Cost leadership, differentiation, and focus are all a means of targeting consumers with the right offers based on their individual preferences. With today’s marketers seeing a rise in demand for personalization, the ability to appropriately reach consumers with targeted messages is paramount. There are three marketing strategies which brands can leverage to reach consumers regardless of which category influences their buying behavior.
The Basics of Michael Porter’s Generic Competitive Strategies
Michael Porter’s model was so groundbreaking in 1979 because it crossed industries. Porter believed that regardless of the type of product or service sold, the competitive strategies which provided the best ROI focused on one of three aspects:
Such strategies involve the overall cost for the quality received. Plans work around discounts and rewards. They can also focus on quantity, like in the case of consumers buying in bulk to obtain volume-based discounts.
Differentiation is everything that makes a product appealing aside from price. This marketing strategy can involve quality, brand reputation and expertise, consumer loyalty, and product novelty, among other factors.
Focus is the hybrid category which determines how companies select their demographic. As such, most companies leverage either price-focused or differentiation-focused models in their advertising.
3 Competitive Marketing Strategies
1. Using Mobile Rewards Programs for Cost Leadership
While price is often considered the primary driver of consumer purchases in the CPG industry, less than 2% of consumers compare CPG product prices online. As this is the case, price focus is less critical in e-commerce than it is in the shopping aisle. In stores, consumers see hundreds of products, with prices prominently listed. Generic and white label brands have an apparent price advantage in the shopping aisle. In resolving this, brands should consider a mobile marketing strategy centered on rewards.
2. Standing Out With Mobile Marketing
Brands that choose not to compete on price point must instead find a way to make their products stand out. Mobile marketing allows brands to gain consumer attention, but only if they’re able to create messages which resonate with their target markets. There are several differentiation drivers brands can use in these efforts.
Loyalty is a big sales driver for CPG brands, but these relationships must be cultivated and rewarded regularly. Kellogg’s offers a prime example of how a CPG brand can leverage loyalty through their Kellogg’s Reward program which awards points for purchasing items in the company’s extensive family of products. Consumers can scan receipts and enter product codes to receive rewards, and the company has made many efforts to increase mobile access. Ensuring rewards programs are mobile is critical for CPG brands, as they can travel with the consumer while they’re in the store.
Some brands can leverage their specific expertise with a product or the knowledge of influencers to establish strong sales in a category. CoverGirl did this through their influencer relationship with brand ambassador James Charles, the brand’s first male spokesmodel. Charles is a recognized makeup artist with millions of page views and followers for his tutorials on Instagram and YouTube. By partnering with Charles, CoverGirl extended his expertise to their brand. The partnership created awareness through his followers while also establishing branded trust and credibility.
Quality can speak to the specific ingredients in a product, how it is made, or the customer experience in branded interaction. Campbell’s Kitchen app, available via smart speaker, is an example of higher quality interaction. The company offers consumers recipes and other information and then uses data from those interactions to provide better recommendations and instructions. The use of both smart speaker-enabled technology and artificial intelligence in predicting consumer behavior heightens the customer experience and, as a result, elevates brand quality perception. This strategy can also act as a critical driver for e-commerce grocery sales by allowing the company to direct consumers to their product in the digital store.
The uniqueness of a product can be its primary selling point, but this is often difficult in the overcrowded CPG industry. Unless a brand can reimagine the product, it’s challenging to use novelty as a selling point in CPG sales. Brands sometimes reinvent an established product to create a competitive advantage. This was the case in the strategy for Tummy Zen, a heartburn product developed by Yale’s Medical School. When introducing the new product, the company focused on sharing information about its breakthrough use of specific zinc properties via video testimonials on YouTube. The brand story becomes the primary selling point, as this is a breakthrough solution to heartburn created by some of the nation’s leading medical minds.
Unilever has maintained its strong reputation by focusing on sustainability. The company made several green initiatives recently, including a goal to use all recyclable packaging for its products by 2025. As today’s consumers are concerned about their carbon footprint, such a move appeals to them. It is the hope that consumers can trust Unilever to follow through on its initiative due to the company’s reputation. This alignment of goals engages consumers and encourages them to choose the company’s products.
3. Targeting the Right Consumers With Programmatic Advertising
The final aspect of Porter’s model is “focus.” This idea is less about advertising, but instead how the brand chooses to select an audience. This category overlaps into the other two, as in most cases, price and differentiation will play roles in the audience the brand selects. It’s about breaking down the audience within an audience to target niches. Consider the instance above where CoverGirl differentiated its product by establishing a relationship with male spokesmodel James Charles.
In this case, CoverGirl also leverages a focused competitive strategy. The entire cosmetics category is aimed at a broad demographic of female users. However, CoverGirl recognized a growing niche of male users of cosmetics. By bringing on a male spokesmodel, they spoke to that smaller segment of emerging users. They also created a way of targeting programmatic advertisements which could significantly boost their return on investment. Programmatic advertising options allow brands to specifically focus messages to users based on a wide range of criteria, including:
Age, gender, family status, and education all lay a foundation for brands wishing to target consumers during specific stages of life.
Income can be gleaned from education and employment information and tells brands which consumers have the most disposable income, as well as those who may be more thrifty.
Insight on the celebrities consumers follow, activities they like, and their hobbies can help brands improve their messages and target influencers to grow brand awareness.
Geo-targeting allows brands to grow their market share in specific areas as well as create ads for local events. It can also help brands discover niche followings tied to particular locations.
Consumers may follow specific brands to which they are loyal, allowing other brands to check out their competitors and see how they can attract these consumers to their products in the shopping aisle.
Partnering with micro-influencers will enable brands to expand consumer awareness with minimal investment. Brands could target individuals with friend lists in the thousands, as an example, to increase their visibility. Micro-influencers are typically those who have under 10,000 followers and often work in exchange for discounts, coupons, and other deals on products.