Traditional channels of advertising no longer serve the purpose of convincing consumers to buy a product. It’s time for marketers to look beyond the textbook strategies
MANISH PANDEY | New Delhi, December 13, 2013 12:55 Tags :
customer |McKinsey |Consumer |Google |
A few days ago, I got a call from a friend. She was at a Dell outlet and wanted to buy a laptop. She’s aware that I keep a tab on developments in the gadgets arena and therefore trusts my judgment. Interestingly, I could hear the sales representative trying to sell her a particular model at a price point she had suggested. Unfortunately, for the folks at Dell, my friend wasn’t really listening to them. She was asking them for what I had recommended. And this is when the thought struck me – what do you do if your customer knows everything? What if a channel, which was supposed to convince prospective customers to make a purchase, is no longer seriously considered by the buyer?
According to McKinsey’s Consumer Decision Journey report, “Consumers rather than sitting passively and having advertising come after them, are much more actively reaching out to their friends and family, the Internet and other channels to understand their options.” As such, there is an urgent need to step back and re-evaluate, both how consumers go through the decision process and see what companies need to concentrate on in order to make their marketing efforts more productive.
Even greater today, when more marketers – both Indian and global – want a generous pie of India’s domestic consumption base of over $830 billion, which translated into 44.8% of the nation’s total GDP of $1.85 trillion at the end of 2012 (even ahead in percentage terms of China’s 32% consumption share out of a total GDP of $7.32 trillion).
Globally too, businesses are looking at the “Next 4 Billion” nations for growth, especially now, given the slowdown in mature economies.
As per a recent report by PricewaterhouseCoopers (Profitable growth strategies for the Global Emerging Middle), “These nations are defined as having average per capita income of between $1,000 and $4,000 per year, and are home to 4 billion people, or more than half of the world’s total population of 7 billion.” Within this group – which includes China, India, Indonesia and Latin America countries in Africa – businesses have traditionally focused on the ‘Middle’ and ‘Upper Middle+’ income tiers.
“The Global Emerging Middle (GEM) already accounts for 2.3 billion people globally. And it is only going to get bigger, thanks to high birth rates and above-average economic growth in many countries in the group. The GEM will represent a combined annual market in excess of $6 trillion by 2021. In India alone, the segment is expected to cross the $1 trillion threshold by 2021 as its ranks swell to 570 million, from 470 million in 2010,” the report sates. Even according to Deloitte’s report (Indian Retail Market: Embracing a new trajectory),
“The total retail spending is estimated to double in the next five years. Of this, organised retail – currently growing at a CAGR of 22% – is estimated to be 21% of total retail expenditure.”
Hence, India is a top priority market in the future plans of almost every global company. But getting to know the heterogeneous and diverse Indian consumer is no mean feat, especially in a dynamic socio-economic environment, where what was a novelty until yesterday is quickly consigned to the dustbins of history the next day.
Today brands cannot rest on their laurels, because standing still in a rapidly developing and fast growing market like India is dangerous. Agrees Mrinmoy Mukherjee Director – Marketing & Business Development, Retail, Raymond Ltd. as he tells 4Ps B&M, “To be successful in future one needs to continue innovating and delighting customers every single day.”
Changing demographics, rapid urbanisation, increased media exposure, and the proliferation of mobile services have changed the dynamics of the game. The fact of the matter is that traditional channels of advertising no longer serve the purpose of convincing consumers to buy the product. They merely help the brand in establishing its presence in the market. A television ad is as good as deploying a loudspeaker in a crowded market place which announces “Brand X is available at a store near by you.”
End of story. This might surprise you, but CEOs already realise this. A recent study conducted by the London based Fournaise Marketing Group reveals that CEOs across the globe are increasingly getting with their marketing department. The study, titled Global Marketing Effectiveness Program 2011, states that “73% of CEOs say that CMOs lack business credibility and the ability to generate sufficient business growth, 72% are tired of being asked for money without explaining how it will generate increased business, and 77% have had it with all the talk about brand equity that can’t be linked to actual firm equity or any other recognised financial metric.”
Therefore, if you, as a marketer, really want to stand out and survive this shift in consumer behaviour, you’ll need to do much more than allocate budgets and hire a great advertising agency. If your website does not answer all possible forms of questions but your competitor’s website does, you’ve lost the bet. Marketing in the 21st century is about going back to the basics. If you are one of those who have suddenly started questioning the viability of Facebook as a marketing platform just because its IPO tanked and a lot of your friends in the industry say their are no reliable metrics, then you’re making a grave mistake. Look at the immense potential of the native ads market.
They’ve been around ever since the rise of Google. Google’s search ads let marketers display offers relevant to their search queries. Similarly Facebook has ‘Sponsored Stories’ which have been proven to be more effective than Facebook display ads.
As history holds – from telephone to televisions – businesses have always resisted change. The resistance is not because of individual judgments but because the growth of a large number of companies depends on many other factors than just sound strategy. Many CEOs are reluctant to invest in social media because returns from such initiatives will take a little more time than usual. And stock markets are not very kind to those who can’t deliver consistently quarter after quarter.
The herd mentality does work at times, but when you are in the business of getting hold of a customer before your competitor tries to hijack her, listening to what everyone is saying might backfire. While there’s still time, forget everything you had learned about traditional marketing and start looking at data unique to your business instead of trusting your past experience – by all standards, that’s now obsolete.