Are you a consumer-led business?

Delivering your growth agenda: Marketing’s critical role

In our first post we said that a growth agenda lives and dies by the strength of its under-pinning cross-functional strategies.  In this post we will start looking at Marketing’s specific role in the creation and then delivery of that growth agenda.

Quantic’s over-arching principle and why the marketing function is vital

First, let’s remind ourselves that our core principle is that connected organisations out-perform their competition.  By connected, we mean those businesses whose commercial functional strategies are aligned behind one consistently understood growth agenda – one based on better meeting consumer needs.

Strategies aimed at meeting consumer needs and designed to influence mid to long-term behaviour changes, are mainly addressed by Marketing.  So, Marketing plays a pivotal role in determining, prioritising and creating behaviour changing strategies, which set the agenda for other functional strategies within a connected organisation.

These consumer-led strategies need to be understood and adopted by the rest of the organisation.  They need to be contextualised in a way that all functions both understand and can then communicate externally.  This context is typically achieved by looking through a category lens.

‘Category’ has traditionally been the language of context for Sales and Customer Marketing teams.  It has been used as the objective currency to create a category management agenda based on trade customers’ needs and typically delivering changes at the POP.  Whilst Quantic believes in the critical role of ‘category’ in these terms, we firmly believe that ‘category’ needs to move from the sole ownership of Sales and become the heartland of Consumer Marketing.  Category Management better exists within a Category Marketing context.

Categories, and the portfolios of brands within them, develop and grow if they achieve targeted consumer behaviour changes.  Marketing functions change behaviours – it’s as simple as that.

So, what is the difference between a consumer-centric business and a brand-centric business?

So, what are the characteristics of a category (read “consumer”) – led organisation?  Here is what Quantic’s experience suggests are the five critical behaviours a consumer-led business focusses on, when planning its marketing response:

  1. Its commercial planning process starts with consumer and shopper growth opportunities, Growth Drivers, not with their brands themselves. The portfolio is then subsequently discussed against the opportunities and decisions taken as to which brand is best suited to tackle each different Growth Driver.
  2. Its Innovation and Renovation efforts are set up to deliver against the consumer and shopper growth opportunities, using whichever brand is best placed to go after the opportunity.
  3. Brand plans start with a review of the Growth Drivers and how each brand has delivered against the identified behaviour changes to realise growth.  They do not start with a simple review of what each brand achieved last year in sales and profit terms.
  4. They have complete clarity on where the barriers to purchase occur across the entire consumer/shopper journey.  Shopper is seen as a core capability and responsibility of the Marketing Team, often a joint responsibility, but something which Marketing actively participates in.
  5. Marketing spend is allocated according to wherever the barriers to growth along the consumer/shopper journey exist.  This might mean most of their budget is spent against ‘Shopper Marketing’ i.e. building the relevance of their brands to shopper missions across multiple channels, rather than addressing typical awareness or consideration issues.

This of course does not replace the need to be brand-centric when addressing brand fundamentals – brand positioning, brand values, product quality etc.  These remain vital to the survival of any brand.

Everyone is talking about Byron Sharp.  But how can marketing functions leverage his principles to become a truly consumer-led business?

Byron Sharp’s book ‘How Brands Grow’ disrupted the perceived wisdom of how to achieve growth, not just for brands, but for categories too.

By analysing brands across multiple categories, countries and time periods, Sharp established ten “laws”.  The most profound is that the size of a brand can be predicted by the number of buyers it has, more so than via its frequency. Building overall brand penetration needs to factor in the ‘leaky bucket’ effect, which states that a brand will lose up to circa 60% of its buyers from year to year.

Therefore, the pursuit of brand penetration should be the focus of all brand marketers.  Your category may have 95% annual household penetration, but how does this track by segment?  What happens to those numbers when you look at monthly penetration at both category and segment levels?  How does your category perform by day-part?  There are always new penetration opportunities and they are vital if you take into account the expected penetration losses.

When you look at your marketing plans, how clearly identified is this penetration priority?

But how do we attract new buyers?  The answer is simple, in concept at least – by having a singular focus on consumer needs and motivations against new or unmet occasions to drive penetration, and then by understanding and overcoming relevant barriers.

Targeting consumer growth opportunities with my brand – penetration or frequency?

Let’s dispel one myth before proceeding.  Penetration growth for a brand can often equal frequency growth for the category, but only when it is against an unmet or latent need and not simple brand steal.

So, it’s wise to focus on new consumption or usage moments for the category when looking for brand penetration growth.

So WHERE do we look for new consumption or usage growth opportunities?

The first source of opportunity is to be clear on WHERE your brands play.

Do you remember when water was water; it came out of a tap and you drank it when you were thirsty?  Then bottled water came along and soon there was a flood of mineral waters from different sources – some fizzy, some flavoured, some fizzy and flavoured.  But, by and large, water was water and we knew where we stood.

But what about Vitaminwater?  Is that a water or a sports drink?  What about coconut water?  Is it a water or something else?  According to one article, coconut water “keeps fluid and electrolyte balance in the body, especially during exercise”. So, does that make it a sports drink and not a water?

Blurred lines

The point is, you can no longer rely on old category definitions based on product format and standard ingredients.  The lines that used to separate categories have become blurred.  The usual rules of engagement have been suspended and all the norms of brand positioning, portfolio, promotion and growth strategy have been superseded.  It’s as if you’ve spent years playing chess on a standard 8 x 8 board, now it has grown to 12 x 12 and there are a new pieces you haven’t seen before.

Is the blurring of categories an opportunity or a threat?

A bigger consumer landscape and more players within it means there are potentially more brands and products that can attack your position. Incursions by brands from adjacent categories are guaranteed, so you have to be ready to defend your territory.

But the reverse is also true.  You now have more potential for growth with new territories to explore, where your existing brand equity might stretch.  This new landscape opens other opportunities for new I&R, or even paves the way for acquisitions as part of a Board M&A agenda.

We address these issues by being clear on the primary consumer motivations that your products deliver against.  Then, by adding in any other products that can meet the same or similar needs, we can contextualise your brands against a new broader consumer landscape to understand where to play now and in the future.  What then?

HOW does the Marketing Team find Growth Drivers to own and then align through the organisation?

Building on the understanding of where to play and with the challenge of driving penetration in favour of loyalty firmly in sight, means we need to have a different way of identifying growth opportunities versus the traditional ‘brand-centric’ way.

We strongly advocate understanding consumers and their habits through a category-led, demand moments’ research approach. This is supported by understanding relevant trends and how omnichannel environments impact the consumer/shopper journey.  Consumer-behaviour changing strategies are delivered through more than just the grocery channel!

So, this new omnichannel environment requires marketers to be much clearer and more involved beyond traditional brand building strategies, so that their brands are in the right format, for specific shopper missions, with relevant content and messaging to address barriers along the full consumer-shopper journey.

The Quantic way for identifying growth: “Pathfinder”

At the start of a strategy defining process, Quantic uses an “Incident Room” approach to co-create ten to twenty draft opportunity territories, based on consumer needs and trends across the entire landscape, which are then further refined and shaped into Growth Drivers.

Growth Drivers are consumer-centric, future-focused opportunities that will drive incremental growth in the category over the next three to five years.  They are not category management operational tactics.

Marketing, therefore, needs to create and own these consumer Growth Drivers, which in turn become the context for all of its portfolio and brand planning and creates the alignment and connections for all other commercial functional planning. We call this approach ‘Pathfinder’.

What do Growth Drivers look like?

So that every function understands each Growth Driver and knows what it needs to do to deliver their growth potential in an aligned and connected activation campaign, every Driver needs to clearly capture the essence of the behaviour change.

All great Growth Drivers must have clear 5W targets, backed by thorough supporting insights.

Why:    what is the consumer motivation that must be satisfied?

Who:    who experiences the motivation?  It is their consumption behaviour that must be changed.

When:  what are the consumption occasions when the motivation arises?

Where: at what location does the motivation arise, considering the full omnichannel environment?

What:   what products, services or experiences will satisfy the need?

Building on the Byron Sharp principles, most Growth Drivers need to identify how to grow penetration in either absolute terms or of a new usage or consumption occasion.  Therefore, Growth Drivers will typically incorporate a First Purchase^.  Understanding how to achieve these initial purchases can be delivered via a pioneering piece of shopper research, the details of which we will cover in the next post.

Drivers will also have a clear behaviour FROM/TO change description – one rooted in overcoming relevance barriers. They will have a clear MORE variable to describe where growth will come from. Finally, there will also be a source of volume, from the competitive landscape, to enable sizing of the Driver and margin mix modelling.

In summary

Marketing teams need a complete focus on the consumer-shopper journey to deliver the penetration gains required for growth.  This focus will enable Marketing to:

  1. Put the consumer and shopper at the heart of the planning process.
  2. Be clear on the consumer Growth Drivers and how they can be activated with today’s portfolio versus the I&R needed to shape tomorrow’s required portfolio.
  3. Set all brand plans in the context of the Growth Drivers.
  4. Treat shopper more strategically and jointly activate shopper marketing behaviour-changing programmes with customer marketing.
  5. Allocate budgets against the biggest opportunities.

Most importantly, it means that Marketing leads the consumer-led growth strategy in the organisation.  Other commercial functions then develop their own strategies, which are designed to support and implement the behaviour changes identified within Marketing’s Growth Drivers.

Connected organisations out-perform their competitors.

Thank you for reading this post.  Our next will focus in on the shared role of consumer and customer marketing within this aligned planning process, in delivering the much-misunderstood shopper marketing capability.

^ The Purchase Outcomes™ Framework is a research approach pioneered by Barry Lemmon from First Purchase Research Limited™


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