Creating meaning in the way we satisfy consumer needs and engage with them

Engaging in meaning in brand value and consumer

engagement… the future of brands.

27 September 2011

We will cover

• How: – An informed consumer;– Media proliferation making it difficult to pinpoint a given consumer;– An explosion in social media;– A global shift in consumption; – Brand parity in most categories;– Increasing difficulty to establish a competitive advantage for a brand;– The questioning of marketing ROI.

• Introduces an era of “substance” in branding & marketing.• This impacts how we create - and communicate - “meaning” for consumers:

– What our brands offer in real consumer value; – How we differentiate them; – How we integrate it into all the brand interfaces;– What channels we use to engage with consumers.

• The above impacts the role of consumer insights; the marketing discipline and the company philosophy.

The consumer is informed, in control and engages when he/ she feels like it

Them “Us”

The traditional view of brands telling consumers what they should know, is gone.

We now have little control over what is said about us. At best we can engage with honesty and transparency.

And not be boring!

Are we ready for “deep consumer engagement”?

Human, likeable, in-tune and in-touch.

“One of us”, not “us” and “them”.

Share in their communities. A mediated environment.

Yet, why do most brands use social media merely as extensions of their websites?

We still see marketing as something we DO to the consumer.

We need to become consumers!

Reaching them is a challenge, establishing differentiation is even more difficult

Easy to talk to consumers

Difficult to reach consumers

Question: how do you differentiate yourself in the current short-term insurance market? Will a consumer even listen to

what you say?

(But it shows that you CAN still buy awareness!)

Choosing media is now complex

Media channels have grown exponentially.

• It has proliferated message dissemination and it makes it more and more difficult to reach a given consumer.

• We cannot “pin down” the consumer like before.

Traditional media types are being challenged

There are four reasons for this:• The cost of media.• The sophistication of consumers.• To break through the competitive clutter, has become difficult - and costly.• A decline in the impact of traditional marketing (in some markets and

product/ service categories like financial services, the number of breakthrough messages is less than 10 in 100 (Millward Brown).

Traditional media are now less successful – and its share of exposure is in decline.

YET, advertising is NOT DEAD as some want us to believe

The Virgin Atlantic “still red hot” campaign (2009) started a viral explosion.

Advertising still has the power to open the floodgates =

if it is really good.

“… it energized and engaged a whole new constituency out there…”

Steven Ridgway, CEO of Virgin Atlantic.

Brands will create their own media – define themselves in the “utility” space

The more functional buying becomes, the more entertaining the retail environment needs to be

Brand proliferation is extreme,

leading to an explosion in choice

Most industries are saturated with brands.

• The boundaries between product and service categories are converging.

These factors make it difficult for any given brand to gain a significant advantage over others.

In some industries, it may have become impossible to establish a competitive advantage unless a brand fundamentally changes the rules of competition.

The result is that all brands are seen as about the same

Consumers increasingly see brands within the same product or service class the same.

If so, why pay more for a given one?

We have brand parity in real and in perceptual terms

Most brands in the same class deliver about the same – and our communications look about the same.

Content is king in deep consumer engagement

Unless what we do is really good: informative, relevant and engaging, we are wasting our time.

There is no place – or money – for mediocrity of content today. We will simply be talking to ourselves.

Brands and their renewed global stature

Brands are deadBrands are more alive than ever

Gone is the era of Naomi Klein and the “No Logo” generation…

Within emerging markets, brands are pervasive

Right now, brands define people more than thirty years ago!

There is no subtlety. Brands get defined by their individual - and collective - “meaning”.

The emergence of “brand-new-brands”

Established iconic brands

• Technology enabled brands

• Brands catering for the “bottom of the pyramid”

Most new global brands are technology brands.

Yet, compare the significant innovation by companies like Proctor & Gamble and Unilever in emerging markets.

This is leading from product & service innovation

to “design thinking” in large companies

“Design thinking” - the new buzzword that works for companies from Unilever to Proctor & Gamble.

The entire company drives innovation, using a combination of internal to external resources.

They often involve small independents to develop new concepts.

Innovation drives brand leadership and margins.

An important view from Gary Hamel

Today 90% of what you need to know, happens outside your industry.

Otherwise you can at best be as good as the best out there, instead of changing the category parameters.

Real margins now lie in changing the status quo.

The death of “incrementalism”?

(Gary Hamel)

The global economic shift is good for brands…

Developed markets drive growth

Emerging markets drive growth

Emerging markets now constitute 50% of global GDP.

The BRIC countries may now save the West!

The new consumer is “consumption-driven”.

Infinite imagination rules in the “new-new world” - all the tallest buildings are now in emerging markets

Emerging markets do not just copy. Brands like Samsung and Hyundai are highly innovative.

Emerging markets are the new pioneers: they energize and inspire.

Will new products and services require

“deep” differentiation?

Commoditisation; reduction in profit margins

Strong functional & emotional differentiation; high margins

What is “inside” – integrity/ quality - now matters

What used to be

• Believe what the marketer says.

• Often “puffery” (words like the “best”; the “leading”; the “only”; the “first”).

• Possibly creative but often in-substantive advertising.

What is now

• Substance and integrity matters, quality is now more important than ever – and is seen as the norm, not the exception.

• In many surveys, emerging market consumers place quality first – if they can afford it.

• What the consumer sees and experiences.

• What the product looks like - and how it performs.

• Fact-based.

“In order to be irreplaceable, one must always be different.” Coco Chanel

Brand authenticity matters – where do you come from? What makes you unique?

In Fortune of October 22, 2007, the CEO of Burberry, Angela Ahrendts, emphasizes the importance of being British as a differentiator for the fashion

brand.

She stated, “Our goal is not to be Hermės or Bottega Veneta. Britishness is so much a part of what we’re about –

now let’s do that better than anyone in the world.”

Apple illustrates this principle well: its products are really different, enabling it large margins

“Design is not just what it looks like and feels like.

Design is how it works.” (Steve Jobs)

To illustrate: non-Apple tablet computers only sell if they discount!

The Coca-Cola logo takes ownership of the category

A brand is what is delivered, not what is said

We had customer service and service excellence. We had best-practice. We had customer satisfaction.

We now have a branded customer experience through all consumer touch points.

According to Forrester Research, 92% of US executives rank customer experience as very important, yet only 38% do anything about it.

In a HBR survey of CEO’s, 80% said their customer service was good to excellent. When their customers were interviewed, only 8% said they received good or excellent service from these same companies!

If we do not deliver an “on-brand” experience at each customer touch point, we are inefficient. In an era of social media it will also signify

“dishonesty”: to say one thing and act another!

There is a major shift in “brand meaning” (Verganti)

Category brands Concept brands

We move from product to concept brands

Brands defined within industries.

Brands have narrow meanings (Toyota = cars).

Brands defined within the consumer user space.

Brand concepts span categories (Apple = products that are fun and easy to use).

Brand meanings are more important than category meanings.

Brands now manage “meanings”. Products support these meanings.

“The Virgin brand (philosophy)

is built around an idea — being the

‘people’s champion”’.

Virgin finds gaps in how other brands service or

under-service their customers…and then

jumps in…

A given philosophy underlies concept brands

Swarovski has extended its “brand meaning” dramatically – from ornaments to…

Consumer engagement expects a dialogue, not a monologue

Consistency Ongoing change

We are moving from an era of consistency to ongoing change

Consistency

• Identities were slowly and incrementally adapted when they became stale. When this was was rather arbitrary.

• And whilst a degree of consistency remains important, it is no longer as simplistic as that.

Ongoing change

• The new rule is to challenge the consumer.

• The new rule is to engage and involve the consumer.

• The new rule is to set “the boundaries of engagement” for a consumer.

A brand like Shell gradually adapted its identity over the years

As against Shell, BP changed its name, positioning and identity

This added a dynamism to the brand that no other petrochemical brand has! And it increased sales.

To enable an authentic dialogue, we need to know what is core to our brand, yet how we can extend the way it speaks

To do all of the above well,

we really need to know our customers!

Consumer research

Deep consumer insight, observation and intuition

Customers are no longer “disguised” amidst the masses

Not just quantitative research.

Qualitative, observation, experiential.

• Creative interpretation of it.• Insights central to decision making, not just an entity churning out figures

with lip service paid to it. Link internal and external data. Really identify customers by name.

Really place the consumer in the centre.

To do all this,

we will need to reassert the role of marketing

Marketing as an intangible cost Marketing ROI

The credibility and stature of marketing

Despite CEO’s saying marketing is now more important,

they also say it is not accountable enough.

In a US survey of CEO’s, 75% complained their business and marketing agenda’s, were not aligned.

Marketing permeates everything…

Marketing departments

The marketing organisation

The best marketers are not marketers!

The brand as defining the organisation

Brand a “sub-set” of marketing.

Brand defines the way the organisation works and delivers customer value.

We organise the company around the brand.

To conclude: we will manage meaning

Brand owners will engage in “creating reciprocal meaning” – to do that they will need to extend the language of the brand: in what it delivers, how it speaks, what it says and what channels are used.

The everyday challenge will be to remain relevant and interesting!

• An informed consumer;• Media proliferation;• An explosion in social media;• A global shift in consumption; • Brand parity;• Increasing difficulty to establish a competitive advantage for a brand;• The questioning of marketing ROI.

Introduces an era of “substance” in branding & marketing.

In the brave new world of marketing, do something that scares you everyday

Otherwise computers can do our jobs!