A new decade – one currently on pause, of course – but one that started with a degree of consensus that our industry has to change in order to survive.
This is not a piece about COVID-19, but suffice to say the pandemic has surfaced the challenges and failings of marketing today.
Changes in consumer behaviour have long been accelerating far in excess of businesses’ abilities to catch up. Now it has turbo-charged.
Insight and innovation should be our resilience and growth watch words: it’s why it’s time to get back to the basics. Marketers should go back to the future and think beyond the ad budget alone: instead concentrate on all four pillars of the discipline – product, price and place as well as promotion.
What have we been getting wrong?
We’ve too long over-indexed on promotion because the budget is there. It is routine to spend the annual allocation in order to preserve the same or more each year. Yet, with a focus on revenue over profit (a far truer brand barometer), marketing has lost its way.
If a million pounds is spent advertising a product with 10% margin, you have to make an additional £10m in sales just to pay back the initial campaign investment. It’s not turning a million pounds into £11m, merely breaking even.
Change will be hard
The digital ecosystem encourages executives to lean on and learn more about the customers they already have. There’s always this feeling that a business can make more money by selling existing clients more stuff, but they don’t want to be sold more things that they already have or don’t really need. Again, the pandemic and lockdown has accelerated this feeling.
Marketing has got lazy and complacent. Companies are in the habit of spending budget on advertising campaigns to attract new customers while hammering the CRM database to sell existing clients more.
Getting back to the 4 Ps
A business should always also be looking outside of its existing customer base to expand. That requires moving out of comfort zones and getting back to basics. It’s often scary, because there’s nowhere to hide, but that is exactly why it matters.
We need to stop flogging (to) our existing customers and wonder instead why others in the market for our goods and services have not purchased.
We need to get into consumers’ mind sets and understand their behaviour. This next decade will see consumer behaviour change even more rapidly than the last, so it’s impossible to know exactly how people will react – but there are pointers and primers.
Covid has accelerated the shift towards internet shopping. Those who might previously have been cautious may have found it a lifeline. How many of our customers have been nudged into new behaviours by the pandemic and the new social norms enacted by it?
Another part of place is going to be securing supply chains to make sure they’re as resolute as possible. As many have found out, if you can’t get your product to market, you’re never going to have a ‘Place’ to sell it.
Product is another of the four Ps where marketing is often loath to get involved. Yet marketing should be the eyes and ears of the company examining how consumer habits are changing and how that impacts the products and services they buy. Marketers really are often the only strategic function to look externally, rather than inwards.
Product innovation will change from one company to another but one aspect you can easily imagine is going to be more important to consumers is the environmental angle.
The price is right
The price goods can be sold for will also need to be examined, particularly if environmental improvements push up costs at the same time as clients face pressure on their income if the predicted worldwide recession happens.
It’s now time to consider a fifth P
Perhaps we should consider a fifth P – to stand for planet or purpose? As stated above, consumers are becoming more aware of the damage our travelling habits cause the globe and how shifts in behaviour can improve the environment. Any company that does not consider this is likely to lose out to businesses who innovate greener goods.
There are no simple answers, but I guarantee businesses will fail if they believe or pretend consumers are unchanged and continue to spend on advertising while squeezing the life out of their CRM database.
The future always needs reinventing and the good news is, we already know the areas we need to look at. It’s time to get back to basics and examine if you have the right product, available in the right place, for the right price with the correct promotion behind it – and with authentic purpose to boot.
By Ben Little, Founder and Director at Fearlessly Frank
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