From Targeted Promotions to Tailored Packs: Colgate-Palmolive, P&G, and PepsiCo Respond to Consumer Shifts
Consumers are largely prioritizing value in today’s CPG landscape, but how can companies deliver differentiated products and services when the definition of value keeps changing? As Sally Lyons Wyatt, Circana global EVP and chief CPG and foodservice advisor, told CGT earlier this year, “Price and value can mean different things to different people.”
Colgate-Palmolive, P&G, and PepsiCo have all recently pointed to heightened consumer awareness of value in the U.S. market, according to recent earnings calls, responding with analytics-driven promotion strategies, adjusted price pack architecture, and new ways of communicating differentiated value.
Colgate-Palmolive
The North American consumer is still price-challenged, per the company, and so a focus on promotions has been key to delivering the value shoppers are looking for. CEO Noel Wallace said it is “making sure that you are very thoughtfully thinking about your promotional cadence and how you promote your digital coupon strategy, your paper coupon strategy, your promotions, on-pack promotions, your price pack architectures.”
Behind this effort is an analytics strategy that taps AI to determine promotion ROI, better inform investment decisions, and drive category growth for retail partners. Wallace said consumer spending has normalized some, and there’s a slightly higher promotional redemption rate behind coupons.
Related: Read more about Colgate-Palmolive’s AI-fueled promotion schedule
Procter & Gamble
P&G finds that consumer value is more synonymous with quality, particularly for product categories that are daily-use.
“Consumers don't stop washing their hair, they don't stop doing their laundry,” said CFO Andre Schulten. Because of this, consumers are more likely to pay a higher premium for a product that delivers on higher quality and meets performance expectations. As a result, P&G is seeing its existing consumers trade up.
For new-to-brand consumers, however, P&G is focused on communicating benefits through packaging and distribution to drive growth in underpenetrated categories and consumer groups, with fabric enhancers as a primary example.
“It's a more than $1 billion business, but household penetration is only about 30% on liquid fabric enhancers, only about 20% on beads,” said Schulten. “So there's a huge growth opportunity to drive more household penetration by, again, finding ways to make this proposition more appealing to more consumers.”
Related: Learn how P&G is prioritizing consumer value through laundry appliance collaborations
PepsiCo
The company has noticed a shift from large-format, multipack purchases to more affordable, smaller packs. As consumers look to balance their budgets by opting for smaller, more affordable purchases, PepsiCo has responded by offering 10-count multi-packs of chips instead of 18 and 24, also leveraging plus-two or -three unit bonus packs for added value.
“The consumers are gravitating toward lower purchase,” said CEO Ramon Laguarta, who added that even though penetration is increasing in some areas like healthier non-premium options, such as SunChips, Simply, and SmartFoods, “everything is impacted by affordability, even for medium-income consumers or medium-high-income consumers.”
Related: Learn more ways PepsiCo is responding to price-sensitive consumers
