FIVE FACTORS DRIVING MARKETPLACE COMPLEXITY IN THE...
Transcript of FIVE FACTORS DRIVING MARKETPLACE COMPLEXITY IN THE...
FIVE FACTORS DRIVING MARKETPLACE COMPLEXITY
IN THE FUTURE OF MARKETING
The Greek philosopher Heraclitus said, “The only thing that is constant is change,” and nowhere does
this seem truer than in the world of consumer packaged goods marketing. Change seems to happen
more frequently and with more severe consequences than ever before.
Christopher Brace
The systems he is referencing are those based on the outdated, industrial formula for success we discussed
in the last white paper, “The Future of Marketing — Changing Marketers’ Mindsets.” We need a more stable
foundation — emotional truths — on which to handle the major factors that will drive marketplace complexity
over the next ten years.
BIG DATA DIGITAL/SOCIAL MEDIA
OMNI-CHANNEL SHOPPING
DECLINING BRAND LOYALTY
ROI MEASUREMENT
A 2011 IBM global study of CMOs1 identified increasing complexity and turbulence as their number one
concern for the future (results confirmed in the 2014 study).2 This makes us ask, “What’s making marketing
so much more complex?” The two biggest factors are uncertainty and ambiguity, but it’s the latter that
is having the most significant impact. Uncertainty is when you know the variables in the game but you
don’t know their values. Ambiguity is when you don’t even know the variables. Today, CPG structures and
processes focus on dealing with uncertainty when, in reality, they need to be concerned about ambiguity.
There is a disconnect between the types of problems companies need to solve and the ones they are
structured to solve. When we don’t know what we don’t know — ambiguity — our gears come to a grinding
halt. In a 2012 Fast Company article, “This is Generation Flux: Meet The Pioneers of the New (And Chaotic)
Frontier of Business,” author Robert Safian stated:
“Public, private, and government institutions have structures and processes built for an industrial age, where efficiency is paramount but adaptability is terribly difficult. We are finely tuned at taking a successful idea or product and replicating it on a large scale. But inside these legacy institutions, changing direction is tough. We have been trained to expect an orderly life. The expectation that these systems provide safety and stability is a trap.”
1. From Stretched to Strengthened: Insights from the IBM Global CMO Study, 20112. Stepping up to the challenge: CMO Insights from the Global C-Suite Study, IBM Institute for Business Value, 2014
The immense power of today’s computers is facilitating
the analysis of massive amounts of data collected
through digital and social media. This analysis of big
data is often heralded as the panacea for all marketing
problems. How many times have you heard this in the
halls of your company, “If we only had more data we
would know exactly what to do!” The fact is, companies
don’t know what to do with the data they already have.
They frantically try to run the perfect set of analyses that
will give them all the right answers. The problem with
panaceas is they rarely prove to be the solutions they are
promised to be, and big data is no different.
There are two major caveats to keep in mind when it
comes to big data. First, the analysis is often done in
isolation of the company’s key strategic growth initiatives,
so too often hard to activate immediately. Secondly, big
data is heavily behavioral in nature, and consumers and
shoppers’ behaviors change continuously. By the time a
company analyzes the data and draws conclusions from
it, the behaviors on which it is based may have already
changed. This is not to say that big data is not relevant,
because it is extremely relevant. However, we need to
link data directly to the company’s key strategic growth
initiatives so it creates as well as captures value for the
brands. We also need to realize and accept the limitations
of data.
BIG DATA DIGITAL/SOCIAL MEDIA
Digital and social media are also being sold as
cure-alls. We can connect with our consumers
and shoppers at almost any point in their day
with technology. This has led marketers to believe
that if we push the right offer identified through
analysis of big data — no matter when that offer is
pushed — then we’re successfully using digital and
social media. The problem is, just because we can
push an offer doesn’t mean we should. One of the
biggest challenges we as marketers face is: are we
connecting with our consumers and shoppers at the
right place and time, with a message that contains
the right amount of emotional resonance?
The companies and brands that are connecting
successfully are the ones who understand the
strategic role digital and social media can play in
the telling and deepening of the brand story. By no
means should we ignore value-added offers, but
we need to understand that monetary incentives
are not the only way to convert consumers into
shoppers. There are two ways to persuade shoppers
to purchase your brands: you can manipulate them
or inspire them. Today, we spend most of our efforts
manipulating via price promotion. We need to start
inspiring shoppers with stories that strike the right
emotional resonance. There is a physics principle
applicable to this topic: as resonance increases,
resistance decreases. The more emotionally resonant
our messaging, the more successfully we overcome
consumers and shoppers’ resistance. Emotion is the
new currency in the game of conversion.
Loyalty is a very tricky subject especially within the
context of marketing; it’s often discussed but largely
misunderstood. Some scholars such as Dr. Byron
Sharp of the Ehrenberg-Bass Institute don’t believe it’s
reasonable to assume we can affect brand loyalty. In
fact, these scholars don’t support that building loyalty
is the purpose of marketing at all. Yes, loyalty is on the
decline, but this does not mean it’s now out of reach
for marketers. To deny loyalty as a goal undermines a
key aspect of what marketing should be about. Today,
marketing’s sole purpose is to sell things: a mentality
that drives brands to resort to cheap manipulation
through price promotion that is anything but cheap.
But what if marketing were about building deeply
emotional relationships that are leveraged to sell goods
and services? We would then be forced to realize
that real brand loyalty consists of both emotional and
behavioral loyalty.
Rather than focusing solely on behavioral loyalty, as
we do today, brands need to switch their attention to
developing emotional loyalty. The more emotionally
loyal the consumer, the easier it will be to translate that
into shopper loyalty. Concentrating our efforts and
dollars on building emotional loyalty up front means
investing less effort and money on the backend to
trigger desired behaviors.
Omni-channel is a big buzz word in CPG today.
In fact, many companies are wondering if omni-
channel marketing is the natural evolution of Shopper
Marketing. We don’t subscribe to this notion for a
few key reasons. While shopping across multiple
online and brick-and-mortar retailers will continue
to increase, they all still share the same entity: the
shopper. Shopper Marketing, in its simplest definition,
is the recognition of the shopper as a new strategic
target which does not change with an increase in
omni-channel shopping. While omni-channel is a
very relevant and important topic within Shopper
Marketing, it is not a replacement for it.
Another reason we do not subscribe to the above
notion is that omni-channel will quickly evolve to
borderless shopping. Today, the lines between online
and brick-and-mortar are blurred, but in the future,
those lines won’t exist at all (Maybe we are there
already?). We have only just begun to think about the
implications of borderless shopping. Take for example
Amazon’s Dash Wand and Buttons, which allow people
to purchase instantly when the need is triggered. This
is real borderless shopping and it is the reality of our
future as marketers.
DECLINING BRAND LOYALTY
OMNI-CHANNEL SHOPPING
Marketing’s ability to prove that it adds real financial value to corporations seems to be
under some debate as of late. This has spurred a firestorm of discussion around how
to best measure ROI and attribution. A vast majority of companies are measuring the
performance of each tactical function — social, digital, print, TV, shopper, trade, etc —
separate from the other tactical functions in the marketing plan. Put more simply, if
you have $5 in your marketing plan: $1 each for TV, print, digital, shopper, and trade,
companies want to know the return on investment of each individual dollar. This approach
is propagated by the fact that each function has a vested interest in out-performing the
others because it means greater funding next year. The concern about this approach —
measured through marketing mix analysis — is that marketing has become much too
complex to make these calculations reliable. Can a black-box formula make distinctions
between the sales attributable to TV versus print or trade that even the consumers and
shoppers themselves cannot make?
Another, possibly better approach, is to measure the $5 plan in an integrated manner
and then run test-and-learn scenarios. For example, let’s say the combined $5 plan gets
a payout ratio of 5:1 in year one. Then, in year two, we move $.50 from TV to digital and
$.50 from trade to shopper to get a payout ratio of 6:1. We’re still getting the information
we need to make informed decisions but in a more realistic manner given the complexity
of today’s marketplace.
Known as these five factors are, few CPG companies have adapted their business
practices to provide themselves a stable enough foundation on which to sustain these
changes. And these are only a few of the difficulties organizations will face in the future
of marketing. Not only are there other well-discussed challenges like shifting consumer
demographics, customer collaboration, and corporate transparency, there are additional
less-discussed difficulties we will cover in the next white paper, “Five Hidden Factors
Impacting the Future of Marketing”. While organizations exert great effort towards
changing internal processes believing this will solve these challenges, they spend little
time challenging the thinking that goes into those processes. To successfully contend with
the increasing complexity in the future of marketing, we must first change how we think,
then adjust our processes accordingly.
ROI MEASUREMENT
Christopher Brace is the CEO and founded Syntegrate Consulting in 2006. He can
be reached at [email protected].
Syntegrate Consulting is an insight-based strategic consulting firm that specializes
in helping clients build better brands, communications, and go-to-market
strategies that create new value in the marketplace through syntegration: the
bringing together of dissimilar research, knowledge, insights, and people to create
something completely new.
Please visit our website at www.syntegrate-consulting.com.