Traders and the lost art
Decades ago, FMCG was a seriously scientific business. The “marketing concept” was the holy grail. Every FMCG marketing executive lived and breathed their primary target audience prospects’ needs, wants, desires and behaviours. FMCG was good.
New product development responded to changing market needs. New brands were launched to satisfy new segments. Re-launches happened when existing segments reached maturity and their corresponding brands needed to be extended.
In those days product orientation was sinful. A CEO would never question the expense of consumer-pull activity or question ongoing primary market research.
FMCGers ruled by sticking to the disciplines of marketing science. Only the ignorant or the stupid tried to buy space on shelf, drive sales with trade push or avoid investment in market research. These were the players that nibbled at the crumbs while the smart money gobbled up major market share.
Change isn’t always good
Somewhere in the late 1980s academia altered the rules with tertiary marketing training. No longer was the knowledge of marketing practice good enough. “Publish or perish” and full-time pure academic values and personnel began to dominate tertiary marketing schools.
Course content changed as those without the practical know-how stamped their more theoretical perspectives on course structures, oblivious to the limitations on learning for the majority of students who wanted to learn real-world commercial practice.
At the same time, in an effort to “capture” the science, marketing processes, rules and routines were instituted in organisations by operational-level executives lacking in strategic marketing knowledge. Senior executives without marketing qualifications, fearful of being exposed as frauds, employed operational and administrative marketers where they should have balanced their marketing department personnel with strategic and managerial skills.
Within two decades, “marketing” has become a synonym for “advertising” or “promotions”. “Marketing is too important to be left to the marketing department.” – David Packard, co-founder Hewlett-Packard.
The third and final factor that has undermined FMCG is the dominance of the grocery duopoly. With no reason to buy on any other basis, retailers have measured the relationship by how much they think a supplier is worth to them. Price, not value, is the measure by which FMCG businesses have eroded their own franchises.
It isn’t too late – yet – to find the way back
The way back? To re-commit to FMCG marketing science! In the words of well-known management consultant, Peter Drucker: “The purpose of business is to create and keep a customer.”
Coles and Woolworths have fallen into the “Aldi trap”, teaching consumers to like house brands and private labels by reducing popular brands, only because FMCG marketers have failed to innovate and satisfy customers.
Woolworths and Coles need brands. They need leadership and marketing know-how that only branded products offer.
There are three ways for products to prosper. If FMCG manufacturers return to marketing science, they’ll produce products that consumers will seek out and consume routinely. To do this, FMCG marketers need to:
1) Commit to a sophisticated annual segmentation study, followed by appropriate strategic response. Brands are promises to consumers. If you find out exactly what a segment wants and perfectly align the brand promises to that need, the segment will buy from you and no one else. The trick is to get the research right and be objectively responsive to the findings, positioning and targeting.
2) Innovate creatively. About 25 million consumers and I are tired of product orientation. FMCG is about market orientation. New product development should be much more creative. Make your innovations dynamically continuous, not continuous innovations. Don’t do research that asks, “Do you like this?” Do research that asks, “What do you want?”
3) Genuinely help supermarket buyers: Provide genuine information so they can confidently say yes to win–win new line submissions. Say no when you are not able to negotiate satisfactory agreements – even in the face of threatened deletion. Take a genuine “category management” approach in function rather than just name.
It’s simple! The winning FMCG equation is as it always has been: ask customers what they want, accurately identify attractive segments, make your offer better than any other in the market, and you’ll own a market leadership position and a brand that will prosper.
Leigh Cowan, leading edge strategy consultant, Launch Engineering. This article originally appeared in the October issue of Inside FMCG magazine.