How FMCG Firms can Explore Ways to Beat Inflation by Creating Demand

The fast-moving consumer goods (FMCG) companies are struggling with the impact of high inflation for some months straight now. India’s retail inflation surged to a 17-month high of 6.95 percent in March 2022, on the back of rallying food and oil prices. In April 2022, it had climbed higher to 7.8 percent. Retail inflation has in fact, been at an all-time high in the country, and the biggest challenge of these inflationary pressures is that it has been persisting for months now. 

Consequently, FMCG companies are struggling with the impact of high commodity price inflation and muted demand. This phenomenon is especially being observed in household consumption of middle-to-lower income families, and in rural India. To cope with such extraordinary inflationary pressures, FMCG companies are exploring various options to ensure demand remains intact.

Here are some ways in which FMCG firms can explore to beat inflation by creating demand:

Launching Low Unit Packs (LUPs)

When times become uncertain, FMCG firms bet on small packets to evade inflation and drive growth. Under this strategy, companies launch low-unit packs or LUPs to help drive growth while trying to keep their customer base going to other brands. Also, LUPs are usually the best option to increase sales as Indian customers prefer small packs over large ones due to their pocket-friendly price range. LUPs are essentially small packets priced anywhere between Rs 5-20; besides driving sales, they also have the potential to take a brand to remote or rural areas, thereby enhancing the penetration of a product. 

Using Product Scarcity to Bolster Sales

Scarcity, again, plays on the customer’s fear of missing out, and it can be used to create a massive brand lift as well. You must have come across limited-time offers like daily deals, or one-time-only promotions; these tactics are used by marketers to create a sense of urgency and leverage scarcity to generate huge demand in a short time. For instance, promoting “out of stock” items is an effective approach adopted by companies to develop product scarcity. It creates an impression in front of potential customers that your product was so popular that your inventory is temporarily depleted.

Leveraging User-Generated Content

Some companies have been able to apply this yet another innovative way of creating demand for a product by letting their customers sell the experience to them. These brands let their customers’ experience do the talking and selling. This can be done by promoting your good reviews and highlighting your best customers. In addition to this, using images and videos of your real customers using your products across your social media platforms can also work wonders!

Address your Customers’ or Clients’ Biggest Issues

Successful FMCG firms have always followed this habit of focusing on the biggest problem(s) that their clients or customers face. Once you have identified a major issue that an audience is facing, you can pitch your product as a perfect fit and then take the market by storm through a comprehensive content marketing strategy. Companies need to find out how people are searching for solutions, and they can develop their strategies based on those searches.

Influencer Marketing

FMCG and influencer marketing make a power couple as they go hand in hand with each other. According to a report, the FMCG category was the highest spender on influencer marketing in 2021, increasing their spending by more than 62 percent, compared to an average of 40 percent across all sectors. With people reprioritizing their spending in the Covid era, traditionally high-spend categories such as fashion, luxury, auto, beauty, and cosmetics performed poorly in comparison to fast-moving consumer goods. With Influencer marketing, you can tap into the wider range of follower audiences of influencers with different interests on social media.