A Spotify secret can unlock value for cpg brands
Odds are when you think about the music streaming and podcasting company Spotify, you don’t easily connect it with CPG conglomerate The Kraft Heinz Company, right? I guess maybe unless a new remix of Nigerian dancehall recording artist Ketchup was released on New Music Friday by DJ Mustard 🤣.
While Spotify likely doesn’t know the first thing about categorical differences in shelf-stable dressings and their refrigerated counterparts, they have faced a similar challenge…
Problems aren’t unique
The Kraft Heinz Company owns around 100 global brands that sell in more than 50 individual fragmented CPG product categories. In recent years, CPG products have become increasingly difficult to fit into clean categorical siloes. This is a major challenge for The Kraft Heinz Company because it creates additional complexity when trying to efficiently and effectively allocate resources across separate product categories.
So, what does this have to do with Spotify?
How do you easily categorize music? What’s the difference in deep house music to funky house music or Texas country to Classic country? What happens when an artist from electronic and an artist from country collab?
Spotify Success Secret
Spotify brilliantly attacked this challenge by taking the original content-based category approach (grouped by genres and language or geographical boundaries) and changed it to context-based categorical groupings. Upon browsing the Spotify app, you’ll find playlists such as, Focus Flow, Work from Home, and Workout Beats. There is a commonality among all of these playlists — each solves a problem for the listener.
“It’s in the solution where you start to build value and loyalty.”
Whether it’s an activity (romantic dinner) or time-related event (Women’s History Month), context-based grouped playlists are quickly becoming the new paradigm in which we experience music and likely many other consumer categories.
$KHC Strategic Transformation Plan
In September 2020, The Kraft Heinz Company unveiled a strategic transformation plan that included a sweeping change to how it will manage its portfolio of more than 50 individual categories. It will now focus on six consumer-driven contextual platforms based on real consumer needs and includes:
Taste Elevation = enhancing the taste, flavor, and texture of food. (e.g. What should I put on my burger?)
Easy Meals Made Better = convenient foods that minimize trade-offs at mealtime. (e.g. What is an easy meal to make for my family?)
Real Food Snacking = nutrition-rich, tasty, convenient, clean food experiences. (e.g. What can I snack on to get me through the 3pm slump?)
Fast Fresh Meals = help consumers make fresh, easy, prepared, or assembled meals. (e.g. What do I need to put together a quick lunch?)
Easy Indulgent Desserts = sweet and indulgent treats that bring simple joy to everyday (e.g. What is a 5-minute dessert that will get a smile?)
Flavorful Hydration = provide hydration across kids’ beverage and beverage mixes (e.g. What drink should I serve at my daughter’s soccer game?)
Lesson For All CPG Brands
Business strategy should no longer be centered on your product. Instead, it should be focused on the customer needs. It doesn’t matter how great your CPG product is if your brand is not delivering value to your target market. As technology evolves, consumer patience and attention spans have shortened, causing consumers to become increasingly emotional, stressed, and anxious. More than ever, consumers want their everyday problems solved.
What pain point does your product resolve?
Focus on a consumer’s pain point and make explicit what you’re solving, rather than solely focusing on the features of your product. Finding the value a product provides and making it evident in marketing materials should be the goal for any CPG brand. If your CPG brand can become a go-to product for an everyday consumer problem, an internal association will begin to form. This is the beginning of habit-forming products.
Final Thoughts
CPG brands need to continue moving more towards meeting the consumer on their own terms. Consumers are becoming more demanding than ever, so CPG brands need to develop a contextualized and personalized strategy to stay relevant. Instead of the saying “content is king”, maybe we should be saying “context is king” or at least that’s what seems to be upon us.