand with consumers, but they won’t buy from you directly. If you do, you might seriously anger a retail or on-seller partner, which is not recommended.

Furthermore, in B2B vs B2C marketing, in both occasions you’re marketing to human beings. B2B however is often a small & focussed target market made up of committee’s, in a higher-risk purchase environment. However, in B2C marketing your target market can number in the millions, made up mostly of individuals, in a lower risk purchase environment.

In B2B, you might only sell one product a year, but it could be a product that you sell for millions of dollars. And generally speaking, sales staff will be heavily involved with process too (e.g. offering more information, relationship building over a long period of time). On the other hand, in B2B you might sell thousands of products to another business and only be making twenty cents off each item. It doesn’t matter, you are thinking in volume not just profit.

Retail Marketing

Retail Marketing definition: Retail is the sale of goods and services from businesses to an end user (customer). Retail marketing is the process by which retailers promote awareness and interest of their goods and services in an effort to generate sales from their consumers.

Now, from a consumer psychology perspective, retail marketing differs somewhat from FMCG marketing or B2B Marketing, because a retailer doesn’t usually invest anytime in building the brands it stocks, the FMCG marketers and B2B marketers have already done this. But it does invest lots of time in telling you which brands/product it stocks. There are five key things people want to know when shopping from a retailer:

  1. What categories do they sell? e.g. food? electronics? fashion? sports goods?
  2. What brands do they sell? e.g. Coke? Samsung? Gucci? Adidas?
  3. Where are they located (where can I buy from)? e.g. Online? Locally? Across town?
  4. What are their store hours? e.g. 9am-5pm 7 days a week? Late night Thursday? 24/7 online?
  5. How long is the sale on for? e.g. 3 days only! Today only! Must end Sunday!

If nothing else, ensure that you answer the five questions above when doing a general retail promotion. People need to know what you sell (breadth), how much of it you sell (depth), where they can get it (place), when they can get it (store hours), and how long it’s available for (e.g. three days only!). This last point, how long is it available for, can be a good place to start as a call-to-action. If people perceive that time is running out, and they might miss out on a deal (assuming they’re in the market for your product), they will make sure they can come and buy something from a retailer shop.

Remember to stay price competitive, because whilst shoppers can be brand loyal, they won’t necessarily be loyal to the retailer they buy that brand from. E.g. Shop A is advertising a Samsung TV I want for $300, but shop B sells it for $288. I’ll buy from shop B.

So when working as a retail advertiser, ensure you answer the above questions, remain price competitive, and entice people where necessary with a ‘hook’. A hook can be a hot price, a value add (e.g. bonus sound bar with your Samsung TV, or a bonus scoop with your John Deere tractor), a tight timeframe to score a ‘deal’, a NEW product, or a bundle buy (buy 2 get 3), to name a few.

Further reading?

To read a little more, try my previous blogs about normative influences versus informational influences to better understand the psychological drivers between low-involvement purchases, which are generally associated with retail and FMCG, and high-involvement purchases, which are generally associated with B2B.

 

 

 

 

 

 

 

 

 

This is part two of a two part blog on how social influences effect consumer behavior (i.e. what drives people to buy ‘stuff’ on a psychosocial level). Part one is on Normative Influences and part two is on Informational Influence.

 

Part Two- Informational Influences…

Let’s use the following example, to illustrate the difference between Normative and Informational Influences:

You go to a Sunday market with your partner, and you both decide you want to buy a cup of coffee.

There are TWO seperate coffee stands standing side-by-side (stand A & B). Coffee stand A has ten people lined up to buy coffee, whereas stand B has two people lined up to buy coffee.

Because you are driven by Normative influences, you will most likely conform, and line up at stand A.

But! The two people lined up at Stand B, know something you don’t know. Stand B actually has better coffee, better service, their coffee is fair trade, and it’s even a little cheaper.

If you were driven by Informational Influences, you would go to stand B. regardless of the huge line at Stand A.

But hey, it’s a Sunday, you have time, and it’s only a few bucks so who cares (and anyway what’s in a cup of coffee? Coffee, milk, and the cup it comes in). So, let’s just buy from Stand A, because everyone else is. Let’s be driven to make our purchase based on Normative Influences.

However!! If you were going to spend 30,000 on a car, or 600,000 on a house, I doubt you’d be too worried about the crowd when it came to making a purchase decision. You’d become more driven to make a purchase based on informational influences.

Why? Because financial risk has just gone up considerably, and there are more features to consider (engine size, fuel economy, suspension, steering, ABS brakes, alarm, warranty, size, boot space, acceleration, torque, gears, upholstery, colour etc etc). You will definitely base your purchase decisions based on informational influences.

In a nutshell;

● Normative Influence is conformity based on one’s desire to fulfill others’ expectations and gain acceptance (Myers, 2009).

● Informational influence is conformity under acceptance of evidence about reality which has been provided by others (Myers, 2009).

B2B vs B2C marketing…

It’s timely to mention, that generally speaking you can state that B2C marketing is concerned with driving business through Normative Influences (especially low-involvement purchases like FMCG), and that B2B marketer’s are concerned with driving business through Informational Influences (although like all things, cross-pollination does in actual fact happen, and is preferred if your goal is a thorough brand building exercise).

Furthermore, in B2B vs B2C marketing, in both occasions you’re marketing to human beings. B2B however is often a small & focussed target market made up of committee’s, in a higher-risk purchase environment. However, in B2C marketing your target market can number in the millions, made up mostly of individuals, in a lower risk purchase environment.

References:

Myers, D.G. (2008) Social Psychology. Ninth Edition. New York, NY: McGraw-Hill Companies, Inc.