Consumer packaged goods marketers depend on contractors, agencies and consulting firms, arguably more so than peers in other industries. That’s not going to change much in 2014, but what will is the role these parties play. Something must change: “According to a recent Deloitte survey of 4,047 respondents encompassing 28 product categories and more than 350 brands, brand loyalty is declining.”
The Deloitte study cited in this Inc. article describes price-sensitive consumers still reeling from recession as the norm, challenging any attempts to develop brand affinity. The solution? “Brand segmentation,” which requires consumer goods companies to:
“Rethink their product portfolio in light of the widening gap between the affluent and lower-income households. Consumer products companies may need to have distinct strategies (e.g., brands, product offering, pricing) to target affluent and lower-income consumers.”
That sounds like a data and analytic problem, dependent on truly knowing your consumers beyond anonymous and summarized sales figures. How prepared are CPG brand marketers to attack it?
Consumer Data as an Asset
Data about your consumers should be your data – not something outsourced, scattered among contractors. This data and its insight could be an asset that drives better decision making across the organization. If it were, it would be accounted for on your company’s balance sheet.
None of this means you need to necessarily own the technology that collects, analyzes and puts consumer data to use. But it does call into question how CPG companies outsource marketing to a network of third parties who develop silos of consumer insight. Often the most visible of these is the “one stop shop” marketing services provider.
Marketing service providers operate on the premise that clients care little about the underlying data and marketing technologies working behind the scenes – just as long as they work. Instead, they emphasize servicing almost any marketing need. Diversity to this extent makes for thinness in certain areas that is more apparent than ever; it’s simply impossible today to be expert at everything a marketing organization may require.
The situation has services companies retreating to reposition as the market shifts back to preferring best-of-breed providers. The pace of technology innovation is so fast, only firms putting their full prowess behind adapting to a particular piece of the marketing puzzle are capable of delivering the most differentiated capabilities.
It’s why you see many CPG companies investing in and partnering with start-ups creating new social networks, mobile applications and other ways of engaging consumers. Most CPG companies are missing the parallel opportunity to work in a similar fashion to make the most of data from all marketing efforts across brands and channels. Just look at Unilever’s recent announcement for the latest evidence that something’s not working.
Picking the Right Partner
In October of last year, McKinsey’s Global Co-Lead of Digital, David Edelman, posted an article to LinkedIn headlined, “Time for Marketers and Agencies to Shake it Up.” His piece describes the need for agencies to change the nature of their business models to focus on higher value services. He says:
“Who do you need as a partner? When every different channel has its own specialist agencies claiming expertise in it, a client can get overwhelmed by a mix of as many as 14 different traditional, media, digital, social, mobile, sponsorship, etc. agencies. If each corporate business unit and geography gets to choose their own agency, the complexities are overwhelming and negate much opportunity for scale or cross-channel coordination.”
The landscape he describes begs for some degree of standardization that accommodates the specialist capabilities offered by the ecosystem of agencies, consultants and start-ups.
A good first step is to begin with data about your consumers – integrated profiles, based on personally identifiable information or PII. How it’s collected, analyzed, shared and secured such that everyone operates from the same playbook. The resulting consistent and comparable metrics across brands and campaigns will be essential in 2014 as CPG marketers are under the microscope more than ever.