What is a CPG?
It’s a consumer packaged goods product. They are usually branded. Also known as fast moving consumer goods or FMCG, they are distinguished from the less often purchased, slower moving, and higher priced items (like houses, refrigerators, cars, or even electronic devises and clothing).
CPGs are products you use every day, from toothpaste in the morning to wine at night. CPGs can be food, beverage, sundries, cosmetics, cleaning products, and just about any other item the average consumer uses on a regular basis. These products get consumed, used up, or run out. Therefore, they need to be replaced frequently.
CPG Distribution
Because of the high turn, CPGs are generally distributed to a retail store that is located in a populated area. It is currently more efficient to shop at a local store that carries thousands of CPG products to choose from than to have each item individually delivered to households by the producers.
With CPGs, the cost of shipping is the elephant in the room. Most consumers will not pay $5 to have a $5 item delivered. However, they may choose to have 50 CPGs delivered in a single delivery. If the CPGs come from a store or a warehouse near them, they avoid the high shipping costs for individual items. This is why we see Amazon getting into the bricks-and-mortar grocery business. They are already set up to take orders online. And now, they will be able to efficiently deliver from local stores to local addresses.
Still, most CPG companies vie for shelf position and floor displays in bricks-and-mortar stores because they know that the stores already have traffic that is liable to discover their products on their next visit. They know that tactile handling and physical comparison shopping gives them a better chance at selling their products. Online sales are a race to the bottom price-wise and are much more difficult to demonstrate quality. They also know that shoppers like the social experience, convenience, and immediacy of instant gratification when retail store shopping for their CPGs.
What is CPG marketing?
It is everything that a CPG producer does to persuade consumers to buy their products. But unlike selling higher priced items and online sales, CPG marketing focuses mainly on selling within the confines of a physical, overcrowded, and somewhat harsh retail environment. This type of marketing is confined to the limits of the retail market. This includes signage, placement, pricing, labeling, logos, endorsements, and programming.
What does CPG stand for in marketing? Consumer packaged goods with the emphasis on packaging. It is through packaging that CPGs stand out and distinguish themselves in the marketplace. It is really the merchandising side of marketing where the question is, “Can you find it?” and “Does it compel you to buy it?”
The CPG industry has been around for more than a century. Over the years, they have developed best practices that get their CPG products through the distribution system, onto the shelf and into your cart. The industry is changing but certain classic principles remain.
Consumers want to see it, feel it, and compare it physically, before they buy. This will be the big challenge for online CPG sales. Getting the customer to buy a new product online with just a picture will never compare with retail CPG bricks-and-mortar retail sales because if it’s a CPG, you want to hold it in your hand before you buy it!
