In brief

In brief

  • The definition of crowdsourcing and ways in which some of the large CPG companies have used it as a tool to generate product and marketing ideas.
  • The range of tasks that consumer goods companies can outsource to the public, from data collection to business representation.
  • Benefits of crowdsourcing as an efficient way for manufacturers to accomplish tasks without impinging on permanent employees’ time and focus.

What's key to success for CPG manufacturers to strengthen retailer relationships and win at the shelf? It’s all about relationships and relevance. When it comes to moving goods, manufacturers rely on their sales representatives to build trust and a strong affiliation with distribution channels. Maintaining this relationship includes not only being in contact with store managers, but also having a good grasp of each retailer’s profile and statistics, such as size, customers, competitors and sales data. A variety of sources—from the retailer’s POS data to Nielsen data—can readily provide this information and help the sales representative determine the best course of action to optimize offerings, promotions and placements and ultimately boost sales.

The Challenge

But what if a manufacturer wanted to know if the actual buyers of their product matched their target demographic? Or if their product display improved sales? Such information could be useful in helping understand their customer base and store dynamics better and make decisions to improve instore performance. Sales representatives or merchandisers, who are responsible for checking in-store displays and campaign executions, could collect this specific data—but such a time-consuming, albeit valuable, activity could impinge on the performance of their primary functions.

The solution: Crowdsourcing

In a 2006 blog post1, Jeff Howe defined crowdsourcing as “taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call.” Before Howe coined the term, companies had already been tapping these large, undefined networks for marketing and ideation purposes. Australia’sMarketing magazine feature2 on the “State of Crowdsourcing” showed that fast-moving consumer goods (FMCG) companies had been crowdsourcing ideas since at least 2004, with Coca Cola, Pepsi and Danone using it most actively and with significant results—Coke’s 2011 “energizing refreshment” contest pulled in more than 2,600 entries from 74 countries and logged 92 percent cost saving efficiencies for the soft drink giant versus its standard agency fees and production expenses.

The Forbes piece “Crowdsourcing: Your Key to a More Effective, Engaged Organization?”3 cited businesses that used crowdsourcing to generate ideas, including invention platform Quirky. Product ideas that pass Quirky’s evaluation process get mass produced, and the creator receives a percentage of the sales. Similarly, Wal-Mart’s Get on the Shelf initiative4 invites inventors and entrepreneurs5 to submit their ideas, with the winning products making their way onto Wal-Mart’s website and store shelves.

Aside from ideation and product development, the retail industry can use crowdsourcing to accomplish a variety of tasks in-store:

Standard activities (Level 1)

These typical crowdsourcing tasks include data collection or other tasks that need no specialized skills or knowledge.

More sophisticated activities (Level 2)

These include merchandising tasks and the activities entail letting the store manager know that a person is being sent on behalf of the manufacturer.

Official activities (Level 3)

A crowdsourced resource is sent as official representative of the manufacturer to the store and it need more specialized expertise and some training.

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Crowdsourcing can help companies accomplish one-off activities over a wide geographic scale.

Remuneration of crowdsourced workers varies as well. The work may be accomplished in exchange for perks such as discounts or gaming currency as well as monetary compensation.

By outsourcing tasks to a wider network of people, manufacturers can:

Speed result in a broader scale

Accomplish simpler and one-off activities faster, even over a wide geographic scale.

Building Customer Relationship

Strengthen customer relationships, overseeing brand campaigns to increase relevance of their product portfolio, promotions and in-store activities.

Accumulate customer contacts and gather data

Collect more data about their store partners and customers to better understand and connect with them.

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Steffen Zimmermann

Senior Manager – Product Management


How to increase CPGs' growth: New paths
CPG sales and eCommerce

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