STUDY: CPG FIRMS NEED TO BUILD CONSUMER TRUST

NEW YORK -- Consumers are more interested in respect, trust and honest pricing than product features, function and low price, according to a new consumer packaged goods study.

ing to the 7,000-person CPG survey conducted by Cap Gemini Ernst & Young, a management and IT consulting firm here.

CPG companies need to do a much better job in building trust, according to the study. While 83% of consumers said they "strongly agreed" that brand manufacturers' products need to perform up to advertised claims, and 74% said it was important that the ad claims they see are true -- only 16% believe that "manufacturers' claims and communications about their products are generally true."

So, while retailers have had the most influence over the consumer, consumers expect to see human values reflected in their interactions with manufacturers as well.

"Those that ignore this message do so at their great peril," said Fred Crawford, executive vice president, Consumer Products Retail & Distribution, Cap Gemini Ernst & Young. "CPG companies have many opportunities to assert their own influence over both consumers and retailers. The most successful CPG companies are utilizing this strategy."

Results were discussed during a panel discussion two weeks ago on critical issues affecting the CPG industry. Crawford was joined by two other participants: Christine Overby, CPG analyst, Forrester Research, Cambridge, Mass., a technology research firm; and Mark Baum, executive vice president, Grocery Manufacturers of America, Washington, the association of food, beverage and consumer product companies, and president and chief executive officer of the Association of Sales & Marketing Companies, a subsidiary of the GMA, a trade association representing sales and marketing agencies and manufacturers.

Crawford discussed eight ways for CPG companies to build and strengthen a values-based strategy that will make their products more relevant to consumers. They are:

Messaging. This refers to what the company is trying to communicate to consumers. As an example, he cited Anheuser-Busch's "Whassup!" ad campaign.

Selling. By controlling the distribution channel in which its products are sold, a CPG company can differentiate itself from the competition, said Crawford. He cited Coke's "everywhere, always in stock" strategy by making its products as accessible as possible to the consumer.

Community. This is the set of people among whom a company creates a sense of affiliation.

The Offer. This is the actual product or service that a company sells. The offer can extend beyond a single product, like Colgate's Total brand of products.

The Brand. Companies can influence the context of how their brand messages will be received by consumers. For instance, he said how Gerber, realizing its brand was more about trust and quality than food, extended into older age groups and other product lines. The Customers. By changing the size, formulation or packaging of their brands, manufacturers can better match a particular retailer's format and "fit" into their environment. Procter & Gamble, for example, created a smaller-size package for its Dawn dishwashing liquid for Dollar General stores.

Discontinuities. These are events that manufacturers can't foresee, like the Tylenol-cyanide scare, according to Crawford. Johnson & Johnson, for instance, actually strengthened its Tylenol brand by communicating effectively and clearly with its customers when the event occurred, he said.

The Consumer. Some of the most successful companies have discovered ways to assert their influence by taking into account different consumer needs and meeting those needs. "It's clear that CPG manufacturers have an opportunity to reach out and influence the consumer and the retail outlet," said Crawford.

Along with building trust, CPG firms face other challenges. Among them is how to use the Web to build human values. Overby of Forrester Research said that while the Web is not a viable direct sales channel for most CPG firms, it is a strong communications vehicle. "Consumers are connecting with brands online," she said. "They're open to a dialogue with manufactures and are receptive to e-mails, contests and online coupons."

Kraft Foods is the leader in this area, as 18% of respondents said they've interacted with the company via the Web over the last year, according to a Forrester survey. Other leaders include Mars (12%), Procter & Gamble (12%), Hershey Foods (11%) and Campbell Soup (10%). Respondents said they interact mostly by visiting company Web sites.

Citing results from a Forrester study, Overby said consumers are interested in subscribing to e-mails about new products (38%), home-cleaning tips (30%), home decorating (30%) and meal planning and recipes (29%). Of those who are interesting in meal-planning topics, most are concerned with money-saving recipes (65%), time-saving cooking tips (58%) and recipes based on ingredients they already have (57%).

Meanwhile, Baum of the GMA and ASMC said brands are uniquely positioned to resonate in today's consumer environment. In these times of globalism -- which has left many people with fewer roots to their communities -- and post-9/11 fear, consumers look to brands for stability and certainty.

He cited that consumers are favoring nostalgic and familiar brands. According to a recent GMA study, about 40% of consumers said they currently use a particular product simply because their family has used it for a long time.

Brands can benefit from "remembering their roots," meaning they should maintain their core consumers and rely on their long-standing tradition of satisfying consumers in advertising, media messages, products and services, said Baum.

Product innovation is a critical success factor. While many marketers are focused on line extensions and incremental packaging changes, Baum said they should be more concerned about true product advancement. Some CPG companies have been progressive in this area by marketing products that cater to convenience, women and health, for instance.

"Everything our industry does must be focused on meeting consumer needs and wants," said Baum. "Companies that anticipate these needs will find success; those that don't will be abandoned."