INTELLIGENT CPG: Packaging is the Future of Connected Marketing (Part II)
This article is the second in a 3-part deep dive into connected packaging: what it is, why it’s relevant, and what brands that expect to compete in the digital age need to do next. In Part I, we reviewed the opportunity for brands. In this installment, we explore the movements driving consumer openness.
Author, Mark Hewitt
Read the Series:
Part III: Targeting Connected Possibilities
The Consumer Trends Behind the Rise of Connected Packs
Connected packaging, embedded technology that transforms a product label into a dynamic brand media channel, is positioned to usher in a new era for CPG. It brings the most relevant moment imaginable — point of use — to life. It’s highly efficient, targeted at consumers who buy the product and opt into engagement. Done right, it’s a potential field-leveler in the battle between CPG and (digitally savvy) DTC brands, capable of redefining CPG’s role in the lives of its consumers.
Of course, for any new digital integration to be a long term game-changer, it has to meet core criteria. It must address a consumer need/demand, or it will be a fad. It must do so in a way that shoppers find uniquely delightful and rewarding, or it won’t engage them (and therefore won’t have much impact). Consumers must be ready for it, primed to find the end-to-end experience seamlessly easy. And finally, unlike episodic marketing campaigns of the past, it has to have an anticipated lifespan that reaches far into the future. It must inform the brand with the data it collects, empowering CPG to both get relevant and stay that way.
Multiple indicators, including openness expressed from the mouths of consumers themselves, confirm that connected packaging will meet these criteria squarely. It has the potential to bring strong, intersecting movements across both consumer behavior and business practices to an exciting culmination point.
The Rise of the Internet of Things. Over many past decades, technology brands acclimated consumers to expect connectivity. And everyone else is following. Smart home systems, cars, TVs, microcontrollers, personal fitness trackers, and even apparel items like the Nike NBA Connected Jersey now put people in touch with tech and teach tech how to better serve people. This year, we’re expected to hit 200 billion connected things. That’s 26 smart objects for every human being on Earth.
Thanks to shoppers’ clear affinity for early connectivity innovators (and the experience they deliver), researchers in the consumer marketing space started asking them what they think of new technology applications — including connected packaging. Bear in mind: only a relatively small number of brands have taken the leap thus far. But according to Mindshare, 64% of consumers say they are interested in the idea of internet-connected packaging.
Mobile as Primary Engagement Channel. All brands want to establish more direct paths to their consumers, but it’s worth noting where the three big tech giants — Amazon, Facebook and Google — are focusing their investments as they crunch their (unmatched) data. According to Adweek, the three spent 54% of their U.S. advertising spend on digital vs. traditional channels in 2019, with 2/3 of those budgets targeting the one they find the most promising: mobile. Shoppers may have bigger screens in their lives. But the companies that know them best believe they’ve found their favorite.
The integration opportunities are fascinating. Amazon even found a way to satisfy consumers who, while undeniably living in the here and now, still like to flip through print catalogs. The brand’s slick new mailers feature codes beside each product. See something you like? Scan it with your phone, and your order will be on its way.
Growing Consumer Openness to DTC Engagement. Among others too numerous to list, successful e-commerce brands like Blue Apron (purveyor of meal kits), Casper (of all things to shop for and purchase online, mattresses), and Harry’s (shaving supplies and other men’s care products) set new standards for direct, one-on-one shopper connection. But big players have already followed their example and structured their businesses to drive DTC contact — and sales. Nike now rakes in nearly $12 billion through DTC campaigns. That’s 30% of the company’s total global profits.
Thanks to the positive experiences they’ve enjoyed, consumers are receptive to new engagement (including DTC) at what feels like unprecedented levels. In a recent survey by Time Inc., an incredible 93% of younger consumers say they want brands to “do something new and unique” to connect with them.
Expanding Expectations for Shared Principles. Today’s consumers want to support brands that uphold two important values: radical transparency and responsible business practices. 98% of consumers say that transparency is important to fresh and packaged food, with 70% saying it influences their purchases. 75% say they would switch to brands that offer more complete product information, an increase of 93% from 2016. In terms of doing good business, 66% of consumers (and 73% of Millennials) say they’re willing to pay a higher price for brands that are sustainable. All digital delivery can meet with their approval, including connected packaging.
Bottomless Hunger for Personalization. Despite the privacy concerns that accompany all data-sharing, shoppers remain remarkably willing to share details of their lives with brands in exchange for highly personalized treatment. It starts before the consumer even knows the product on offer (80% of consumers say they are more likely to do business with a company if it offers a personalized experience) and only persists from there. Personalized distribution (subscriptions, automatic reorders, etc.) requires post-purchase engagement and yet more data. For the custom attention and convenience, consumers are happy to enter the information.
It’s worth noting that personalization doesn’t just work; it’s cost-effective and delivers outstanding ROI. Personalization can reduce customer acquisition costs by as much as 50%, lift revenues by 5–15%, and increase the efficiency of a company’s overall marketing spend by up to 30%.
Personalization also floods brands with the insights they need to develop the right future products and services, as over time, the data they collect on individuals adds up to something much bigger. The Business of Fashion reported in 2019, “Fashion is seeing the start of a seismic shift where products are ‘pulled’ into the market based on actual demand rather than ‘pushed’ based on best-guesses and forecasts.” Data-driven production is redesigning how fashion plans its next season.
Insights To Drive Action
Bearing in mind all the movements pointing toward connected packaging as the next great marketing breakthrough, CPG brands can start identifying their specific engagement opportunities. It’s not enough to recognize that people respond well to connected packs. Each brand must explore its consumers’ unique curiosities and wants, examine its brand story and search for missing chapters, and prepare to respond to the data it will gather about how people relate to their product. Connected packaging is all potential without a clear, forward-looking strategy.
We’ll explore targeting the possibilities for CPG in Part III of this series. Understanding people’s complex, intersecting motivators, businesses can start thinking about how consumers relate to brands today and how they’d like to transform perceptions and behaviors. That’s how companies can find their starting point for creating distinct connected journeys that can reshape people’s relationships with their brands.
Is your business facing a transformation? Let’s tackle the future together. You can find us at Bluedogdesign.com / info@bluedogdesign.com.
About IN THE ROOM WHERE IT HAPPENS
IN THE ROOM WHERE IT HAPPENS is an article series from Bluedog Design’s most creatively strategic minds, launched to engage the many challenges and emerging opportunities facing the business leaders of today and tomorrow.
About Bluedog Design
Bluedog partners with clients to apply principles of Design Thinking that strengthen their businesses — developing inventive growth strategies across brand identity and engagement, marketing, product lifecycles (prototyping through in-store activation), portfolio management, organizational structure and business operations.
