Marketing leaders in the second decade of the 21st century are facing post-financial crisis frugality and fickle consumers, as well as private label and home brands undercutting their offerings. To make matters worse, their customers are daily disappearing into a “cloud” of digital devices through which they are increasingly working, playing, price-comparing and shopping.
While always important, being a brand champion, brand protector or an innovator are now just the minimum requirements of today’s marketing director.
The new mantra is category growth. For example, if you’re in soft drinks, the question becomes not, “How can I persuade people that my brand is better than the opposition?” but, “How big can I make the soft drink aisle of the supermarket?”
Or, as one of the world’s most successful CEOs, Reckitt Benckiser's Bart Becht, revealed on a recent visit to Australia: “It's not just about selling Finish (dishwasher detergent), it’s very much about driving the take-up of dishwashers.”
While Finish has 76 per cent of the Australian dishwasher cleaner market, dishwasher sales are running at only between 30 to 60 per cent of the potential market.
“Once you give a consumer a dishwasher for a week, he or she will never move back, so we are trying to create category growth in what is still a very vibrant market for us,” says Becht.
Becht, who was paid a total of $US210 million in 2008 and 2009, and who resigned recently after 16 years at the helm, would frequently stop customers in stores to ask how they cleaned their homes and laundered their clothes. He used the insights to expand or create new market segments.
“Today’s consumers don’t have the time to spend on laundry that they did 20 or 30 years ago,” he says.
“They also don’t want to do this overnight soaking thing and then to dump everything back into the machine, which is a very painful exercise.”
His answer was to build a stain remover category adjacent to laundry detergents, with a product that could be added to the laundry detergent to complete the job in one session.
Partnering with the retailers
But category expansion also goes way beyond product development and brand positioning. It requires marketing leaders who can develop a different relationship with the retailer.
The marketing director who wants to talk only about brand attributes and brand protection, complains about the positioning of the product on the shelf, or who tries to tell the retailer what to do, won’t win hearts and minds. Retailers don’t want pushing – they want partnering.
While your advertising might be wonderful and your brand beautiful, retailers are more interested in growing sales, revenue and margins. Smart marketing directors will visit retailers regularly, win their trust, exchange information, and share customer insights, pricing suggestions and promotional activities.
Retailers are holding many of the cards which make great brands successful. Their research is excellent, with data-mining and customer analytics giving them early information on trends and market shifts. They are also conducting more in-house product testing and tastings than ever before.
According to John Wardley, of George Weston Foods, owners of big brands can offer the retailer category insights: “We're obviously a lot more focussed on categories and we’ll always be expert in what the consumer wants in those spaces. Those insights are valuable to the retailer.”
He says the most successful marketing leaders will be able to demonstrate to retailers “how to grow their business – not just your own.”
Wardley, marketing and innovations director of the George Weston Foods baking division, adds: “What’s pretty evident today is that when you’ve having a conversation with a retailer it needs to be a holistic conversation about their business and can’t just be about your brands. You need to demonstrate how your brands can be used as tools to grow their category and their total business."
George Weston has recently conducted intensive workshops on retailer engagement and category development.
“The most effective way of generating growth is to look not through the lens of your brands but through the lens of what the consumer wants,” he says. “Some things you can deliver and some things you can’t – it depends if you are focussed at the value end or the premium end of the market, or a blend of both.”
Premium offerings with high value differentiation will usually produce higher margins, Wardley observes.
It’s all about mutuality
Westfield's Director of Marketing John Batistich says the market is rapidly transforming from “my share growth and sales growth” to what he calls “mutuality.”
Until now, he says, global marketing leaders have not been onboard with the idea of “growing the pie” but rather have been seeking a bigger individual slice of the pie for their own brands – “because that’s something I can control if I’m a brand icon.”
But the more challenging idea is to collaborate with retailers for mutual gain, Batistich says.
“Certainly as a brand owner you want to gain, but your role these days is to demonstrate a range of initiatives, a range of innovations that are going to be good for the brand but not at detriment of others and certainly to help grow category volume, sales and margin,” he says.
Batistich says “the old model” of marketing was to build the brand through market share and brand awareness, profitability or other metrics which pushed the needs of the brand owner.
“What is stopping brand owners from achieving mutuality and category expansion? I can define it in one sentence: few brand owners have as part of their measurement and performance review the growth of their categories,” he says.
“The customer used to be on the outside and companies really only engaged them when they were doing research. But in the new world of digital community networks, online discussions and instant product feedback, the customer is very much inside the organisation helping you make decisions,” he says.
“Previously, it was one-to-many, where the brand owner would present the brand to many customers at a time. Now it is one-to-one and many to many.”
“Through digital platforms, customers are actively involved in the brand debate and participating in the very formation of the brand. Now I want to know what my customers are doing with my brand and what they’re saying about it,” Batistich says.
“For the past several years the marketing chatter has been about customers ‘going mobile’, but this time it’s real. Great marketing directors need to have a clear mobile strategy.”
He says the Westfield app (software application downloadable to a smartphone) offers online shopping, acts as a searchable store directory and enables drivers to see how many car spaces are available so they can find a spot, or check on how busy the centre is before they leave home. “We’re also working on number plate recognition so you will never lose your car again!”
At Heidrick & Struggles, we are seeing the role of marketing director change almost in front of our eyes. Skills and competencies are changing to reflect the need for collaborative category expansion and a new mutuality of growth agendas. Added to that is the need to embrace the opportunity of a more intimate discussion with the consumer and to drive innovation in a rapidly changing marketplace.
Patrick Cadman is a partner with Heidrick & Struggles in Sydney. He specialises in general manager, managing director, sales and marketing searches across a broad range of Consumer businesses.