CPG marketing puts the focus on supply reassurance

What consumers want to hear from companies like Kruger and Clorox when their products are already flying off store shelves.
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CPG marketers pride themselves on being keyed in to changes in consumer demand and responding as needed. And right now, amidst the COVID-19 pandemic, Canadian consumers are most concerned with one thing when it comes to their purchases: product availability.

Susan Irving, CMO for Kruger Products, says the company is focusing its efforts on high volume SKUs where brands like Cashmere bathroom tissue, Sponge Towel paper towels and Scotties facial tissue play, increasing its capacity and “largely meeting surge sales demand.”

Irving says that although there has been a rise in demand for tissue products, and that demand is expected to level off after consumers have “stocked up.” However, she says the company is seeing more cleaning occasions for paper towel products, as disposable paper products are an even more important component of clean hygiene in times like these: 79% of consumers use paper towels to clean their kitchen and 58% of consumers use paper towels to clean their bathrooms. Irving says pricing has not been changed in response to the surge in demand.

Price control is an important element of maintaining consumer trust at this time. Shoppers Drug Mart faced a brief call for boycott on Friday among consumers who believed the retailer was engaging in price gouging on toilet paper, though the retailer confirmed that the prices consumers were seeing was the regular price, which had been set months in advance (it later moved some sales up in the schedule to provide a degree of relief to customer experiencing price tag shock).

In the U.S., cleaning and disinfectant maker Clorox saw its share climb 2.5% to an all-time high as its products flew off shelves. Third-party sellers were re-selling its cleaning products online at an exorbitant rate, and in response, Clorox stopped ad-display advertising activity on Amazon, which is planned to continue irrespective of how inventory levels change. Amazon has also since ramped up its own efforts to crack down on price-gouging on its platform.

Matt Kohler, VP of marketing for Clorox Canada, was unable to speak specifically to the supply chain in Canada, but says that consumers and businesses are figuring out how to react to a changing environment each day. “For our part, we’re prioritizing safety above all else – the safety of our employees and the public. In times like these, our principle is to act responsibly.”

Ken Wong, professor of marketing at Queen’s University’s Smith School of Business, says big CPG brands “have to show that they are being fair in the allocation of product.”

“People will want to feel that they have a fair chance of getting their supply,” he says. “It’s important that you stress you are doing everything you can to produce as much as you can in a democratic way.” If not, Wong warns, with media “hungry for stories on Corona virus, you will be discovered.”

David Kincaid, managing partner at Level5 Strategy, says there’s been a crisis-driven inflated level of urgency created for brands and we’ll see those on the front lines – P&G, Clorox, Kruger and others - be the first to move and refocus their dollars into appropriate media and adjust their messaging so that it’s one of assurance their supply chains are robust and they’re operating above-board. It’s about “letting people know they’re here, and not taking advantage of you.”

Though Irving couldn’t provide details about how the company’s marketing was changing during an ever-changing situation, she’s ensuring Kruger’s marketing communications would be seen as “appropriate,” and the company would also ask customers to limit their assortment in order to drive efficiency.

Some of these big CPG brands, Kincaid says, may even consider offering products for free, if supply chains allow.

“These guys are top-tier brand marketers, who’ve worked out the business models and have looked at what kind of retail and wholesale inventory they’ve got,” Kincaid says. If COVID-19 cases continue to grow exponentially, he says, some of the brands could say if this is the right thing to do, it could help serve their “higher-order” brand purpose, he says.