brandcentric blog

At an industry conference last year I saw a fantastic live keynote presentation on buzz marketing from Steve Knox, CEO of P&G’s Tremor division.  Steve’s keynote highlighted the emergence (and critical importance) of word-of-mouth marketing in the CPG sector, and how brand franchises are benefiting from a groundswell of loyal consumers who behave as self-appointed ambassadors.

These “connectors”, as Steve calls them, form the fabric of word-of-mouth and social media in general.  These are the folks that tend to be early adopters (but not always), have distributed groups of friends and acquaintances, and just generally like to be heard.  The key message that Tremor has for brand marketers is to identify these connectors and nurture real relationships with them.   From there, good things will happen. Sounds easy to do, but there is clearly a lot more to it than that.

But once you do identify the right group of connectors, how do you forge meaningful relationships?  Bring them into the product development process.  Let them have a real say on which line extensions, flavors, colors, varieties and form-factors are on the roadmap.  Let them be the first on their blocks (and in their social networks) to try a product pre-launch.  Allow them to critique advertising.  Communicate with these folks often and early, and they will pay you back many times over.

One of the key take aways that Steve shared with the audience has stuck with me.  It was something to the effect of: “Don’t confuse word-of-mouth marketing with the internet.  The internet can be an enabler to this discipline, but is not a requirement.”  Great advice from someone who is clearly deep in the trenches.

On an interesting side note, it’s important to recognize that Tremor serves not just P&G’s portfolio brands, but also brands from non-competitive CPG organizations.  The Tremor business website highlights customers from Hershey’s, Del Monte, Ford, Kellogg’s and more.  Good news travels fast.

Like all good marketers ought to do, I wrote the obligatory contributed story on what this challenging economy means for CPG brand health.  Specifically, my call to action was to apply more rigor and science to the trade promotion planning process.  Doing so is both good brand hygiene and also a likely long-term competitive hedge against private label.  You can find the published story on the Journal of Trading Partner Practices website.

On a side note, as this story went to press commodity food ingredient costs started to tumble back to reality after unprecedented gains in the first half of 2008.  But the same rationale for a better planning process still applies, even in a highly volatile cost environment.  The price hikes that P&G, ConAgra and Kraft were all forced to make in the first half of the year have yielded price decrease decisions that require the same analytical rigor.

It’s hard to deny that digital coupon distribution is poised for a breakout year.  According to Scarborough Research, 11% of US households printed coupons via the internet in 2007 (up 83% since 2005!)  That figure has no doubt grown since this study was executed, given the multiple price advances manufacturers were forced to take in the first half of 2008. 

To add some perspective to this, newspaper FSIs still reign supreme for reach in coupon delivery, with 53% of households obtaining coupons through this medium (up just 8% since 2005).   And other delivery vehicles such as in-store, direct mail and product packaging will continue to have their place.

But CPG marketers now have some pretty interesting choices with how to deliver coupons to consumers in the digital realm.  Here are three different approaches that all have their pros and cons:

1. Printable coupons -  Consumers visit coupons.com (or one of their distribution partners), select desired coupons, print locally and then redeem during their next shopping trip.  The initial fear some manufacturers (and many retailers) had with printable online coupons is print fraud.  And to an extent, the concerns are still very real.   Coupons, Inc. has invested significant R&D into minimizing unauthorized prints, but fraud persists. Still, this approach accounts for the vast majority of digital coupon distribution to date.

2. Loyalty card integration- This approach is intriguing, as it eliminates the print fraud concern and provides a more streamlined consumer experience.  In this case consumers select desired coupons online and electronically “deposit” the coupon as stored value onto their retail loyalty card.   During their next shopping visit, the value is automatically deducted from their card if the qualifying item is purchased.   The big hitch with this approach is that participation today is limited to Kroger and its affiliate retail banners.  AOL’s Shortcuts and SoftCoin’s eCoupon program for P&G are the two technology providers driving this innovation.

3. Mobile delivery – This model is still in its infancy, but offers a rich opportunity to engage consumers in a more meaningful way.  One entry point is to offer and deliver mobile coupons to consumers during the shopping trip, while a buying decision can be affected.  Companies like Cellfire  can push discount offers to a mobile phone and/or leverage electronic value deposit to select retail loyalty cards, as in approach #2 above.

It’s an exciting time to be driving a digital marketing strategy for today’s consumers.  And within the world of digital coupon delivery, brand marketers have a pretty interesting array of choices to draw from.

As a young buck associate brand manager at ConAgra Foods, I developed a deep appreciation for how big brands stay competitive at retail.  My assigned brand, Wesson Cooking Oil, enjoyed a strong affinity with loyal consumers, near ubiquitous distribution, and the halo effect from a long-time celebrity spokesperson, Florence Henderson (aka “Mrs. Brady”).  We had a sizable consumer marketing budget to build off an established base and compete for consumer mind share against Procter & Gamble’s Crisco brand.  This was the fun, “creative” part of brand management.

But what I quickly learned is that building great brands also requires sound business management and a command of the data.  Nowhere was this more important than on the cooking oil business, where a good chunk of retail sell-thru takes place between October and December — holiday cooking season.  Getting the trade marketing plan right meant securing all feature and display activity during the right weeks with the right retailers.  It meant making, or even exceeding, your number.  But getting the trade plan wrong meant a potentially devastating peak season was in store.

Fortunately for me ConAgra was (and still is) a pioneer in using predictive planning software to build better trade plans.  This made my job somewhat easier. We used two first-generation tools to predict promotion events and our overall trade plans, appropriately called PROMOMAX and TRADEMAX.  With a few key inputs such as trade allocation, product mix and merchandising assumptions, the software would spit out our expected volume and profit for a given scenario.  This was a Microsoft Excel model on steroids.  We didn’t blindly follow what the software told us to do, but we sure paid close attention to the simulated results.

So my early lesson as an ABM was that big brands need both art and science to thrive.  Strong, creative consumer marketing is critical, combined with a fundamental understanding and use of data and technology to drive the trade.  Left brain/right brain thinking at its best!

As a funny side note to this story, I had the chance to meet the entrepreneur behind PROMOMAX and TRADEMAX my first day on the job at DemandTec.  Jose Anstey, who founded Applied Information for Marketing (AIM), and I were at an industry conference in Tampa Bay.  It didn’t take us long to put two and two together.

I love this idea and thought it was long overdue: set up an intensive job swapping program for CPG brand marketers (like those from P&G) and a new media organization (like Google).  Expose one another to a “month in the life” of the other side to build a better appreciation for how to do business with one another.  Sounds great on paper.

Here is a link to the story on WSJ (subscription required).

This is a fantastic first step, but more of this cross-breeding needs to happen in CPG land, as many of the big brand teams (and their old line agencies) are still focused on traditional media.  The needle is slowly moving, and behavior differs by brand and category, but there is still a pretty big gap to close.  The last research I saw suggests that, on average, CPG budgets allocate just a few percentage points to interactive with the vast majority still funneling toward television and print.  Old habits die hard, I guess.

That all said, kudos to Tim Armstrong from Google and his counterparts at P&G for pulling this off.