Revamping the Role of CPG Marketers: Equipping Them to Achieve Success Amidst Intense Market Competition
As we dive into 2025, economic pressures, evolving shopper behavior, and a rapidly evolving marketing environment create a mixed bag of challenges and opportunities for brands and retailers in the consumer packaged goods (CPG) space.
Cadent's latest research highlights four main factors CPG brands need to keep in mind: consumer cost sensitivity, aggressive retailer tactics, soaring private label growth, and intensified marketing investments. Let's break these down and discuss how they might affect your business and how you can prepare for another year of uncertainty.
Consumer Cost Sensitivity
While prices have dipped from their pandemic highs, consumers are still feeling the pinch when it comes to purchasing goods and services. At the beginning of the year, the Consumer Confidence Index plummeted 5.4 points, continuing its downturn as shoppers express concerns about future business conditions.
With tariffs looming, the potential increase in the cost of goods and services could further strain consumers' wallets, impacting their purchasing decisions, and potentially leading to losses for CPG brands. Brands may need to reevaluate their marketing efforts in response.
Aggressive Retailers
In 2024, retailers rolled out price cuts and deals to attract and retain cost-conscious consumers. Brands like Walmart, Target, and Aldi were among those that took a price reduction approach, differentiating themselves from their competitors during the summer.
Retailers kept this trend alive towards the holiday season, offering holiday meal deals to keep price-sensitive shoppers interested. This strategy proved successful, allowing retailers to report better-than-expected earnings. I expect retailers to maintain this approach through 2025, continuing to tap into sales growth and building consumer loyalty.
Private-Label Growth
Private-label products have gained popularity as a way for consumers to save money, choosing cheaper store-brand alternatives over more expensive brands. According to research from Placer.ai, discount and dollar stores, and superstores saw a significant increase in foot traffic in 2024.
The growing desire for value-priced products has pushed retailers to increase the availability of private label products, with the grocery sector seeing a 0.4% year-over-year increase in the share of private label products. This trend is expected to continue, with major retailers like Kroger and Target introducing new private-label lines in the coming months.
Marketing Investments Increase
As CPG brands look to market themselves to consumers, I expect marketing investments to continue rising in 2025, with a stronger focus on higher-performing media channels, such as TV streaming, social media, and retail media, while pulling back on traditional media.
With a competitively charged landscape, these marketing investments will be vital for CPG brands looking to distinguish themselves in the market.
Developing a 2025 Strategy
To succeed in 2025, CPG brands need to lean into data-driven decision-making and focus on quantifying the impact of all variables, from marketing budgets to environmental factors like pricing, distribution, and competition. By making real-time, data-driven decisions, brands can respond to changes in their market and remain flexible in the face of uncertainty.
Additionally, CPG brands should work toward connecting marketing investments to financial outcomes, as economic pressures continue. By linking marketing efforts to clear financial results, brands can demonstrate the tangible value of their investments, ensuring that every dollar spent delivers a measurable impact.
Ready to Navigate the 2025 Landscape?
To successfully navigate the challenges and opportunities in 2025's CPG landscape, consider adopting the following strategies:
- Tiered and dynamic pricing --- Offer a range of price points by catering to different consumer segments and reacting to market trends in real-time.
- Enhanced customer engagement --- Employ loyalty programs, data-driven decision making, and personalized pricing strategies to foster lasting customer loyalty.
- Dealing with private label growth --- Focus on quality and value, highlighting your unique value proposition to remain competitive.
- Data-driven marketing --- Invest in marketing efforts that prioritize customer retention and regaining lost customers.
- Omnichannel approach --- Integrate digital and physical channels to create a seamless customer experience while maintaining pricing consistency.
- Leveraging technology --- Utilize AI-led demand forecasting tools, integrated technology solutions, and predictive analytics to drive opportunities and growth in 2025.
- Profitability focus --- Employ profit-based pricing strategies and value enhancement to ensure the long-term success of your brand.
By following these strategies, you can adapt your CPG brand to the obstacles and opportunities that 2025 presents, ensuring that every marketing investment delivers maximum impact.
In the context of Cadet's research, Greg Dolan, the CEO of Cadent, commented on the importance of understanding consumer cost sensitivity in 2025, stating, "Consumer cost sensitivity will continue to be a major factor for CPG brands, and it's crucial to adjust marketing strategies accordingly."
Marketing efforts in 2025 are expected to shift towards high-performing channels, including TV streaming, social media, and retail media, as mentioned by Dolan during a presentation at the B8EB403EDBF73F6CA3AC7E70A41D92E4 marketing event.
Understanding the impact of aggressive retailer tactics and private label growth on CPG brands is essential for developing effective marketing strategies, as pointed out by Dolan during his discussion on navigating the 2025 landscape.
