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Five Factors Driving Marketplace Complexity in The Future of Marketing The Greek philosopher Heraclitus said, “The only thing that is constant is change,” and nowhere does this seem truer than in the world of goods and services marketing. Change seems to happen more frequently and with more severe consequences than ever before. A 2011 IBM global study of CMOs identified increasing complexity and turbulence as their number one concern for the future (results confirmed in the 2014 study). This begs the question, what’s making marketing so much more complex? The two biggest factors are uncertainty and ambiguity, but it’s the latter that is having the most significant impact. Uncertainty is when you know the variables in the game but you don’t know their values. Ambiguity is when you don’t even know the variables. Today, corporate structures and processes focus on dealing with uncertainty when in reality, it’s ambiguity about which we need to be concerned. There is a disconnect between the types of problems companies need to solve and the ones they are structured to solve. When we don’t know what we don’t know – faced with ambiguity – our gears come to a grinding halt. In a 2012 Fast Company article, “This is Generation Flux: Meet The Pioneers of the New (And Chaotic) Frontier of Business,” author Robert Safian had this to say, “Public, private, and government institutions have structures and processes built for an industrial age, where efficiency is paramount but adaptability is terribly difficult. We are finely tuned at taking a successful idea or product and replicating it on a large scale. But inside these legacy institutions, changing direction is tough. We have been trained to expect an orderly life. The expectation that these systems provide safety and stability is a trap.” The systems he is referencing are those based on the outdated, industrial-based formula for marketing success that is rendering us all vulnerable in today’s marketplace. We need a more stable foundation – emotional truths – on which to deal with the major factors being discussed today that will drive marketplace complexity over the next ten years. Big data Digital/Social media Omni-channel shopping Declining brand loyalty ROI measurement Big Data The immense power of today’s computers is facilitating the analysis of massive amounts of data collected through digital and social media. This analysis of big data is often heralded as the panacea for all marketing problems. How many times have you heard this in the halls of your company, “If we only had more data we would know exactly what to do!” The fact is, companies don’t know what to do with the data they already have. They frantically try to run the perfect set of analyses that will give them all the right answers. The problem with panaceas is they rarely prove to be the solutions they are promised to be, and big data is no different. Syntegrate Consulting | New York, NY | Columbus, OH | Phone: (917) 312 - 8411 | www.syntegrate-consulting.com 1 There are two major caveats to keep in mind when it comes to big data. First, the analysis is often done in isolation of the company’s key strategic growth initiatives, so too often, hard to activate immediately. Secondly, big data is heavily behavioral in nature, and consumers and shoppers’ behaviors change all the time. By the time a company analyzes the data and draws conclusions from it, the behaviors on which it is based may have already changed. This is not to say that big data is not relevant, because it is extremely relevant. But we need to link it directly to the company’s key strategic growth initiatives so it creates as well as captures value for the brands. We also need to realize and accept its limitations. Digital/Social Media Digital and social media is something else that’s being sold as a cure-all. We can connect with our consumers and shoppers at almost any point in their day due to their use of technology. This has led marketers to believe that if we push the right offer (often identified through analysis of big data) – no matter when that offer is pushed - then we’re successfully using digital and social media. The problem is, just because we can push an offer in front of the consumer and shopper doesn’t mean we should. One of the biggest challenges we as marketers face is: are we connecting with our consumers and shoppers at the right place and time, with a message that contains the right amount of emotional resonance? The companies and brands that are doing this well are the ones who understand the strategic role digital and social media can play in the telling and deepening of the brand story. By no means should we ignore value-added offers because those are very valuable. But we need to understand that monetary incentives are not the only way to convert consumers into shoppers. There are two ways to persuade shoppers to purchase your brands: you can manipulate them or inspire them. Today, we spend most of our efforts manipulating via price promotion. We need to start inspiring them with stories that strike the right emotional resonance. There is a physics principle that is very applicable to this topic: as resonance increases, resistance decreases. The more emotionally resonant our messaging, the more successfully we overcome consumers and shoppers’ resistance. Emotion is the new currency in the game of conversion. Omni-channel Shopping Omni-channel is a big buzz word in marketing today. In fact, many companies are wondering if OmniChannel Marketing is the natural evolution of Shopper Marketing. We don’t ascribe to this notion for a few key reasons. While shopping across multiple online and brick-and-mortar retailers will continue to increase, they all still share the same entity, the shopper. Shopper Marketing, in its simplest definition, is the recognition of the shopper as a new strategic target, which does not change with an increase in Omnichannel shopping. While Omni-channel is a very relevant and important topic within Shopper Marketing, it is not a replacement for it. Another reason we do not ascribe to the above notion is that Omni-channel will very quickly evolve to borderless shopping. Today, the lines between online and brick-and-mortar are blurred, but in the future, those lines won’t exist at all (Maybe we are there already?). We have only just begun to think about the implications of borderless shopping. Take for example Amazon’s Dash Wand and Buttons that allow people to purchase instantly when the need is triggered, or mobile apps for filing accident reports with your insurance company, or the online trading companies. This is real borderless shopping and it is the reality of our future as marketers. Syntegrate Consulting | New York, NY | Columbus, OH | Phone: (917) 312 - 8411 | www.syntegrate-consulting.com 2 Declining Brand Loyalty Loyalty is a very tricky subject especially within the context of marketing. It’s often discussed but largely misunderstood. Some scholars such as Dr. Byron Sharp of the Ehrenberg-Bass Institute don’t think it’s reasonable to assume we can affect brand loyalty. In fact, these scholars don’t believe building loyalty is the purpose of marketing at all. Yes, loyalty is on the decline, but this does not mean that it’s now out of reach for marketers. To deny loyalty as a goal undermines a key aspect of what marketing should be about. Today, marketing’s sole purpose is to sell things; a mentality that drives brands to resort to cheap manipulation through price promotion that in the end is anything but cheap. But what if marketing were about building deeply emotional relationships that are then leveraged to sell goods and services? We would then be forced to realize that real brand loyalty consists of both emotional and behavioral loyalty. Rather than focusing solely on behavioral loyalty, as we do today, brands need to switch their attention to developing emotional loyalty. The more emotionally loyal the consumer the easier it will be to translate that into shopper loyalty. Concentrating our efforts and dollars on building emotional loyalty upfront means investing less effort and money on the backend to trigger the desired behaviors. ROI Measurement Marketing’s ability to prove that it adds real financial value to corporations seems to be under some debate as of late. This has spurred a firestorm of discussion around how to best measure ROI and attribution. The approach a vast majority of companies are using is to measure the performance of each tactical function – social, digital, print, TV, shopper, and trade just to name a few - separate from the other tactical functions in the plan. Put more simply, if you have $5 in your plan: $1 in each for TV, print, digital, shopper, and trade, companies want to know the return on investment of each individual dollar. This approach is propagated by the fact that each function has a vested interest in out-performing the others because it means greater funding next year. The concern about this approach – measured through marketing mix analysis – is that marketing has become much too complex to make these calculations reliable. Can a black-box formula make distinctions between the sales attributable to TV versus print versus trade that even the consumer and shopper themselves cannot make? Another, possibly better approach, is to measure the $5 plan in an integrated manner and then run testand-learn scenarios. For example, let’s say the combined $5 plan gets a payout ratio of 5:1 in year-one. Then, in year-two, we move $.50 from TV to digital and $.50 from trade to shopper, to get a payout ratio of 6:1. We’re still getting the information we need to make informed decisions, but in a manner more realistic given the complexity of today’s marketplace. Known as these five factors are, few companies have adapted how they do business to provide themselves a stable-enough foundation on which to sustain these changes. And these are only a few of the difficulties organizations will face in the future of marketing. While senior management exerts great effort towards changing internal processes believing this will solve these challenges, they spend little time challenging the very thinking that goes into those processes. To successfully contend with the increasing complexity in the future of marketing, we must first change how we think, then adjust our processes accordingly. Syntegrate Consulting | New York, NY | Columbus, OH | Phone: (917) 312 - 8411 | www.syntegrate-consulting.com 3 Christopher Brace is the CEO and founded Syntegrate Consulting in 2006. He can be reached at [email protected] Syntegrate Consulting is an insight-based strategic consulting firm that specializes in helping clients build better brands, communications, and go-to-market strategies that create new value in the marketplace through syntegration: the bringing together of dissimilar research, knowledge, insights, and people to create something completely new. Please visit our website at http://www.syntegrate-consulting.com/. Syntegrate Consulting | New York, NY | Columbus, OH | Phone: (917) 312 - 8411 | www.syntegrate-consulting.com 4