Are P&G Right to End Marketing?

In the last couple of weeks, there has been a tremendous amount of discussion around P&G’s decision to change marketing into br and management.

The consumer products world closely watches whenever P&G announces changes, whether to their strategy, marketing or in this case their organisational structure. As this AdAge article (herementions “P&G seems well out in front of the rest of the marketing world — or what used to be known as the marketing world — on this”.

As businesses have become more social, there have been a lot of articles about marketing. Some have spoken about the need for marketing and IT to get together, if not even merge in some way (See this Forbes article). Others have proclaimed the end of the CMO’s position altogether, including the infamous piece by IMD’s President Dominique Turpin “The CMO is Dead ..… Welcome to the CCO. Then there have been even more articles challenging marketing to show their worth and suggesting metrics to prove their ROI (See  Fournaise 2011 study of 600 CEOs or  Forrester’s Marketing Performance Management Survey).

The fact that there have been so many different pieces on the topic over the last year or so, suggests to me that marketing is still vital for and extremely attractive to business, but that it is in desperate need of reinventing itself. I believe this is behind P&G’s move.

At the end of last year I wrote a post proposing what I thought would and wouldn’t change and what needs to. Six months on, in light of P&G’s announcement, I thought it useful to review my list:

What will change

  • Marketing can no longer work alone in a silo; it needs to become more collaborative and more commercial or business oriented. It can no longer remain fuzzy and hide behind claims that its ROI is difficult to measure.
  • anding customer service opportunities” width=”375″ height=”226″ />The sales funnel will be (has already been) replaced by the purchase decision journey, which will be a multi-layered, flexible representation of the route to purchase. For more on this, read “How Great Customer Service Leads to Great Customer Loyalty”.
  • Advertising  and messaging TO the customer will be replaced by valuable information made available FOR the customer. In line with the longer sales journey and multiple online consultations, communication will become more informative, more useful, more timely.
  • Local will no longer be geographic but “Native”. Whether it’s language, habits or interests, customers will be targeted on their similarities that will rarely, if ever, include geographical proximity.
  • Mobile web consulting will become the norm, so br and sites need to become adaptive. Content will aim to inform, educate and entertain first and foremost, rather than sell, and websites will become flexible and adaptive to the differing screens and customer needs.

What won’t change

  • The customer is still the king, but content joins the ranks in almost equal position, needing more respect and value, and less commoditisation.
Continue Reading

Brand Portfolio Management: How to Make More (Money) with Less (Brands)

How do you know when you have too many brands and variants? In my opinion the answer is that you have too many when you can’t answer the question! A couple of months ago I wrote a very popular piece called “ A Beginners Guide to Brand Portfolio Management”. This week I’d like to take it a little further and speak about some of the reasons brand portfolio management is so important.

 

Br and portfolio management

Brand management is essential to a healthy business, but marketing has one of the quickest promotion ladders of many professions. That’s great news for marketers, less so for brands. Why? Well because marketers want to make an impression and get that promotion as quickly as possible. And one of the easiest ways is by launching a new brand or variant.

 

I believe this is one of the main reasons why we poor consumers often end up NOT buying something, because we just can’t make our minds up between the vast choice of flavours, packs and sizes on display in some large hypermarkets. More is most definitely not always better when it comes to retailing! (>>Tweet this<<)

Does a brand really need tens of flavours / aromas and hundreds of variants? I decided to take a look at the leading global brands to help answer this. According to Interbrand, these are the top 10 most valuable global brands:

                1. Apple
                2. Google
                3. Coca-Cola
                4. IBM
                5. Microsoft
                6. General Electric
                7. McDonald’s
                8. Samsung
                9. Intel
                10. Toyota

Now most of these brands certainly don’t have hundreds of variants from which to choose and therefore final selection is relatively easy. However, interestingly only one of these is a CPG (consumer packaged goods) brand, so I decided to look at the sub-category of consumer brands (Interbrand separates Food and Beverage brands from other consumer brands, don’t ask me why, especially when many make both! The four beverage brands in the top 100 – Coca-Cola (3), Pepsi (22), Nescafe (37), Sprite (69) – would all fall into the top ten consumer brands):

                1. Gillette (16)
                2. Pampers (29)
                3. Kellogg’s (30)
                4. L’Oreal (39)
                5. Danone (49)
                6. Colgate (50)
                7. Heinz (53)
                8. Nestle (56)
                9. Johnson & Johnson (81)
                10. Duracell (85)

As Elan Cole from Interbrand says in the summary of this category

“Consumer brands bank on their unique versions of these products to generate and grow value. But as soon as one br and patents a technology, competitors ( and the retailer that sells it) race to copy it, one-up it, or make it in strawberry flavor. The advantage that technology brings to a br and is only as valuable as the window of time that the br and controls the manufacturing and access to it. For consumer brands, that window is narrow.”

This might explain why consumer brands tend to have far more variants than some of the other leading br ands and categories mentioned above, whose technical advances often last longer.

Two of the leaders in CPG (Unilever and P&G) both culled the number of their brands’ SKUs about 15 years ago from thousands down to “mere” hundreds and continue to do so on a regular basis. Continue Reading

Beginners Guide to Brand Portfolio Management

This week I want to share some ideas with you that were prompted by a client’s question. I was recently asked about brand portfolio management and what to do to ensure that a company is correctly differentiating its offers. This question was in reference to the service industry, which is arguably more challenging since there are no physical products, but the basic requirements remain the same.

Brand portfolio strategies are an essential prerequisite for the long-term success of multi-brand companies. It is vital for these organisations to consider not only external but also internal competitors.

According to marketing theory, there are two types of brand portfolio models, the house of brands and branded property. The House of Brands model refers to a portfolio where brands have different names across categories. Most of the major consumer goods companies use this model. The advantage of this model is that since the brands are independent, the failure of any single one of them has little impact on the others.

The Branded Property model uses one brand across all categories. Virgin is a good example of this, with its airline, media and train companies all being similarly identified. The advantage of this model is that positive images of one benefit all categories; however a negative publicity or event will also have a direct impact on all brands within the family.

Interestingly, both Unilever and P&G have been placing more emphasis on the company brand associated with their brands in recent years. This move followed a ruthless culling of both their portfolios of brands, from thous ands down to mere hundreds. The addition of the corporate name has come at a time of decreasing consumer trust in brands, which is certainly not helped by the growing adoption of private label, including those from discounters such as Lidl and Aldi.

Even though these two portfolio models exist, in reality firms tend to use components of both models together in their brand portfolio strategy.

For any company which has more than one or two brands, it is important to regularly review their portfolio strategy; here are some thoughts to help:

Two rules of portfolio creation

There are two basic principles for the design of a successful brand portfolio. The first is to maximise market coverage, so that no potential customers are being ignored. And second, to minimise the overlap between the company’s brands, so they aren’t directly competing with each other and trying to attract the same customers. If you can achieve both of these then your brand portfolio will have a solid foundation.

Identify the category

Surprisingly many don’t do this first essential step and end up with a sub-optimal strategy; let me explain why. Suppose you sell a carbonated soft drink and think you are in competition with other carbonated soft drinks. Consumers on the other h and see your brand as being in a larger category of soft drinks which also includes fresh fruit juices, because your product contains juice as well as being carbonated. Continue Reading

Great Customer Satisfaction in 3 Easy Lessons

The latest Customer Experience Survey run in the US at the end of last year by McKinsey shows that Americans are generally more satisfied with their experiences today than pre-recession, although this can in part be attributed to rising consumer confidence. 

The article concludes that happier customers have a higher lifetime value  for a company and highlights several areas for businesses to consider in order to increase satisfaction.

After reading the report I was inspired to take their ideas and exp and them into three lessons that could guarantee increased customer satisfaction for all organisations. This is what I came up with:

Consistency boosts satisfaction

The article refers to consistency across contact channels, but I believe it goes much further than that. Customers need to underst and what we are offering in order to find it a – hopefully regular – place in their lives. If we frequently change packaging, distribution channels or communications from one year to the next, as often follows management restructuring, they can become destabilised.

They will then be forced to work, evaluating how these changes impact their current habits and perceptions of the br and. As we are all creatures of habit, living on auto-pilot in many areas of our lives for much of the time, changes force us to reconsider our choices, which can perhaps lead to the decision that the offering no longer has a place in our lives.

Lesson 1: remain consistent to the br and equity and personality that should have been clearly defined, in every way the br and interacts with its customers.

You can’t control everything

Customer confidence and satisfaction are said to be closely linked, especially in transactional industries such as airlines, hotels and retail. Whilst this may be true, I believe that br ands have an essential role to play in giving customers the confidence they need that they have made the best choice. What a br and st ands for in the hearts and minds of its audience can be influenced and thus we do have control over the confidence our customers have in the product or services we offer.

If we do not meet their expectations every time, again they may start to re-evaluate their choices and could decide to switch supplier. Br ands give customers confidence in the choices they make, as well as a guaranteed level of quality and reliability, but this needs to be reconfirmed every time they experience  it.

Lesson 2: control everything that can be controlled to ensure that your customers’ experience is of the highest level possible, and every single time, of course

Know what matters

P&G are well known for speaking about the first and second moments of truth; the first being when a shopper sees the product “on the shelf” and the second being when the product is actually experienced. With the rise of the internet and the use of search engines, many br and interactions are now taking place between a customer and a br and long before the product is ever seen or experienced; Google has named this the “Zero Moment of Truth”. Continue Reading

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