Why 60% of Brands Fail – And How Influencer Marketing Helps Them Thrive
Brand survival is becoming increasingly difficult in today’s competitive market. Only 60% of new brands survive beyond two years, and 30% of brands launched in 2022 were discontinued within their first year. This rapid turnover is driven by intense competition, short product cycles, and shifting consumer expectations.
However, one strategy that is proving effective in extending the lifespan and success of FMCG brands is influencer marketing. The global influencer marketing industry is projected to grow significantly, reaching a value of $52 billion by 2026, reflecting its growing relevance. Influencer marketing provides a way for FMCG brands to stay competitive, reduce marketing costs, enhance customer loyalty, and ensure long-term success.
Why FMCG Brands Struggle: A Market Under Pressure
The FMCG industry is defined by innovation, but with innovation comes volatility. Several challenges contribute to the high failure rate of FMCG brands:
Shorter Product Life Cycles: According to McKinsey & Company, product lifespans in the FMCG sector have decreased by over 40% in the past decade. Consumers are constantly on the lookout for new, innovative products, forcing brands to continually refresh their offerings.
Price Sensitivity: 78% of global consumers admit to being influenced by price when making purchasing decisions. In Asia, particularly in markets like Singapore, price remains a significant factor, with 40% of consumers opting for lower prices.
Changing Consumer Preferences: Consumer behaviour is shifting toward health-conscious and eco-friendly products. A 2023 report from Deloitte revealed that 70% of consumers now consider sustainability when making purchasing decisions, and 63% are willing to pay more for sustainable products. Brands that fail to adapt quickly to these preferences often struggle to maintain market relevance.
Despite these challenges, influencer marketing offers a customer-centric model that can counteract these trends by focusing on personal connections, authentic brand messaging, and direct engagement with consumers.
How Influencer Marketing Addresses FMCG Challenges
Influencer marketing is designed to meet evolving consumer demands while offering brands a way to secure long-term survival in the FMCG market. Here’s how it works:
1. Building Trust and Personal Relationships
Trust is a key driver in consumer decision-making. 81% of consumers say that they must trust a brand to make a purchase. Influencer marketing excels at building this trust through word-of-mouth referrals, which are far more effective than traditional advertisements.
92% of consumers trust personal recommendations more than any other form of marketing.
McKinsey research also indicates that word-of-mouth marketing generates two times more sales than paid advertising.
By working with influencers who genuinely connect with their audiences, FMCG brands can leverage trust and authentic recommendations, encouraging potential customers to try their products.
2. Cost-Effective Market Penetration
Marketing and advertising are among the highest expenses for FMCG brands. In 2023, the global FMCG market saw an average marketing spend increase of 7% year-over-year. However, influencer marketing provides a cost-effective alternative:
Harvard Business Review reports that companies using direct selling or influencer marketing models can reduce advertising costs by as much as 50% compared to those relying on traditional marketing channels.
Influencers, who often serve as independent contractors, are compensated based on their performance, meaning brands don’t have to invest heavily in upfront costs like large-scale ad campaigns.
This approach is especially beneficial for smaller FMCG brands that need to compete with larger companies on price while still reaching a wide and engaged audience.
3. Sustaining Long-Term Consumer Engagement
FMCG brands that utilise influencer marketing benefit from higher engagement and longer customer retention rates. Studies by Bain & Company have shown that increasing customer retention by 5% can lead to a profit increase of 25% to 95%. Influencer marketing achieves this by fostering ongoing communication.
Influencers provide personalised service, ensuring that customers have a continuous relationship with the brand, leading to a 70% higher engagement rate compared to traditional marketing models.
2023 research by Accenture reveals that 64% of consumers are more likely to make repeat purchases when brands offer tailored experiences—a cornerstone of the influencer marketing approach.
Practical Steps for FMCG Brands to Integrate Influencer Marketing
FMCG brands can take several steps to integrate influencer marketing into their strategies to improve brand survival:
Leverage Customer Feedback: Collaborate with influencers who can gather and share consumer feedback directly with your brand. Influencers act as a bridge between your company and consumers, allowing you to make real-time adjustments to products based on feedback.
Run Product Sampling Programs: Influencers can help brands run product sampling campaigns, allowing consumers to try products before committing to a purchase. According to Nielsen, 75% of consumers are more likely to buy a product after trying it. Influencers can share these samples with their audiences through giveaways or exclusive promotions.
Train Influencers to Enhance Engagement: Invest in training influencers to improve their product knowledge and communication skills. This ensures they can create authentic and persuasive content that resonates with their followers, leading to higher engagement and conversion rates.
Real-World Case Studies: FMCG Success with Influencer Marketing
Let’s look at two FMCG brands that successfully used influencer marketing to navigate price-sensitive and competitive markets:
1. Coca-Cola’s Campaign in Southeast Asia
Coca-Cola used influencer marketing to connect with younger consumers in Southeast Asia. By collaborating with regional influencers, the brand was able to reach millions of consumers across multiple platforms, including YouTube and Instagram.
Coca-Cola targeted price-sensitive markets by using influencers to highlight exclusive promotions and bundle deals, driving up both brand awareness and sales.
This campaign contributed to a 15% increase in sales across the region, particularly in countries like Indonesia and Thailand, where price sensitivity is high.