1 GLOBAL MARKETING TRENDS FOR CONSUMER PRODUCTS Kostas Dermoussis.

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GLOBAL MARKETING TRENDS GLOBAL MARKETING TRENDS FOR CONSUMER PRODUCTSFOR CONSUMER PRODUCTS

Kostas Dermoussis

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The following three (3) areas are covered:

Marketing Practices

Consumer Behaviour

Retailing

GLOBAL MARKETING TRENDSGLOBAL MARKETING TRENDS

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A.A. MARKETING PRACTICESMARKETING PRACTICES

REAL PRODUCT DIFFERENTIATIONS ARE BECOMING MORE RAREREAL PRODUCT DIFFERENTIATIONS ARE BECOMING MORE RAREREAL PRODUCT DIFFERENTIATIONS ARE BECOMING MORE RAREREAL PRODUCT DIFFERENTIATIONS ARE BECOMING MORE RARE

Companies struggle for launching NEW products which will be different

from the existing ones

Consumers’ perceptions for what a new product is, do not coincide with

companies’ marketing strategies and policies

Big supermarket chains “encourage” companies for new differentiated

products

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MARKETING EXPENDITURES WILL CONTINUE TO RISEMARKETING EXPENDITURES WILL CONTINUE TO RISEMARKETING EXPENDITURES WILL CONTINUE TO RISEMARKETING EXPENDITURES WILL CONTINUE TO RISE

Regardless of sales increases, marketing budgets will be higher:

due to competition (impact on advertising and promotion spending)

due to complexity of distribution channels and the increasing requirements

of retailers for shorter delivery times and more regular shipments (impact

on logistics)


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DRAMATIC INCREASE OF OUTSOURCINGDRAMATIC INCREASE OF OUTSOURCINGDRAMATIC INCREASE OF OUTSOURCINGDRAMATIC INCREASE OF OUTSOURCING

During the last 2-3 years, we have experienced a considerable increase of outsourcing in marketing and sales

For the next 3-5 years, the expenditures related to outsourcing will be dramatically increased in the following areas:

Marketing communications

Logistics

Marketing and sales strategy & planning

Marketing and sales training

Outsourcing will be a suitable strategy for large and SME companies

Main reason for outsourcing: Cost reduction and “fresh”/ more creative approach by a third party


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EXCEPTIONAL CUSTOMER SERVICE WILL BE A KEY STRATEGYEXCEPTIONAL CUSTOMER SERVICE WILL BE A KEY STRATEGYEXCEPTIONAL CUSTOMER SERVICE WILL BE A KEY STRATEGYEXCEPTIONAL CUSTOMER SERVICE WILL BE A KEY STRATEGY

Customers recognize excellent service as a unique differentiating factor

One unsatisfied customer talks about his/her negative experience to seven people

Mass advertising and promotion activities can not easily reverse the situation

We are going to see:

A bigger number of customer service departments

Friendlier call centres

Service oriented and customer-focused employees

Better trained people in customer service

An increasing number of customer satisfaction measurements


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MOVING FROM CALL CENTRES TO CONTACT CENTRESMOVING FROM CALL CENTRES TO CONTACT CENTRESMOVING FROM CALL CENTRES TO CONTACT CENTRESMOVING FROM CALL CENTRES TO CONTACT CENTRES

Today, the main purpose of call centres is selling products/services

During the next years, their image will be “redefined”. Their new name will be “contact centres” and apart from sales, there will be greater emphasis on high quality service

Main characteristics

Handling of complaints

Customer satisfaction measurements

Information to consumers

Profit centres

An integral part of the marketing and service strategy


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HUGE INCREASE OF CALL CENTRES WORLDWIDEHUGE INCREASE OF CALL CENTRES WORLDWIDEHUGE INCREASE OF CALL CENTRES WORLDWIDEHUGE INCREASE OF CALL CENTRES WORLDWIDE

50% increase in Europe, Middle East and Africa, up to 2008

According to research in 26 countries, the number of call centres will exceed 45,000, employing more than 2,6 million people

Threat: Many call centres will operate in countries with low labour cost and low taxation

Call centres will be specialized, covering new markets: hospitals, clinics, hotels, restaurants, department stores, public services.


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COMPANIES FOCUSING ON THEIR MOST PROFITABLE BRANDSCOMPANIES FOCUSING ON THEIR MOST PROFITABLE BRANDSCOMPANIES FOCUSING ON THEIR MOST PROFITABLE BRANDSCOMPANIES FOCUSING ON THEIR MOST PROFITABLE BRANDS

Product portfolios are shrinking, especially in multinationals

Products with lower brand awareness and brand purchase will be eliminated

Concentration in mega-brands with big market shares and higher profit margins Advertising investments in mega brands

Risks

Consumers acceptance of global brands is not the same everywhere

Consumers may switch their brand which has been abolished with a competitive one

A new war in supermarkets for shelf dominance


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INCREASING SCEPTICISM OVER ADVERTISING MESSAGESINCREASING SCEPTICISM OVER ADVERTISING MESSAGESINCREASING SCEPTICISM OVER ADVERTISING MESSAGESINCREASING SCEPTICISM OVER ADVERTISING MESSAGES

Implications

Companies will increase the frequency of social marketing and cause related marketing programmes, decreasing budgets of the traditional commercial advertising

Too many advertisements - clutter effect

Advertising promises are not taken into consideration by consumers resulted to a lower degree of brand loyalty

Research shows that viewers do almost anything during a commercial break except watch the TV


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SALES PROMOTION IS BECOMING A STRATEGIC MARKETING TOOLSALES PROMOTION IS BECOMING A STRATEGIC MARKETING TOOLSALES PROMOTION IS BECOMING A STRATEGIC MARKETING TOOLSALES PROMOTION IS BECOMING A STRATEGIC MARKETING TOOL

As a result of advertising clutter, an increasing number of marketing

people have started to use sales promotion as a main element of

their marketing strategy

Sales promotion objectives:

Increase sales - short and medium term

Increase brand loyalty - long term


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CO-ADVERTISING AND JOINT PROMOTIONS ARE BECOMING CO-ADVERTISING AND JOINT PROMOTIONS ARE BECOMING COMMON PRACTICECOMMON PRACTICE

CO-ADVERTISING AND JOINT PROMOTIONS ARE BECOMING CO-ADVERTISING AND JOINT PROMOTIONS ARE BECOMING COMMON PRACTICECOMMON PRACTICE

We are going to see:

Joint efforts between two or more brands of the same company or between different companies

Joint efforts between retailers and their suppliers

Why?

Lower advertising budgets

Marketing synergies with complimentary or non-competitive products


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LOYALTY MARKETING CAMPAIGNS WILL BE ENRICHEDLOYALTY MARKETING CAMPAIGNS WILL BE ENRICHEDLOYALTY MARKETING CAMPAIGNS WILL BE ENRICHEDLOYALTY MARKETING CAMPAIGNS WILL BE ENRICHED

Although the number of loyalty programmes are increasing,

consumers require more creative and innovative approaches

Consumers have experienced loyalty cards, air miles, etc, but now

they want more in terms of quantity and quality

Implications

Companies will have to use new techniques which will require deeper consumers’ involvement

Loyalty campaigns will be an integral part of the marketing communication strategy.


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MYSTERY SHOPPING COMES OUT OF THE SHADOWSMYSTERY SHOPPING COMES OUT OF THE SHADOWSMYSTERY SHOPPING COMES OUT OF THE SHADOWSMYSTERY SHOPPING COMES OUT OF THE SHADOWS

Mystery shopping is more than “spying” on the staff

Companies focus on improving the service offered to consumers

by their staff

Mystery shopping is used as part of the training process which is

related to personal selling, negotiation skills and customer service

Companies receive accurate information, regularly, about the

shopping experience of their customers at the time of purchase

It is going to be used as a motivational tool for people

Spending on mystery shopping will be steadily increasing


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USE OF ON-LINE SURVEYS TO INCREASEUSE OF ON-LINE SURVEYS TO INCREASEUSE OF ON-LINE SURVEYS TO INCREASEUSE OF ON-LINE SURVEYS TO INCREASE

The on-line market research sector in Europe and N. America is set

to rise, according to a recent survey

More than 80% of interviewed managers expect that on-line research

will be booming since it is a cheap and fast way of collecting data


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CRISIS IN BUSINESS DECISION-MAKING RELATED TO MARKETINGCRISIS IN BUSINESS DECISION-MAKING RELATED TO MARKETINGCRISIS IN BUSINESS DECISION-MAKING RELATED TO MARKETINGCRISIS IN BUSINESS DECISION-MAKING RELATED TO MARKETING

Two surveys - in Europe and USA - reveal the continuing trends of marketing executives making more complex decisions in less time, flooded by data

The main problem will be the volume of data which will double and triple compared to previous years, making decisions more complex

SOLUTION

Development of CRM and MIS from the company’s centralized data warehouse which will act as information provider to the marketing and sales departments


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B.B. CONSUMER BEHAVIOURCONSUMER BEHAVIOUR

AGE COMPLEXITYAGE COMPLEXITYAGE COMPLEXITYAGE COMPLEXITY

Children are becoming teenagers before reaching their teens. Today, a

12 year-old kid is more likely think he/she is 17.

So, manufacturers are developing children products with “cool teen”

attributes

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INDIVIDUALISMINDIVIDUALISMINDIVIDUALISMINDIVIDUALISM

Consumers want even more personalization. Therefore, we are talking

about one-to-one marketing instead of mass marketing


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SENSORY EXPERIENCESSENSORY EXPERIENCESSENSORY EXPERIENCESSENSORY EXPERIENCES

We are becoming more tolerant of risk and change

We are actively seeking out more intense experiences. Hence, the

increase in extreme sports and short and busy weekend breaks

Consumers are more prepared to experiment with new products,

discover ethnic foods and try new tastes


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HEALTHHEALTHHEALTHHEALTH

Three-quarters of Europeans are now more concerned about their

health and well being

People will put greater value on healthiness such that sales of healthy,

de-stressing and self-medication products will be booming


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SUPERMARKET SHOPPING WILL NOT BE A “DECLARATION” OF SUPERMARKET SHOPPING WILL NOT BE A “DECLARATION” OF LIFE STYLE ANYMORELIFE STYLE ANYMORE

SUPERMARKET SHOPPING WILL NOT BE A “DECLARATION” OF SUPERMARKET SHOPPING WILL NOT BE A “DECLARATION” OF LIFE STYLE ANYMORELIFE STYLE ANYMORE

During the past years, consumers were buying products from

supermarkets based on their brand image. “Prestige” as a brand value

was taken seriously by consumers

This has started to change and in the next few years, consumers will

express mainly their need for self-esteem and recognition, by buying

products and services which have higher prices, such as cars, holiday

packages, etc.


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PRETERMINED PURCHASES AND HIGHER FREQUENCY OF PRETERMINED PURCHASES AND HIGHER FREQUENCY OF SHOPPING VISITSSHOPPING VISITS

PRETERMINED PURCHASES AND HIGHER FREQUENCY OF PRETERMINED PURCHASES AND HIGHER FREQUENCY OF SHOPPING VISITSSHOPPING VISITS

An increasing number of consumers visit supermarkets having a

predetermined shopping list. The picture was not the same 5 years ago

Reduction of consumers’ disposable income

Consumers prefer to visit supermarkets more often (European average:

twice a week), spending less each time


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CRITERIA FOR PURCHASING A NEW PRODUCT IN THE CRITERIA FOR PURCHASING A NEW PRODUCT IN THE SUPERMARKETSUPERMARKET

CRITERIA FOR PURCHASING A NEW PRODUCT IN THE CRITERIA FOR PURCHASING A NEW PRODUCT IN THE SUPERMARKETSUPERMARKET

The type of sales promotion activity is one of the most important criteria

for consumers to buy a new brand for the first time

Although, consumers act less and less impulsively, certain sales

promotion techniques will help new brands to achieve higher rates

of brand trial.

Consumers prefer the following types of promotions for new products:

• Free samples

• Coupons

• Displays/ Point-of-purchase (POP) material

• On-pack promotions


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C.C. RETAILINGRETAILING

INCREASING POWER OF LARGE SUPERMARKET CHAINSINCREASING POWER OF LARGE SUPERMARKET CHAINSINCREASING POWER OF LARGE SUPERMARKET CHAINSINCREASING POWER OF LARGE SUPERMARKET CHAINS

Quick expansion of discounters

Strong competition between retailers

Price war and “squeezed” profit margins

Impact on suppliers

• Higher listing fees

• Lower prices

• Bigger quantitative discounts and year-end-discounts

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CONTINUING EXPANSION OF DISCOUNTERS IN EUROPECONTINUING EXPANSION OF DISCOUNTERS IN EUROPECONTINUING EXPANSION OF DISCOUNTERS IN EUROPECONTINUING EXPANSION OF DISCOUNTERS IN EUROPE

WHY?

Consumers are becoming more price-conscious

They are less brand loyal

They are less interested in brand image

Main characteristics of discounters

• Smaller outlets

• Less staff

• Limited product categories/ product lines

• Private labels


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DOMINANCE OF PRIVATE LABELS ?DOMINANCE OF PRIVATE LABELS ?DOMINANCE OF PRIVATE LABELS ?DOMINANCE OF PRIVATE LABELS ?

NO!! Brands will prevail

However:

Private labels are gaining consumers’ acceptance. They are not considered as “inferior” products

They are cheaper or much cheaper compared to advertised brands

Private labels will make marketing people’s life more difficult since they have to develop and pursue strategies aiming at:

• new product development

• continuous advertising and promotion support

• focus on merchandising stronger presence in supermarkets

• quality improvements


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SOURCESSOURCES

British Market Research Association

Advertising Research Foundation

American Marketing Association

Association of Relationship Marketing

Business Marketing Association

Datamonitor

Euromonitor

Forrester Research

Federation of European Direct & Indirect Marketing

Institute of Sales Promotion

Marketing Research Association

Marketing Society

Marketing Week

Point of Purchase Advertising Institute

Product Development & Management Association

Sales Marketing Network

World Advertising Research Center

Goldman Sachs Research

A.C.Nielsen

M&M Eurodata

UBS

1 GLOBAL MARKETING TRENDS FOR CONSUMER PRODUCTS Kostas Dermoussis.

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