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Eleven risks for consumer products companies - 4. Brand and marketing effectiveness - EY - Global

Eleven risks for consumer products companies

4. Brand and marketing effectiveness

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Combating retailer power

Key questions for consumer products companies are likely to include:

  • How do you get your brand into the hands of consumers you don't know, in markets you don't understand, with retailers you don't recognize?
  • How do you predict the likely maturity of your brand categories in unfamiliar markets over time, and what does that mean for your overall global strategy?
  • As major international retailers move into emerging markets, where do consumer products companies need to be, to stay one step ahead?
  • Given that digital media will probably leapfrog traditional media in emerging markets, how should your media strategy change?

"Consumer products companies are realizing that, to retain brand relationships and make their value proposition convincing, they need to redirect marketing budgets back into building the consumer relationship." Elaine Parr, UK & Ireland Advisory Services, Ernst & Young LLP

Deciding how to allocate marketing spend, introducing brands to unfamiliar new markets and optimizing digital relationships all present big challenges for consumer products companies. And all involve getting closer to the consumer.

Marketing budgets seek the right balance of consumer and retailer spending

Decisions on how to balance consumers and consumer investment are becoming ever more complex. The best players are changing their game plan to stay on the winning side.

Consumer product companies are putting more money into building the consumer relationship.

This highlights how important it is for companies to understand how shifts in spending patterns and changes in marketing activities influence sales volumes. Companies need to know the relative benefits and financial trade-offs associated with running different kinds of promotional programs.

However, a surprising number of organizations don't have this at their disposal, for a variety of reasons.

Moving into new emerging markets

When companies move into emerging markets, it means they are also opening the door to a new group of competitors.

To compensate, companies are putting more money into marketing efforts in emerging markets.

But the challenge of moving into new territories presents a steep learning curve for brand owners and raises tough questions. For example understanding the speed at which different markets move and having the flexibility to develop local approaches which still align with the global brand is key to success here.

retailer power

Using digital media to gain clarity on marketing effectiveness

Consumer products companies are great at influencing consumers in stores. But when it comes to identifying and engaging consumers via social media, companies face a learning curve.

Embracing this new technology will help companies reach new consumers and give companies a better understanding of effective marketing.

For example, consumer click through from websites to advertisements to potential purchases can be clearly measured and understood in a way that print media ads cannot.

Still, marketers are making a gradual shift from old channels to the new as they measure effectiveness along the way.

Innovation must include perspectives on brand equity

Innovation is the lifeblood of brands, but it is highly risky. The right innovation can create value; the wrong innovation can destroy it. Getting it right requires companies to innovate with a clear perspective on what impact the innovation will have on current brand equity.

Companies may need to think about innovating less often, but on a bigger scale, to avoid falling into the trap of half-hearted launches that fail.

The challenge

Brand owners need to look at the implications of change by:

  • Assessing each change from a structural, capability and skills perspective
  • Deciding how to build helpful new processes into the way they do business
  • Ensuring they use all the financial and qualitative information necessary

Potentially, the toughest task is simultaneously maintaining consumer relationships and retailer relationships, because this challenges branding and marketing practice in the consumer products industry.

To succeed, practitioners must have a profound understanding of their business and of underlying economics.

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