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The deck may seem stacked against generating much growth for most brands and businesses this year, but that doesn’t mean marketers are ready to write-off 2009 quite yet. In fact, most of the clients and colleagues we hear from these days want to know exactly what they can do to develop a growth-oriented brand strategy for the near- and long-term. In response to their inquiries, we’ve decided to focus discussion over the next few months specifically to the issues marketers in different industries are dealing with and approaches they might take to driving growth.
First up on the docket, consumer packaged goods. Though they might be staples of American households, it doesn’t mean they aren’t feeling the tightening of consumer purse strings on top of the usual pressure to hit a higher sales number. We sat down with Jeff Maloy, a senior vice president and resident CPG industry expert at Copernicus, to get his thoughts and perspectives on what brand managers are dealing with and how they might improve their current lot in life.
Jeff has several years of in-line experience and previous P&L responsibility for major consumer packaged goods brands. Highlights of his CPG career include stints as the director of marketing on the American breakfast staple Aunt Jemima and line management assignments at Kraft Foods. At Copernicus, he has worked with a variety of consumer marketing clients in the U.S. and internationally, helping them translate marketing strategies into plans and carefully implement them.
Here’s what he had to say:
Mzine: The scary state of the economy has consumers pretty jumpy these days. Even if their circumstances haven’t changed, folks seem to be preparing their household budgets for the worst. This situation has to weigh heavily on CPG marketers. What are the biggest concerns, do you think, for brand managers these days?
Jeff: I think their biggest concern is “how am I going to deliver growth in this economy?” Most CPG categories are flat or even declining. Yet, senior management still expects most brand managers to deliver organic growth for their brands. This is not a new issue, but is even more worrisome in a recession when marketing budgets are getting slashed.
In the end, brand managers need to decide where to place their bets. With limited resources, a poor choice can be the difference between “making plan” or not. These high-risk decisions are what keep brand managers up at night.
Mzine: The big suggestion from marketing gurus and industry consultants is to spend more on marketing and innovate like crazy during a recession. What do you think of the notion companies should be spending more now? Is it realistic?
Jeff: Spending more sounds great in theory, but the fact is that CPG marketing rarely pays for itself in the short-term. As such, I don’t know too many CFOs willing to open the checkbook wider during tough times.
The reality is that marketers are going to be spending less, and therefore need to get more for each dollar spent.
Mzine: We’ve seen an uptick in “negative” advertising from CPG marketers where they directly criticize a competing brand. Why do you suppose that is?
Jeff: Comparative advertising becomes an attractive tactical option in a recession primarily because consumers generally are not expanding their overall category consumption. What that means is in order for your brand to “win,” your competitors inherently lose. I’ve certainly used it—effectively and not-so-effectively—in my past life.
If done well, comparative advertising brings “new news” to your brand, clearly communicates key brand benefits, and ultimately may steal share from the “losing” competitor(s). If brands can get too carried away with taking down a competitor, the reason-your-brand-is-better message gets lost in all the name-calling. The bitter advertising between Bud and Miller a few years ago comes to mind.
Mzine: It seems there’s a raft of price and sale promotions going on now. What do you think of these types of tactical responses to tough economic times?
Jeff: During tough times, we tend to gravitate to those tactics and programs that we know will work. For all of its faults, promotions such as discounting or trade promotions, do drive volume. Unfortunately, the new volume is not very profitable, nor is this strategy sustainable. Likewise, discounting can have some negative long-term consequences, such as training your consumers to buy on deal and denigrating your brand equity.
A much better alternative—albeit riskier and more difficult—is to deliver “value” above and beyond price. It is innovation that truly drives business—beyond this week’s buy-one-get-one. Innovation can take many forms, including new products, new packaging, and/or new advertising claims.
Mzine: A few weeks ago, Mary Beth West, the CMO of Kraft, offered her advice to CPG companies for marketing in a recession. She said, "the thing that's challenging is to figure out what value proposition we have for them and understand what’s going to make them put money down to buy our product.” She also suggested, “walking in the shoes of your consumers is the key to keeping products moving during a recession. And I am talking about walking not just a mile, but two miles.” What do you think about her ideas?
Jeff: I think this advice is vital, especially for a company like Kraft that markets premium brands. During this economy, consumers will be looking for a reason to stray to cheaper alternatives, such as private label. You need to make this very difficult for them, by adding significant value beyond price.
Building value starts with a thorough understanding of consumer needs, including their latent and/or more emotional needs. With this understanding, marketers then need to do a “brand inventory” to assess if/how their brand can satisfy these needs—and do so better than the competition. This type of insight only comes from careful marketing research among key consumer groups, or “walking two miles in their shoes."
Mzine: You’re in the midst of launching a new service for Copernicus, the SMART Solution. What does it offer CPG marketers and how does it get at some of their big concerns?
Jeff: I can’t really take credit for this service. It is based on tools developed by the founders of Copernicus, who are much smarter than me. All I have done is to “retrofit” these tools for CPG companies and for specific marketing decisions especially relevant to the industry and to the times.
Brand managers in this economy require efficient (in both time and resources) responses to their marketing challenges. The SMART Solution offers the same actionable, strategic advice Copernicus has always provided, but its scope is more focused and targeted. This new service (1) identifies the most profitable target for your business, (2) develops a powerful messaging strategy, and (3) offers tools to find your target in traditional and non-traditional media.
By focusing on these specific objectives and deliverables, you can get answers in about 30 days, without killing your budget.
I encourage readers to visit http://www.copernicusmarketing.com/cpg-marketing-strategy.shtml to learn more about The SMART Solution.
Mzine: What’s the biggest or most common mistake you see CPG marketers make when it comes to marketing during a recession? Is it inevitable or is it avoidable?
Jeff: The biggest mistake I see is getting too scared by all of the bad news and cutting marketing programs too quickly. The brand manager has to be the advocate for his/her brand, and should fight to invest behind it. Trust me, there will be enough people in the organization pushing to cut spending (even in the best of times).
It‘s always risky “going to bat” for your ideas. In fact, I always felt this was the hardest part of my job as a brand manager. That said, it is much easier to do if you feel confident that you have uncovered a key consumer insight and have developed a “big idea” in response to this insight.
Mzine: If you had the ear of brand manager and CMO at consumer packaged goods companies around the world for five minutes, what advice would you give them about developing a brand strategy for the recession?
Jeff: It’s a risk-reward world, and this axiom certainly applies to marketing. Don’t take the easy way out. A “safe” marketing plan will deliver safe results, and in a recession that equates to a declining brand. While “conservatism” may sell organizationally during tough times, it doesn’t give consumers much reason to switch to (and not from) your brand.
You’re a marketer. You get paid to be creative and to take chances! Let the finance guys be the naysayers—but make it very tough for them.
Use the recession as an excuse to try new things. Otherwise, “if you do what you’ve always done, you’ll get what you always got.” Devote at least a portion of your budget to new media. Test new advertising, including some bold new claims. And “stretch” your brand through innovation—consumers often give your brand more “license” than you’d expect.
In doing so, your brand will not only survive the recession, but will emerge even stronger.
Send an email to Jeff with questions and comments: jeff.maloy@copernicusmarketing.com
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