Marketing and selling products has always been the bigger challenge for businesses. Management guru Peter Drucker timelessly said that business success comes from how well companies perform 2 fundamental tasks: innovation (i.e., offer an innovative product), and marketing. And of the 2, why is marketing is the more important? If you have a so-so product, but great marketing, you can have a successful business. If you have the greatest product in the world, so-so or lousy marketing will leave you with nothing.
Marketing is even more challenging today. In the last 10-20 years, the digital revolution has altered marketing in significant ways, across nearly every industry, multiple times.
One of the last industries to experience the latest round of marketing transformation has been the retail CPG industry. CPG margins are so tight that the high early costs of sophisticated marketing management software made no economic sense. But a revolution is well underway in CPG marketing. Marketing teams today must creatively out-market competitors, AND do so with unprecedented efficiency and personalization.
The implications of some technologies have been obvious. Photoshop and video tools have touched nearly everything we do, and there are millions of artists using them. But some implications were less obvious, e.g., the implications of a 140-character limit, or the new ease of getting a cheap ride anywhere at any time. Executives who can see beyond the tools that everyone else sees, to the implications that others do not, can place themselves well ahead of the competition.
Here are 5 less-obvious ways that digital, web, social, cloud, and mobile technologies are currently transforming the world of CPG marketing – along with several implications that many CPG execs have not yet capitalized upon to date.
Years ago only the largest commercial enterprises could afford sophisticated (i.e., computerized, connected, dedicated, comprehensive) management tools, because (1) they had revenues large enough to amortize the incredible costs of developing them; and (2) those sophisticated solutions were not “shareable” with other companies. This has traditionally contributed to larger brands’ competitive advantage. That is now disappearing.
According to Deloitte, the advent of open-source, web-based, and more recently cloud-based solutions has made it possible for a relatively smaller number of vendors to offer sophisticated solution platforms that work well for the vast majority of business cases. Today, even the smallest startup company can employ business management tools that large companies could only dream of 5 or 10 years ago.
This has implications for small and large organizations. Today even a small, creatively talented team can use rapidly evolving SaaS (software as a service) applications to compete favorably with much larger teams. Tools are so important that venture capitalists now measure startup viability in part by assessing their “stack” – the set of software tools that the startup has cobbled together to automate their various ongoing management tasks.
For several years now large companies have also trended away from building business platforms in-house, and toward using available cloud-based solutions. This is especially true in trade promotion management software platforms. (I will cover this in more detail in a separate post.)
Everyone knows they need data. What’s less obvious is that the move to more sophisticated tools requires a shift in the upper- and even mid-level management team’s mentality. This shift is toward a more disciplined demand for data upon which to base (or at least confirm) significant management decisions. This is a non-trivial cultural evolution / revolution, in both implications and implementation.
Are the days of the experienced “old dog” over? No. But it does mean that the manager who in the past could have gotten away with basing their entire decision process on “gut feel” and intuition must now add a level of data demand and utilization to their daily, weekly, and quarterly decisions. Failure to use data in strategic decisions has become a potentially fatal vulnerability.
Data vs. Big Data. The greater availability of data is both a blessing and a curse. Data can help to confirm or improve decisions about known subjects. But what about hidden opportunities? Teams today often have more data than they know what to do with. Owning and standing on top of a gold mine doesn’t do you much good if you have no ability to mine it. The ability to cost-effectively digest, organize, and draw actionable insights from your data is the next challenge and opportunity.
Big data is an entirely different beast, and requires a different skill set to fully capitalize upon than you are likely to find among your otherwise talented and personable marketing staff. Getting to the gold nuggets in your data takes a data scientist – and these rare people are in high demand. They can “slice and dice” vast amounts of data, using sophisticated mathematical tools to extract unseen patterns and opportunities. A good data miner will probably provide you some surprising, valuable discoveries.
According to McKinsey, marketing organizations today need data scientists to catch up to technology. However, such individuals are most often grown in house, because they ideally should possess an impossibly difficult-to-find combination of company marketing culture, domain expertise, and mastery of digital technology, databases, and math. But for the same ROI & cost reasons that CPG companies have been slower than other industries to adopt technology into their marketing programs, it's difficult for many to justify the expense of developing such a capability in-house. For most CPG companies, it makes more sense today to "share" that cost with others by using experts.
The instantaneous nature of modern data reporting means that data is more available, and it is often available in real time. This has given rise to practices such as conversion hacking. And with social, blogging, and email channels, it’s easier and more important than ever to launch your marketing messages into the market a few minutes or hours after you’ve finalized them. So, marketing competitiveness today results from consumer relevance, data accuracy, and also time to action.
It is widely understood that the rise of smartphones and web search has created a new shopping phenomenon: online shopping. Less obvious is that in the frenzy to capitalize on “mobile”, it is important for the brand to understand the difference between online shopping and online purchasing. It is popular to project that soon 90% of purchases will be done from a smartphone – but it is incorrect. We might see 90% of purchase decisions soon involving a mobile device – according to a recent Nielsen study, already 72% of shoppers research an item on their mobile device before purchasing it, and 37% of respondents START their shopping 25-50% of the time on their mobile device. But while these numbers are growing each year, the vast majority of CPG purchases (94%) are still made in brick-and-mortar stores. Also according to Nielsen's report, around 60% of consumers even feel that shopping in store is an enjoyable and engaging experience!
The best strategy for CPG brand managers currently is:
We live in a world of increasing automation, digital “connectedness”, massive customer databases, and data-and-algorithm-derived “personalization.” Amazon robot drone deliveries. Cell phone dinners. Siri, Alexa, Cortana, Google Now.
In parallel with the rise of these technologies, the baseline challenge of marketing has also progressed from “getting in front of them,” to “getting exactly the right thing in front of them in the right place at the right time,” to “let’s put a microphone on them 24/7 and listen for and anticipate what they want.”
While there is something very exciting about the ability to inject this far into the consumer’s life, there’s also something a bit creepy about it – and increasingly, consumers are feeling it and reacting to it. I sense among consumers a realization that in the digital revolution, something is missing, and that they long to talk to a real live person. My sense is that this desire for “the human connection” is much greater than their desire to be any more digitally “personalized.”
This consumer desire for contact presents brands with a great opportunity:
However, I have observed that most brand managers’ strategies for providing the “human touch” are incomplete and – dare I say – even inauthentic. I’ve noticed 3 approaches in this area.
A) The first, base-level approach is to brainstorm creative ways to make the digital experience “feel” more like talking to a human. Whether this is to give Siri a bit of personality, or to record a folksy training video, or to implement an automated support system that can draw upon a customer’s history and speak less like HAL9000, the underlying aim is still to mold a fundamentally digital experience into something that feels like the customer is dealing with a human… when really, they aren’t.
B) The second (slightly better) approach is to build a marketing team that habitually surveys and speaks to consumers directly, in order to gain insights that can drive their integrated product/service offering. This is a customer-connected approach rooted in the traditional marketing focus group… but still with the objective of turning lessons learned into a standard packaged offering.
Although they want something more, consumers will accept the above… unless they have an alternative. As Simon Sinek observed in his TED talk and his book, “Start with Why”, people increasingly want relationships with the brands they buy from. For this reason, I believe that there are tremendous opportunities in exploring the various ways to communicate emotionally to increase the quality of relationships between consumers and brands.
C) The third strategy, which I’ve seen only rarely, is for the company to use technology to enhance person-to-person marketing as an end in itself. The underlying motive is not to move away from actual interpersonal interactions, but to embrace them as an integral part of the business model and optimize them. Think Zappos.com.
In a few years, many of the most-successful CPG companies will have based their success on learning how to efficiently deploy field marketing “human touch teams” to promote to consumers.
The aforementioned in-store experience is a largely unexploited opportunity. There's no better place than “in the store” to share your message with a potential consumer – it is the one place where the shopper’s intent and yours are totally aligned. Brand managers have the opportunity to greatly enhance this in-store experience by using brand ambassadors who connect with and personably educate the shopper. New technology platforms can be used to train and equip brand ambassadors for better in-store demo productivity and success.
Cultural outreach is another prime opportunity to leverage the consumer's desire for the human touch. Product lines increasingly reach across national and cultural lines – and to serve these markets, you’ll benefit from developing greater cultural awareness in your organization. Marketing in United States gives brands a head start – the USA is a microcosm of the world, and the most culturally diverse market anywhere – and it is just waiting to be more appropriately catered to.
I hope these observations give you some good ideas for how you can improve your own team’s marketing and positioning. Questions or comments are welcome below.