Zeina Estwany Barakat, CCO ME & Partner at Product of the Year, on how innovation can be sparked by chaos.
Businesses simply cannot operate as they used to. What made an organization successful in the past will no longer be possible after the Covid-19 crisis. Considering where we stand today, a quote by Albert Einstein is enlightening: “We cannot solve our problems by using the same kind of thinking we used when we created them.”
The pandemic has presented us with both a threat and an opportunity, and as history shows in this graph by McKinsey, only those who innovate across the board overcome the threat and turn it into an opportunity.
Source: “Innovation in a Crisis,” McKinsey, June 2020
Covid-19 has spurred the most significant change in the FMCG sector where health- and hygiene-related categories boomed whereas non-essential and impulse categories were affected and recovering slowly.
These FMCG companies are dynamically shifting their business models to adapt to a new market reality. But how are they doing this? How are they reacting to evolving consumer behaviors? How is their innovation strategy serving consumers’ altered needs?
From my own experience dealing with clients in this sector, I have identified five key strategies:
Invest in Zero Moment of Truth (ZMOT). According to Google, 53% of shoppers say they always do research before they buy to ensure they are making the best possible choice. Winning the category search will make the brand top of mind in browsing lists.
Today, the focus should be on e-commerce and creating direct-to-consumer platforms like the ones launched by Pepsico and Heinz Kraft this year. Convenience is a major driver behind the shift to online retailing. Seeing how it is reaping success across several platforms, like Amazon for example, we recommend boosting e-commerce ad spend.
Empathize with your customers. The massive shock caused by the pandemic will continue to resonate for years to come. According to a survey conducted by Earnest & Young in the MENA region last July, the 31% of consumers hit the hardest by the crisis had to cut on their spending deep and across the board, except for household and home hygiene products.
In that context, some organizations are thinking outside the box and developing special activations to interact, attract, and encourage consumers. For example, in August, Al Ain Water by Aghtia developed the “Shop with Zero Limits” national campaign in the UAE, offering a chance to win up to AED100,000 in cash.
Activate transparency and trust. According to Bain & Company, consumers showed a preference for trusted brands during the pandemic. However, when consumers could not find their preferred product due to supply chain complexities, they changed their shopping behavior: many tried a different brand or shopped at a different retailer. So, what are brands doing to re-foster this trust?
Brands are partnering with reliable retailers to create value for customers. They are making sure their products are available at retailers and on trusted online platforms. They are focusing on quality through expert labels and trusted certifications. Research shows that labels such as the Product of the Year do play an important role as trusted sources of information in an increasingly complex market.
Bring new customers in. McKinsey’s consumer sentiment survey in Saudi Arabia found that word of mouth and online display ads are powerful tools for consumers to discover new brands. They have become key to win over new online shoppers through value plays, more user-friendly experiences, and investments in moments that surprise and delight.
Connect with purpose. Even before the pandemic, Millennials (the largest consumer group in the GCC) wanted to know what their brands stand for, according to an Euromonitor International report. Companies must consider the value they offer beyond the product, such as the services and experiences they create, based on consumer values. For example, Unilever’s “Sustainable Living” brands (Dove, Vaseline, and Lipton Tea) stand out every day by embodying the company’s purpose of reducing environmental footprint and increasing social impact.
In conclusion, as brands brace for whatever lies ahead, they must take a serious look at the mirror, embrace transformation, and retool themselves. Innovation is not only a strategy; it is a mindset that will enable companies to survive and thrive even when disruption occurs.