According to a Bitkom study, there will be more than one million smart homes in Germany by 2020. Worldwide, the Internet of things will interconnect 50 billion devices at that time. FMCG brands are not only awaiting this development euphorically, since networked and/or intelligent household devices will significantly change the buying behaviours of many consumers away from the shopping list towards on-demand purchases. The rapidly advancing voice control sector will further invigorate this development: ‘Hey Alexa, I need a new detergent.’ – and Amazon’s voice assistant orders a product right away. Those not adjusting their market positioning and product communication according to the rules of the smart home will suffer a rude awakening at the hands of consumers in the near future.
Transformation of the buyer decision process
Large brands enter the age of the smart home with a decisive advantage. Because one thing consumers will not want to do when shopping via voice control is comparing products and prices for hours. Therefore, the chosen brand will be ‘his’ brand or simply the one that comes to mind first when thinking about the product. According to a study, most shoppers already choose between merely two brands per product. In a smart home, the relevant set of consumers will shrink further and thereby increase pressure on smaller manufacturers. For companies like Zewa and Labello, the smart home offers an opportunity for long-term customer retention. Others might, for the time being, not receive any attention from consumers at all.
They are therefore required to quickly consider how to become a ‘smart brand’ to exploit the opportunities of web-enabled devices for innovatively appealing to customers. For regardless of how small the relevant set of a smart home becomes, there is always space for an innovation leader.
The ‘touchpoint home’ as a new point of sale
Household devices with an internet connection establish new communication channels between their owners and manufacturers. FMCG brands can use these channels to approach their target consumers. Possibilities include, for example, collaborations with device manufacturers: for instance, new fridges alert their owners when the expiration date of foodstuff is closing in. ‘Your cream cheese will expire in two days. Would you like to order some?’ – a product suggestion appears on the integrated touch screen immediately.
It is likewise realistic to include an advertisement via an app connected to the device. Technically skilled owners of electric toothbrushes use such an app to receive tips for optimal cleaning while brushing and are probably also receptive to one or the other toothpaste recommendation.
The possibility to contact customers exactly at the time of need turns the smart home into a promising point of sale. Smart brands attain the opportunity for an exclusive sales pitch while competitors vie for the attention of stressed shoppers on a supermarket shelf. The requirement: they have to consider how to provide an added value.
FMCG goes digital
To become the uncontested go-to brand in a smart home, FMCG brands need to go one step further: with the development of a digital product, for example, in form of an in-house app for a networked device, a real unique selling point can be created. Let’s return to the example of the detergent: how do I remove this tomato stain from my jacket? Which washing cycle is best for the new silk blouse? The new app by the detergent manufacturer knows the answer. Additionally, it can interact with the smart washing machine to assist with the correct dosage. Collaborations with manufacturers are possible here as well for the app might already be pre-installed when purchasing the machine.
An application of this kind does not characteristically target sales only. However, it is a central tool to positively stand out from the competition. If the digital content provides a genuine added value and is continually resumed, the best-case scenario sees the formation of a committed community that indefinitely chooses the brand they trust.
Digital is not a foregone success
The development of digital products is uncharted territory for most FMCG brands and can, without a well thought-through concept, turn into an expensive and bad investment. This does, however, not mean that new communication channels should not be tapped just to be on the safe side. Still, they need to ensure that product, smart home integration and digital storytelling are in perfect harmony. When the brand and service provider only meet to devise an ad campaign, it is usually way too late. Instead, all parties should be on board from the product development stage onwards.
Thinking in the long-term, this opens up possibilities for entirely new business models for manufacturing consumer products: we may soon see the first washing machine with integrated Ariel programme software or Persil tips for red wine stains. For FMCG manufacturers, the chances of becoming the trusted brand when positioning themselves in the touchpoint home rises in line with the amount of creativity and added value. In any case, trust is what’s needed in the smart home, because consumers will seriously deliberate who to let into their domiciles.
This article was also published at horizont.net.
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