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Tag Archives: Advertising

Do Your New Products Have Real Competitive Advantages?

First published on 09/02/2014 on www.marketingprofs.com – a preminent resource on best practice marketing techniques for the benefit of the members. What is MarketingProfs? Individual marketers, teams, and entire marketing organizations at the world’s largest corporations rely on us to cut through the chaos to find the marketing experts you can trust and the information you need. Trusted by 618,000 professionals globally, MarketingProfs is the only resource you need to stay ahead of the curve. Read more:

Do Your New Products Have Real Competitive Advantages?

Think Outside The Box Image
It’s a well known fact that brand marketing and new products have radically changed as portrayed by Don Draper and his team in AMC’s “Mad Men” TV series. Back in the 50’s/60’s, mass marketing / advertising / new products seemed to be more of an art than science. Things like intuition, gut feel and luck seemed to have more to do with brand and new product success than a disciplined process. However, since then marketing / advertising / new products have “grown-up” with sophisticated analytical and process models. While a lot of these new tools certainly have their place I would argue some have been at the expense of solid strategic and creative thinking. This thinking “gap” means brand and new product innovations have not been as “disruptive” enough relative to the past – and thus lack real competitive advantages. Reasons include:

  • Retailer and manufacturer consolidation – Unfortunately, stock price pressures from Wall Street have created a myopic view of how to effectively manage and grow businesses – particularly in consumer product companies. The number of retailers and manufacturers serving consumers has radically dwindled since the 60’s. A lot of companies and retailers either no longer exist or now part of bigger concerns. The result has been lower headcount, lower tolerance for long term payback and lower new product activity (source: Nielsen).
  • The retail landscape continues to shift – Brick and mortar outlets have been losing share to online outlets due to consumer “show rooming” purchase behaviors. Moreover, private label / control brands now comprise roughly 25% of all retail sales dollars (source: Private Label Manufacturers Association) decreasing the importance of national brands. Finally, lack of store buyer continuity and buying habits continue to put downward pressure on retail prices – even if a disruptive new product is launched
  • Consumer demographics have shifted – Millennials are changing the face of marketing forever (source: Boston Consulting Group). Millenials will likely outnumber baby boomers 78 million to 56 million by 2030. This segment will have different habits and purchase behaviors vs. boomers and will impact marketing activities to reach them.
  • Marketing and information technology are merging – (if not done so already) – The growth of social media along with more sophisticated analytical tools are bringing these two separate functions together. Older marketers need to better understand social media and tactics and become more “tech savvy”; while younger marketers need to have a better understanding of strategy since more media is now BOTH traditional and digital. Allocation of marketing dollars to the most effective media channel to drive sales is critical since consumers are harder to reach
  • Idea generation/intellectual property have become too narrowly defined – Historically idea generation and intellectual property were sequential activities. This meant you had to have good ideas BEFORE you had a patentable intellectual property. However, some companies have recognized good ideas can come from anywhere – both from inside and outside. As a result, they have formalized their idea generation and intellectual properties processes to ensure they have both sustainable and robust streams of new product/business ideas (i.e. P&G).

As a result, many consumer product companies are losing/lost their competitive edge / advantages and not really innovating any longer. This can be seen in the Boston Consulting Group’s latest white paper: “The Most Innovative Companies 2013”. In this report, BCG continues to track the state of innovation via interviews with 1,500 senior executives which rate and rank their views of their own innovation plans and competition. They rank the 50 most innovative companies and their movement up/down this list over time. The sad fact from their latest report is only 5 consumer product companies are listed:

Boston Consulting Group’s Most Innovative Consumer Product Companies

Boston Consulting Group's Most Innovative Consumer Product Companies

So what can you do to make sure your new product programs have the right kinds of competitive advantages? I would argue you need to think big and “outside the box”. You need to persuade your CEO and CFO that investment in new product initiatives are worth the time and effort – despite the risks. However, that being said you do need to prepare compelling case(s) or basis of interest(s) so other senior line managers can better see opportunities. You can do this by following 10 steps:

1). REALLY understand your consumer / customer – Figure out what really motivates your customers / consumers to purchase your product or service. This could mean going beyond just focus groups to real quantitative analysis that gets to the core of purchase behaviors and attitudes.

2). Think big – Be creative and think outside the box. Remember the customer / consumer might not think about your product category in the same way you do. This is where creativity, intuition and gut feel really counts – if you need help get it.

3). Involve more than just marketing people – While marketing people usually drive new products, they don’t know everything. Good ideas can come from other functions beyond marketing….and also listen to your customers who resell to the ultimate end user. They see what your competitors are doing.

4). Test the validity of your ideas/concepts and prioritize them – Once you have a range of ideas you need a way to quickly screen them with the right target consumer. Quick concept market research screens are usually the best way.

5). Put together alternative business proposition(s) – At this point you need to summarize your top product ideas so senior management can better judge their attractiveness relative to other options. I recommend “single sheet of paper” approach summarizing the a) opportunity, b) barriers to entry, c) product line strategy/expansion potential and d) rough unit/$ volume potential.

6). Use a new product development process – If you don’t have a new product development process – get one. There are many staged tollgate new product models that can fit your business. Each “approved” business proposition should have its own tracking model and metrics for go/no-go decisions.

7). Put together new product roadmaps – Product life cycles are now incredibly short due to a combination of changing consumer needs and competitive offerings. You should plan a multi-year new product roadmap outlining what could be follow-up innovations to extend their new product life cycle.

8). If you sell to a reseller – be sure to highlight the opportunity from their perspective. – You need something to give your reseller (i.e. retailer) a reason to stock and carry the product. Otherwise, end users might not never see your idea.

9). Put together a comprehensive marketing plan – You will need to “broadcast” your new product news so customers/consumers can see it in the marketplace. Don’t just assume consumers will “find” your product on the internet or word of mouth.

10). Go back and re-evaluate if your new product programs were successful – Once you launch a new product or service it should be re-evaluated to see if it performed as expected and if not why?

Developing and launching new products are challenging – no doubt about it. However, if your business follows the above steps you should have much greater probability of success. You need to assume your competition ALWAYS knows as much or more than you with end users. If you keep this in mind don’t be surprised if you show up sometime on future Boston Consulting Group’s most innovative company lists. This is a great way to measure your success/failure as an innovator – because it from your peers.

Rick Steinbrenner
Global Marketing Officer
Brand Marketing Advisors
www.globalbrandguy.dot.com

Digital Providers Say Forget Clicks – Focus on Brand Building

Recently, I wrote a post about the efficacy of digital marketing – is it really driving sales / brand building or is it just about clicks/grabbing eyeballs?  This question was was posed based on a 1/’12 article – “marketing capabilities for the digital age” sponsored by the Boston Consulting Group (BCG).   In this article about 3/4 of global CMO’s aren’t sure if digital marketing efforts can be tied to business results.  This was just one of many conclusions.

More recently, Facebook the opportunity at the 2012 Advertising Week conferences in New York City to answer questions about the efficacy of buying advertising on their site.  These set of conferences were sponsored by Mediapost communications, the mobile marketing association and interactive advertising bureau.

Brad Smallwood, director of pricing and measurement at Facebook, discussed the findings of a study the company hoped would change advertisers’ minds about depending on measurements like clicks to determine the success of campaigns on Facebook.com. The goal is to have them perceive the social network more as a medium akin to television for branded advertising

“If you ran a campaign in the last five years, you focused on clicks,” Mr. Smallwood said, but “demand fulfillment is only one piece of the marketing puzzle. We have to provide a solution for the brand marketers of the world,” he added.

The study was conducted with a new Facebook partner, Datalogix, a company that measures in-store purchases. Fifty campaigns on Facebook were measured, for brands from giant marketers like Nestlé, Procter & Gamble and Unilever. When purchase data from stores was combined with data about ad impressions on Facebook, the study found that 70 percent of the campaigns enjoyed three times greater return on their budgets, and 99 percent of the sales came from consumers who did not interact with the Facebook ads.  More details on his comments are on the link below.

http://techcrunch.com/2012/10/01/facebook-brad-smallwood-datalogix/

I do applaud Facebook efforts to help branded advertisers assess the effectiveness of their online digital efforts.  If someone could show online ad impressions efforts can be tied to in-store sales / brand building, this would be very useful.   However, you need to spend more money with Facebook to figure this out.  It is not transparent.  In other words, you need to “trust” Facebook that they can tell you the right number of impressions to reach your target audience based on their “black box model” with Datalogix – their market research provider.

Facebook says ad impressions is the standard in the TV advertising world – we shouldn’t focus on clicks anymore.  While ad impressions are a traditional TV ad world concept, their view of effectiveness is not – at least not yet.  I’m not aware of any traditional TV ad metric that can say for sure – these number of impressions can drive the desired sales result.  Yes, reach and frequency does drive effective reach and based on historical benchmarks you will have a higher degree of confidence a certain level of spending will work.  However, no one can “guarantee” a positive sales result – there are too many more variables – not the least of which is pricing and distribution – not within digital marketings’ control.  If Facebook/Datalogix have such data they should share it in the interest of driving more understanding among the branded advertising community.  If they would, they would be first to market on this piece and their business will increase.  Trust is the issue here and Facebook and other digital providers have yet to earn it.  Trust has to be earned, not demanded.  Just my take.

Rick Steinbrenner
Global Marketing Officer/Principal Brand Marketing Advisors
www.globalbrandguy.com
The Global Brand Guy 

Is Digital Marketing An Effective Brand Building Strategy?

A recent Boston Consulting Group article says most Chief Marketing Officers aren’t sure. 

Obviously, social media is important/highly efficient and holds the potential for building better relationships with communities of consumers/customers.  Traditional marketing (i.e. TV advertising / promotion / PR) historically placed a premium on brand building and transactions, but has declined in importance due to a combination of message clutter, time pressed consumers, fragmentation of media and the growth of people using the internet to research what others are saying about products/companies.  Nevertheless, what really concerns me is how “tactical” social media has become in recent years and less “strategic”.  It appears almost everyone on the social media provider side keeps looking for the latest tools / technique.  If something doesn’t work, they simply abandon the approach and go for another without regard to strategy.

Social media today seems to be just a collection of curation, SEO / SEM, permalinks, long tail key words, meta descriptions, website crawling, and click through conversation rates (to what we don’t know) and more.  Moreover, when anyone “disses” social media, most assume it’s just driven by a desire to go back to “good ole days” of traditional TV marketing / brand building and they don’t “get it”.  What makes this worse is some digital marketing providers don’t have a clue on how to make social media effective and how it ties to a clients’ business strategy.  I recently attended a social media presentation put on by top online agencies and when asked how they know if digital marketing drives clients’ sales and builds brands the response was: “I don’t know, but you just need to invest in it since it’s the right thing to do”.  No wonder, most CMO’s struggle with social media.  I think most want to use it, but don’t know how to bridge traditional TV marketing vs. the new world of digital marketing.  They also aren’t getting a whole lot of help from digital providers.

To put all this in a fact-based driven perspective, a recent BCG article below was published in January of this year.  It was based on a survey among CMO in global fortune 500 companies. The link is attached below:

https://www.bcgperspectives.com/content/articles/marketing_branding_communication_marketing_capabilities_for_digital_age/

Below is a summary I gleaned from this article. I’m sure you will have your own if you read it and it’s a good read anyway.

* Most companies do recognize the need to adopt new ways to reach consumers and build better relationships (i.e. websites, Facebook, Twitter, YouTube, mobile marketing, etc.). It can be very efficient, free / cheap, and can easily measure traffic / activity (read efficiency).

* However, some companies are still just experimenting with digital marketing; while others have developed an infrastructure that can share data with relevant internal business groups. These companies usually spend >20% of their budgets on social media.

* Roughly ¾ of all marketing executives in global Fortune 500 companies are still unsure where to best reach consumers via these new mediums. Moreover, 90% feel they don’t have the right metrics that can tie into business objectives.

* Marketers seem to think consumers want information or product reviews from websites. But consumers want marketers to give more discounts and/or access to purchasing products online vs. brick and mortar stores – This is a disconnect.

* Even the mighty Proctor & Gamble is redeploying marketing spend away from traditional media to digital since it’s more efficient and less costly. They announced recently they will lay off 1,600 people and are banking on digital ROI for long term savings.  However, I bet P&G is also developing the internal infrastructure to capture the data and share it with relevant internal business groups to help change their business models.

* Outsourcing of social media initiatives to outside agencies exclusively is probably not best option given need for integrated brand messaging.

* More companies are adding IT capabilities to marketing management job descriptions. Marketing and IT are converging into one function. Marketers now need to learn digital in addition to traditional marketing / brand building skills to be effective going forward.

Source: Boston Consulting Group

Based on this, a few conclusions come to mind.

1) CMO’s need to better understand social media and how it works beyond just giving assignment(s) to outside agency(s). 

Simply outsourcing social media will not work.  They need to know how to effectively use it for impact.  CMO’s really need to know SEO and how consumers are talking / searching about their company / brands.  They then need to have the right strategy(s) and develop the right social media tool(s) addressing those strategy(s).  It also needs to be measurable to make sure it’s working.  Developing the right kind of metrics will go a long way to proving social / digital marketing effectiveness.  This might require testing of alternative approaches to see which works / doesn’t work and not just guessing.

2) When social media / digital marketing is used there needs to be a organized and well thought out customer / consumer feedback loop to the organization. 

Comments / data from consumers, influencers, other stakeholders and communities need to be filtered back not only to marketing, but to customer service, sales, supply chain, finance and even engineering / R&D.  You need an internal infrastructure to capture this information and be able to synthesize it for these groups so appropriate changes can be make to companies business models. Social media is cheap…but there is a huge labor cost involved in using the data to help change your business.

3) Finally, using social media / digital marketing tactics exclusively is probably not a good idea. 

A good business strategy will probably require a blend of BOTH traditional TV marketing and social media / digital marketing.  We must remember digital marketing is a “slow burn” approach and in some cases won’t help brand building that quickly – just like traditional TV marketing.  In some cases traditional advertising or promotions will help jump start a strategy while social / digital marketing will help build the brand in the long run.  Using both to some degree is the best way to EFFECTIVELY grow your business, but again it needs to be driven by strategy and not the latest tool / technique.

Marketing is evolving and social / digital marketing is part of that evolution.  We all need to learn how to use the new tools as well as refining the old.

Rick Steinbrenner
Chief Marketing Officer/Principal, Brand Marketing Advisors
www.globalbrandguy.com
The Global Brand Guy