The Best Practices for Evaluating Campaign Performance within the FMCG Sector

The fast-moving consumer goods industry is a very competitive industry, with slim profit margins. Success in this industry can only be achieved by intensifying marketing efforts, following them up, doubling performance, and providing a distinctive and unique customer experience that lives up to competitiveness.

In a previous article, we emphasized the significance of customer experience in the fast-moving consumer goods industry. Today, we shift our focus to the pivotal role of advertising and marketing campaigns. We will delve into the importance of measuring their performance and tracking essential indicators to enhance brand revenues and reputation within the fiercely competitive market.

What is FMCG Marketing?

Consumer goods are fast-moving due to the large consumer demand for them on the one hand, and on the other hand, they are often fast-moving. They take up a large part of the consumables that the customer requests and seeks today.

Brands active in the FMCG sector have achieved wide activity and impressive success, due to:

● Mastering and innovating products, building a mass market brand.

● Form relationships with retailers and other grocery stores that provide quick access to the consumer.

● Penetrating early developing markets.

● Designing their operating models for cost reduction and consistent implementation.

● Implementing mergers and acquisitions to consolidate markets, establishing a basis for acquiring natural growth after acquisition.

To survive and win in the coming decades, fast-moving consumer goods (FMCG) companies need to reduce their reliance on offline channels, embrace technology-driven trends, and leverage millennial preferences and digital marketing to grow rapidly.

Going forward, brands will need to engage with e-commerce as part of their core business and maximize their success in the online marketplace. Digital marketing will become an integral part of brand strategies.

How does e-marketing benefit the consumer goods industry?

Digital marketing offers numerous advantages to brands in the fast-moving consumer goods (FMCG) industry, primarily due to their short shelf life, cost-effectiveness, and the vast retail audience that provides ample marketing opportunities.

Furthermore, brands operating within the FMCG sector can craft attention-grabbing campaigns and deliver enticing offers to their customers through a well-structured digital marketing strategy. Let’s delve into some of the key benefits in greater detail:

Distinguishing the Brand Amidst Competitors

The FMCG market is saturated with similar products, making differentiation crucial. Robust digital marketing strategies enable brands to not only stand out but also position themselves as industry frontrunners. Effective brand differentiation fosters a stronger connection with their target audience.

Innovative Brand Presentation

Today’s consumers seek solutions to their problems and ways to fulfill their desires. Traditional consumer goods marketing relied heavily on physical display tools like posters, billboards, banners, and signage to influence purchasing decisions.

However, modern brands are embracing technology in their operations. Digital signage has become a popular choice among brands, offering an effective means to reach their target audience, thereby enhancing the cost-effectiveness of their overall marketing strategy. 

Products can also be promoted through digital display tools like Google AdWords, which can be strategically placed alongside content that consumers are currently browsing. For example, an ad for healthcare products can be displayed alongside healthcare-related blogs that consumers are reading.

Creating a professional website is arguably one of the most effective ways to showcase a brand. It not only raises brand awareness but also serves as a platform to introduce products and market them effectively.

Understanding the Customer and Maximizing ROI

One of the most significant advantages of digital marketing compared to traditional marketing for fast-moving consumer goods is its ability to provide brands with valuable insights into consumer behavior, sentiments, and perceptions of their products. 

While brands invest substantial resources in print ads, billboards, TV commercials, and other traditional marketing channels, determining the exact return on investment (ROI) for these expenditures can be challenging.

Digital marketing offers a range of analysis tools that enable fast-moving goods companies to measure various metrics such as clicks, conversions, and impressions. These tools also provide deeper customer insights, equipping companies with the technology to identify which specific digital advertisements yield the most conversions. This data is invaluable in shaping future marketing strategies and ultimately increasing ROI.

Embracing the Mobile Trend

To remain competitive, brands must adapt to the growing trend of consumers who prefer shopping on their mobile devices. An astounding 90% of internet users now rely on their smartphones for various online activities. Consequently, a well-executed digital marketing strategy is essential for brands seeking to stay abreast of the ever-evolving digital marketing landscape in their target and key areas.

Key Performance Indicators in the FMCG industry

Key Performance Indicators (KPIs) play a crucial role in the fast-moving consumer goods (FMCG) industry. They serve as essential metrics for assessing progress, driving improvement, and making informed decisions. Some of the key KPIs in this industry include:

Out of Stock Rate (OOS)

Also known as “item not available,” this term refers to a situation where a retailer does not have a specific product category ready for immediate sale to customers. Monitoring and reducing the OOS rate are crucial for FMCG companies because they directly impact sales and customer satisfaction. By leveraging real-time inventory management systems and demand forecasting, businesses can optimize their inventory levels and decrease the occurrence of out-of-stock situations.

How to measure: (Number of times the product ran out of stock / Total number of opportunities to sell the product) × 100 = Rate of product out of stock.

On-Time & In-Full Delivery (OTIF):

The on-time delivery rate measures the percentage of orders delivered to customers on schedule and in the expected quantity. Timely and accurate order fulfillment is essential for maintaining customer loyalty, preserving brand reputation, and minimizing disruptions in the supply chain. FMCG companies should focus on optimizing their logistics and delivery processes to achieve high OTIF rates.

How to measure: The On-Time Delivery Rate (OTIF) is calculated as follows: (Number of orders delivered on time and in full / Total number of orders) × 100.

Average Time to Sell

The average time to sell represents the duration it takes to sell a product from the moment it enters the store. This performance indicator helps companies assess the efficiency of their sales processes and identify any bottlenecks or inefficiencies. Reducing the average time to sell can lead to improved cash flow and increased sales rates, which are essential objectives for FMCG companies.

How to measure: (Total days held in inventory/Total quantity sold) = Average period of sale.

Products Sold Within Freshness Date

Tracking the percentage of items sold before their freshness and shelf life expiry date is essential. This key performance indicator ensures that customers receive high-quality products, reduces waste, and enhances overall customer satisfaction. Achieving high sales of products within their freshness dates requires meticulous monitoring of expiration dates and the implementation of strategies to rotate products before they expire.

How to measure: (Number of products sold before the expiration date / Total number of products sold) × 100 = Percentage of products sold at their freshest date.

Cash Conversion Cycle (CCC):

The Cash Conversion Cycle, also known as the “Net Operating Cycle,” measures the number of days it takes a company to convert its inventory and other resources into cash flows from sales. This metric offers valuable insights into cash flow management efficiency and the utilization of working capital. It is a particularly important KPI in the fast-moving consumer goods (FMCG) industry, contributing to improved financial performance and maximizing return on investment.

How to measure: Cash Conversion Cycle = (Inventory Sale Period + Receivables Collection Period – Payable Days Period).

Supply Chain Costs

Supply chain costs encompass the total expenses incurred by a company in the process of moving products from suppliers to customers. The supply chain cost index includes various expenditures related to procurement, transportation, storage, and inventory management. Identifying opportunities to reduce these costs and optimizing supply chain operations can significantly impact a company’s profitability.

How to measure: (Cost of Goods Sold + Logistics Costs + Storage Costs) = Total Supply Chain Costs.

 On-Shelf Availability

On-shelf availability measures the percentage of products that are adequately stocked and readily available for customers to purchase in retail stores. Maintaining high on-shelf availability is crucial for consumer goods companies as it directly influences sales and contributes to a positive brand reputation. Achieving this involves implementing effective demand forecasting, efficient replenishment processes, and collaboration with retail partners.

How to measure: (Number of Products on the Shelf ÷ Total Number of Products) × 100 = On-Shelf Availability Percentage.

Margin by Product Category

Margin analysis by product category is a valuable tool for FMCG companies. It helps them identify which product lines are the most profitable and allows for the optimization of pricing strategies. By gaining insights into the profitability of different product categories, companies can make informed decisions about resource allocation and focus their efforts on products that contribute the most to their overall profitability.

How to measure: ((Total Revenue – Cost of Goods Sold) / Total Revenue) × 100 = Margin by Product Category Percentage.

 Product Penetration Rate

Product penetration rate measures the number of customers who have purchased a specific product, providing companies with a metric to gauge the product’s success and its reach among customers.

How to measure: ((Number of Customers Who Buy the Product ÷ Total Number of Customers) × 100) = Product Penetration Rate Percentage.

How Lucidya contributes to campaign measurement in the FMCG industry

The fast-moving consumer goods industry is exceptionally competitive, requiring brands to excel in customer experience, understand customer preferences, and tailor their services to bridge existing gaps.

Lucidya offers advanced tools for measuring and analyzing customer sentiment and channels with utmost professionalism. These tools empower consumer goods brands to gain insights into customer behavior and needs, enabling them to meet these needs at a high level of professionalism and competitiveness.

Achieve a distinctive presence in the  market and elevate your competitive edge to a new level with Lucidya’s services

Conclusion

In summary, monitoring key performance indicators (KPIs) is vital for the advancement of brands in the fast-moving consumer goods industry. By measuring and analyzing these metrics, companies can identify areas for improvement and make informed decisions to enhance their bottom line.

From tracking stock-out rates to optimizing inventory management and implementing comprehensive marketing strategies, there are numerous performance indicators to monitor. Each contributes to ensuring business success, continuity, and revenue growth in this highly competitive industry.