Supply Chain Shaman

Search
Close this search box.
Lora's Latest Post

Stop Yelling. Start Listening. Become Market-driven.

A presentation was due on Monday.  The IT team was trying to respond to a new program. They wanted break through thinking on how IT could improve the consumers’ path to purchase.  So, last week, I changed my schedule and flew overnight to respond to an urgent client request.  The client, a major Consumer Products (CP) company, needed help with a topic that I am passionate about.  So, I rolled up my sleeves and went to work.
I started the session by asking the team,  “What is the goal?  Why is this important?  What are you trying to achieve in the market?  And, when I got their answer, my question was “Have you thought about the differences between a marketing-driven and market-driven company and how this defines the program? They scratched their heads, and asked, “What is the difference?”  …and the fun began.

What does it mean to be Market-driven?

We reward marketing-driven programs.  This is VERY different from a market-drive approach.  How much difference does ING make? Let me explain.
Historically, marketing-driven initiatives fueled growth for the CP company. Internally, the brand manager still wields power.  It is the world of advertising, trade promotion, line extensions, and brand positioning.
Externally, the tide has shifted. In the last 20 years, power has shifted from the manufacturer to the retailer to the consumer.  In the face of this trend, and to better compete and serve retail, the CP company built multi-disciplinary sales account teams.  The average CP company now has 22 sales account teams focused on channel activities with major retailers. Due to the importance, these teams can be very large (I have met with teams over 150 people). They are also autonomous.
These efforts are anything but market-driven. Instead, they are marketing-driven (focused on market share) or sales-driven (focused on volume).  The design is inside-out (from the company) not outside-in ( a process built on how a shopper buys).
It is all about them.  Consumer products companies continue to yell their message into the market with limited sensing.  The team, I was working with laughed at my comment that “They have big mouths and no ears.”  To be able to listen and learn, based on new forms of data is a huge opportunity.
What is the difference?  In our session,we quickly outlined four major differences on the white board.

 
Marketing-driven
Market-driven
Design
Focus on the Company and the Company’s products
About the consumer. Processes designed to serve the consumer/shopper at the moments of truth
Behavior
Yelling the message. Pushing products. Programs largely based on history.
Listening, testing, and learning. Adapting programs based on a market-driven approach.
Focus
Selling into the channel
Testing and learning with a focus on sales through the channel
Process
Inside-out
Outside-in

How does Market-driven tie to unleashing New Opportunities at the Digital Path of Purchase?

The opportunity is effectively connecting with the consumer to inform, delight and serve on the Digital Path to Purchase.  Through the use of new technologies– business analytics, mobile applications, social and e-commerce programs– CP companies can drive significant growth at each of the moments of truth.  It is an opportunity to put disruptive technologies to work.  At the session, we worked with three moments of truth:

  • Kitchen table:  The decision to put the product on the list.
  • The Shelf:   The decision to put a product into the shopping cart.
  • Usage:   Delight when the product is used to drive new sales

When the market-driven principles are applied, the IT strategy becomes VERY different from a marketing-driven IT plan.  Unfortunately, and sadly, I seldom see the IT organization being asked to come to the table to help.  Much of this work, based on recent research with 25 CP companies, is being designed within marketing to drive a marketing-driven approach.
It is not about you or your brand.  It is about the shopper and improving their experience.   This is a hard concept for a brand manager, but it is a fundamental concept.   Let’s take an example.  To take advantage of mobile/social convergence, the CP company will often have a goal to launch their own mobile applications, or their own virtual currency or loyalty program.  My question is why?  First of all, most of the mobile application ideas that I hear do not improve the digital path to purchase, and in my opinion, it is no coincidence that the highest rated applications on itunes are not ones built by the consumer products companies.  My suggestion to companies is to work with sales account teams to build a mobile/social/digital strategy for each retailer.  My advice is that “it is about them.  It is less about you.”
I believe that every CP company should have a mobile applications team that is an overlay to the sales account teams to speed time to market in developing winning programs with retailers.  The team’s focus could be federating review data, building excitement through gaming, mobile wallets and social couponing, redefining the in-store experience through QR code and RFID usage.  This work is experimental, ever-changing, and represents huge potential to redefine the shopping experience if it is market-driven.
Influence at each Moment of Truth.  Yelling no longer cuts it. A major opportunity for consumer products companies is providing value-added information at each moment of truth.  For the kitchen table, it could be syndicated review data, recipe information, or content on an ecommerce site (Amazon or Peapod) to influence the shopper.  One of the companies that I feel is doing some interesting work in this area is Kraft.  Another company doing great work in this area is McCormick.  Both McCormick and Kraft are working on recipe programs, special offers and tailored programs with eCommerce sites to influence the decision to buy.
Power has shifted to the consumer.  Change your channel strategies to be outside-inStarting with the three moments of truth, spend time to look at how you can inform, influence and build customer loyalty at each moment of truth.  Empower test and learn programs through investments in downstream data, retailer and consumer insights and business analytics to understand what is working.  Adapt your programs based on analysis of effectiveness between control and test stores.
What do you think?  Would love to hear about your progress on redesigning the path to purchase through the use of disruptive technologies.
 

Search the Archives
Search
Share this Post
Email
Twitter
LinkedIn
Facebook
Pinterest
WhatsApp
Featured Image
Recent Posts

Just Jump

Like a secretarial typing pool, the definition of work for a supply chain planning is ripe for rethinking work. The redefinition cannot be crawl, walk and run. Instead, companies need to just JUMP!

Read More »

Outside-in Process Q&A

On Friday, I presented an overview of outside-in planning to a consulting group. I love the questions when I present. The reason? The dialogue helps

Read More »

Happy Groundhog Day

On February 2, in a small town in Punxsutawney, Pennsylvania on Gobbler’s Knob, an unsuspecting furry Groundhog is plucked from a burrow to predict the

Read More »