Customer Priorities are Shifting in the New Consumer Markets Reality
As the dust of the recession settles, we realize that we have awoken to a new market and consumer reality. Rather than wonder “What will be next?” we need to focus on the ways we adapt our businesses to the new situation. Are you and your people ready for the shifting demands of consumers and market forces?
Seven trends are emerging in consumer markets that require everyone's attention. See Part I below for the complete picture. In a time when consumers are less and less sensitive to marketing claims and promises, focusing on the experience customers have with your brand becomes all-important. But how do you get your people to “live the brand”? See Part II for more information.
Part I: Seven Realities No Consumer Company Can Ignore
1. Frugality is here to stay
The recession of 2008 has changed consumption patterns in ways that will persist even as the economy starts to recover. This means that consumers will not accept a higher price unless there is a clear value advantage. Even in those cases, consumers will still look for “the best deal”.
As a result private labels, price-shopping on the Internet and low-cost retail shops will become stronger than ever. Consumers will even be prepared to sacrifice convenience for a better price. So, brands need to make sure they deliver clear value at every price point, even if this is much lower than before.
Ask yourself: Is the relative and absolute value of my offer large enough to justify my price to cross-channel, bargain-hunting, value-critical shoppers?
2. Sustainability is not optional
Consumers are getting more serious about the sustainability of the brands they buy. Their concern is broader than just ecological awareness. Recent examples include the pressure on Starbucks to come to fair trading relationships with Ethiopian coffee farmers or the pressure on Nestlé to stop buying palm oil from an unsustainable vendor.
Brands need to make sure that their operating principles at every step of the supply chain—and with every supplier they use—can stand up to public scrutiny. Even so, most consumers are not prepared to pay more for brands that behave in a sustainable manner. But they do vote with their wallets when a brand is perceived to be inconsiderate of the world in which operates.
Ask yourself: Are the operating procedures and purchasing policies of my brand in line with what my consumers consider to be fair and sustainable? Do I even know?
How MCE can help you
In response to the above, MCE has developed a workshop that helps you measure and monitor progress in your sustainability strategy.
- Planning, Measuring and Managing Sustainability is offered as in In-Company workshop that can be customized to your needs. It shows you how your company can measure its carbon footprint and decide on a phase II & III plan.
You will discover how to integrate the different metrics versus the final goal to satisfy the customers and other stakeholders. We will share with you the initiatives taken by the World Business Council for Sustainable Development (WBCSD), initiatives taken by companies who provide performance measurement systems, etc. Click here to request more information about MCE's In-Company workshop, "Planning, Measuring and Managing Sustainability" (2333).
3. Personalized experiences are critically important
Consumers increasingly expect personalized products, services and experiences. Popular examples include the personalization technologies of the sportswear industry, or the ability of iPhone users to totally personalize their “standard” phone.
If brands are not instantly responsive to this need, consumers will use Internet and mobile communications to seek what they want, even if it is offered by lesser-known brands, or companies in another geographic region. So, brands need to find new ways to tailor their offer. This could include allowing consumers to modify products so they exactly meet their needs. Experience IS the product they are offering. So, brands need to look at every customer touch point across every channel to demonstrate their value to their consumer.
Ask yourself: Does my brand operate on a “one size fits all” product/service template, or do we offer consumers tailored experiences plus the chance to adapt them to their exact requirements?
How MCE can help you
Management Centre Europe can help your teams in all functional areas—including Marketing, Sales, Finance, Purchasing and Logistics—think through their existing retail situation and organize themselves around the channel and retail directions that are right for your business. Once these are set, we can help your people develop retail partnerships that are based on a position of mutual strength, respect and profit. And, we can help you do this while you are creating a corporate mindset that focuses your team on innovations “in the areas that matter”. To set up a meeting to discuss all of this, please click here.
For individuals and groups of managers, we recommend the following. Click on each title for details:
How do you “create” Loyal Customers? Click here for more information.
4. The Retailers take charge
Retailers are increasing their stronghold on the customer relationship. Brands need to keep the balance of power. They have to become more and more skilled at the development of retail-wholesale partnerships. They need to establish market positions or skills retailers can’t copy. And in some cases, this may mean setting up distinct distribution channels.
How will this affect your business?
As a brand, you need to continuously improve the relationship with your distribution partners. They are your channel to the customer. Every part of your business needs to interact with the retailer. Everyone needs to be part of the sales process. But you also need to keep a clear balance of power intact. You can do this by:
- Creating more and more economical products at better, higher quality levels
- Becoming a private label or co-branded product partner to retailers
- Developing micro-brands outside of the scope of other brands or retailers (e.g., locally relevant brands, low-volume specialist products)
- Offering retailers new brand skills that they cannot match themselves, e.g., R&D, unique customer insights, multi-channel service, remarkable customer loyalty
- Continuously pruning the brand portfolio to preserve your energy. Avoid battles where there is simply no more “space” for your brand.
Finally you can decide to shake up your industry with a direct-to-consumer approach. Caution: This will probably challenge your existing organisation to its very core.
5. The multichannel retail reality is unavoidable
Today, consumers use all kinds of distribution and information channels to get the best price and experience available. They compare products and features online. They ask sales associates to demonstrate products in the store. Then they return home to purchase them from the best price at an online retailer. When the product breaks down, they contact the most convenient retailer and expect to be serviced the best possible way. Brands need to understand the pathways that consumers follow and be prepared to meet them on their terms. For some brands it may even mean setting up proprietary retail channels or customer interaction centres.
Ask yourself: Is the distribution of my brand in line with the actual purchasing behaviour of my consumers? If not, where are we out of sync?
How MCE can help you
For individuals and groups of managers, we invite you to participate in our Workshops for Individual Managers. Click on the title for details:
A primary driver of multichannel retailing is the Internet. Your customers are spending more and more time there, shopping and comparing prices and features, before contacting retail outlets. To help you work more effectively with online media, MCE has developed the following Workshops for Individual Managers.
6 Marketing communications is a two-way street
Traditional marketing communication methods are increasingly ineffective. Consumers have become so immune to advertising promises that they simply tune out when brands shout at them. Instead of talking to consumers, brands need to engage them in a two-way dialogue.
These dialogues need to be conducted with integrity and be consistent across all channels. After all, some consumers have become very active in voicing their opinions through social and digital media. On these Internet sites, complete accounts of unsatisfactory customer transactions or grievances reach thousands of consumers in a matter of hours.
Ask yourself: Is my brand talking to consumers? Do we truly engage in a two-way dialogue? Do we have a “Community Manager” on staff that initiates, monitors and evaluates our organization’s digital marketing activities to maximize and monetize the recommendations of online communities?
How MCE can help you
Management Centre Europe can work directly with your sales and marketing people to help them adapt their mar-com behaviours to support the touch-points of the customer experience. We can help them visualize life from the consumer’s perspective and develop an “all-company” approach to communication.
We can also help them work more effectively together by aligning the Marketing and Sales teams toward your strategy. MCE has helped customers in this endeavor. And, we routinely work with customers to help them create a customer-centric digital communications plan. In this process, we re-consider your marketing communications efforts with input from your people in Marketing, Sales, Customer Service and other support areas. To request more information about how MCE can help you with these issues, please click here.
For individual development, we invite individual managers from every business function—from Finance to Production, from HR to Marketing, from Customer Service to Operations—to participate in the following open enrolment workshops that deal with the impact of this trend on retailers:
- Building Strong Brands helps you make your key brands stronger by defining their brand equity and positioning in the market.
7. Customer loyalty is the name of the game
In the frugal market place, brands can no longer afford to kiss and leave consumers because there may not be new brands to replace them. Brands across all categories need to make sure that they maximize the lifetime value of their customers. Financial measurements need to include Customer Net Present Value (NPV). Brands need to manage the relationship with and the loyalty of individual consumers.
Marketing activities need to have a very active presence in online communities from within to gain an almost infinite positive impact on brand value and sales revenues. They need to focus on gaining “viral” (rapidly self-replicating) recommendations from delighted customers. In the process, brands need to focus on the real drivers of loyalty—which are tied to the customer experience.
Ask yourself: Do we really manage the loyalty of our consumers? Do we even know the value of one of our consumers? If so, what do we do with this knowledge?
How MCE can help you
For individuals and groups of managers, we invite you to participate in our Workshops for Individual Managers. Click on each title for details:
- Product, Category and Segment Management in Consumer Markets helps you move beyond traditional research methods to what really motivates consumers.
- Profitable Customer Centricity helps you understand how to adapt your business unit, department or organization to deliver a delightful customer experience. You will strengthen your skills in communicating with your existing and potential customers effectively through digital marketing channels. And you will learn how to measure the lifetime value of your customers.
Part II: Getting Your People to “Live the Brand”
The attitudes and behaviours of people in any organization are driven by six dimensions. These dimensions form a system in which they are interdependent and interact with each other. They need to be managed as a whole.
Today's consumer is less and less sensitive to the claims and promises brands make. Instead, consumers increasingly use conversations and social media to turn to each other for information on brands and products. They formulate a point of view based on the reputation of these brands among people whose opinion they respect. In other words, it is not what the brands say about themselves that matters. It is what others say about the brand, based on the whole customer experience with the actual behaviour of the brand.
So, brands need to deliver experiences that make sure people will “speak well of them”.
Delighting customers is easier said than done
Providing continuous and meaningful value to a wide variety of consumers is probably one of the most difficult things to achieve. But some brands may avoid looking in the place where the biggest gains can be made: the people in the business. Most brands employ four types of people:
- Promisers: People and departments who make promises to consumers and the market place at large, i.e. sales and marketing
- Fulfillers: People who have to fulfil the explicit or implicit promises that are made, i.e. production, logistics, servicing or administrative functions
- Fixers: Those who need to help the customer if, for whatever reason, the promises are not delivered, i.e. customer care
- Supporters: People in support functions like HR and IT, who set up the systems that influence how the other groups do their jobs. They are more important and connected to living the brand than most people realize.
The co-operation among these four groups is not always seamless. In fact, their attitudes, performance goals and operating principles often prevent them from providing what the consumer really wants or needs. These misalignments can become even larger if the various groups do not work for the same company. For example, independent manufacturers, distributors, retailers and customer service centres are often parts of the value chain. Each has its own policies, procedures and value propositions (which may conflict). These disconnects can weaken the customer experience, reduce the reputation of the brand in the market place, and thus slow down or stop the growth of the brand.
How MCE can help you
For individual development, we invite individual managers from every business function—from Finance to Production, from HR to Marketing, from Customer Service to Operations—to participate in the following Workshops for Individual Managers that deal with the impact of this trend on retailers:
How to get your people to “Live the Brand”
These realities will not change overnight. But brand leaders and managers can still take decisive action to ensure that the various groups servicing the end consumer are aligned in both their methods and objectives. They need to do three things:
1. Redefine a clear Customer Value Proposition
Brand leaders and managers need to clearly understand what consumers are looking for and redefine their value proposition based on those insights. The customer value proposition has to evolve from being product- or service-oriented to being experience-oriented. Remember: the Experience IS the Product. When brands understand how and why the experience makes consumers buy and recommend the brand to others, they can take steps to make it happen. For more insights on Customer Centricity, click here.
2. Ensure that all the people directly working for the brand are aligned to deliver the Customer Value Proposition
Brand leaders need to ensure that everyone is willing, skilled and able to deliver what the customer is looking for. People need to be able to translate these brand promises into actions and behaviours that guide them and their departments. KPI's and reward systems need to be aligned so people are motivated to deliver the customer experience. Leaders and managers need to ensure that the business does what is right for the customer and for the bottom line.
3. Gain support from other stakeholders to achieve this objective
Getting your own business aligned is difficult enough. But you also have to reach out to your distribution and service partners. You need to demonstrate to them the commercial advantages of delivering a delightful customer experience. If partners are reluctant to co-operate, brands should evaluate the economic benefits and risks of alternative options.
How MCE can help you
We can help the various functions in your management team better understand the ways these trends affect your business and the ways your people can respond to them. Our Senior Associates can review all of these trends with you in detail. Then, we will sit down with you to figure out how the trends impact your business. And, finally, we can help you define potential action points for adapting your organization to meet these challenges.
If you are a marketing professional, contact us to help you bring your entire team up to speed on how to execute a consumer marketing strategy. We will meet with you to understand the particular requirements of your business and your customer value proposition(s). If there is a skills and knowledge gap in the team, we may propose a workshop on consumer marketing strategy that would be presented entirely in the context of your organization’s strategy.
We also invite individual managers to participate in our workshop, Leadership for Senior Managers. By participating, you will be able to identify the differences in organizational approach that are required by each Customer Value Propositions (CVP). And, you will be able to select the different processes and metrics needed for each function in your organization, based on your CVP.