Why brand marketing needs a relaunch and how to do it
Martin Glenn, CEO Birds Eye Iglo Group dicusses why brand marketing needs a relaunch and how to do it.
I believe that brand marketeers are facing a crisis of confidence. I want to talk about what we can do to restore that confidence and reclaim their authority in terms of being marketing-led businesses. If we accept that brands are now going to be managed by the vagaries of a global chat room, we're in big trouble. As Benjamin Franklin said, drive your business or it will drive you.
So what are the issues? I think there are five major factors that have led to what I see as a lack of confidence, a lack of direction and a lack of authority in brand management over recent years. These issues are not going to go away and they make our job more difficult to do.
Two of these factors aren't new but they are relentless – constant challenges that, if anything, are likely to get worse. The other three are new difficulties facing brand management.
CHALLENGE 1: PRIVATE LABEL IS MORE THREATENING
First in the 'old but relentless' category of problems is the continued growth of private-label discounters, or, if you're in services, any form of disintermediation. What makes this problem more serious is that we are facing an interesting polarity in the way consumers shop.
On the one hand, there has been a huge trend in people wanting to buy luxury products. People have been trading up in many categories where they are looking for some form of accessible luxury.
On the other hand, the corollary of trading up is that people have also been trading down in many sectors. So in areas that people don't judge to be valuable, we are seeing price/value offerings working very well. So for every story where you hear the growth of luxury brands, you will also see the growth of areas, such as budget airlines, where people decide that service isn't that important. For fmcg marketeers where price continues to be a factor in a number of areas, private label can make that much more difficult.
CHALLENGE 2: TECHNICAL DIFFUSION IS GETTING FASTER
The second ongoing factor is the power of the global economy, which means that technical diffusion happens much more quickly. So the job of making a real functional, tangible USP is much harder to manage. This, along with the increased strength of private label, makes building a lasting brand proposition harder than in the past.
CHALLENGE 3: TALENT AND RESOURCES BEING SIPHONED AWAY FROM MARKETING
Let me move now to the three new factors that have led to a lack of confidence in brand marketing. The first is the siphoning away of talent – from brand management into the financial sector. I started work in 1981, when I joined Cadbury-Schweppes. The environment I joined at Cadbury (and this was true of Unilever, Procter & Gamble and others) was a hothouse of very smart people. The intake that year was about 120 in the graduate training scheme, all clearly very bright. It was competitive as hell to get in, and you were pleased to get a job offer.
This recruitment trend began to change in the early 1980s with the growth of the City, the Big Bang and the liberalisation of financial markets.
What seemed to happen was that graduates had more choice, and financial services jobs paid more money. I also think that many of these financial jobs are fundamentally simpler to do. The role of a dealer is less complicated than being a brand manager, but it obviously yields massive returns. And this has affected the flow of talent into brand management and marketing. We still get very good people but we don't get the same quantity of talented individuals.
The Rise of the Consultant
In addition, there's been a huge boom in consultancy. This was partly driven by the City of London requiring change management during the process of liberalisation of nationalised industries. I did a spell in consultancy and I seemed to be permanently working at BT, which was trying to make sense of how this new liberalised world worked for it. And once again that siphoned off good people at an important age.
The Decline in Resources
Another characteristic of the past was numbers of people and amounts of time. I recall when I was in the marketing department at Cadbury, although it was a hard-working environment there was time to learn and observe. We don't give our young people that time and we've got to try to recreate a better learning environment.
Also the resources were so much greater. The advertising agency was a legion strong and when they came up for the Nielsen results they must have filled a whole train. It was really impressive. There were seriously smart people in ad agencies looking at linkages between this factor and that factor adding in some of the other consumer data; it was like a little workshop every four weeks, which, if you were open to learning and remotely intellectually curious, you learned an enormous amount. I don't see us doing that much today.
But that environment of massive marketing departments and massive agencies did feel like a big party. And at the end of any big party, there will be a hangover. Sometime in the late 1980s the accountants moved in because profits weren't being made. Marketing people and investments were all treated as costs and got cut back.
Information is not Used Effectively
Today there's a paradox. We have more and better data than ever, but less capability to do anything about it. I see marketeers being very conscious about the need to be accountable but not really sure about what that means. I also see marketeers not having the confidence to state the case properly or argue with the finance director about the value of their marketing programme.
Marketeers today have been taught that if they can't prove to the world how fast they can move, they're not doing a good job. They fall out of their seat to tell you how well they understand the retail trade and how well they understand Tesco or Sainsbury's. That's important, but it's not the only thing. There's a good general level of trade understanding, but consumer understanding has to come first or the retailer won't be interested in listening to you.
There's less time to think and if you're a young brand manager, you are probably disconnected from the annual plans with no linking narrative and no sense of journey. I think that's quite a serious problem.
CHALLENGE 4: THE CHALLENGE TO MARKETING'S LICENCE TO OPERATE
The fourth difficulty is an even bigger one: it's what I call the challenge to marketing's licence to operate. The world has changed and I'm going to give you two examples, linked by chocolate, to bring this point to life.
Cast your mind back a couple of years. Cadbury is one of the most progressive food companies in Britain and in a very well-meaning initiative it was determined to try to seize the whole obesity issue and look at it more holistically.
The evaluation criteria for obesity was seen to be 'calories in', but of course it's really about calories both 'in' and 'out'. So Cadbury said it was going to do a 'get active' campaign, a great piece of cause-related marketing. So it did 'get active' and Cadbury was absolutely killed for it.
What was interesting was that Cadbury did not see the problem; it was astonished by the reaction the campaign received – the only mistake it made was probably being a bit niggardly on the ratio of reward for wrappers for sports equipment. It wasn't a bad idea, but with hindsight it was poorly executed. But what surprised Cadbury was how many pressure groups there are that have a point of view about obesity and which were determined to criticise Cadbury and hold it to account. I thought that was one of those defining moments where it felt like the world had changed.
The second anecdote also has to do with chocolate. David Cameron's first big speech on food policy was about chocolate oranges in WHSmith. Now why on earth would the leader of Her Majesty's opposition have a bee in his bonnet about chocolate oranges on sale on by the till in WHSmith? Why? Because he's a good marketeer. He'd been up and down the country listening to focus groups and he was hearing people talking about healthy eating, children's diets and so forth. So for his first public policy speech on food he talks about impulse selling.
New curbs on TV advertising have come into force because the food industry failed to put its case forward properly, and the government was looking for some easy wins. One of the results is that we're seeing a curb on the freedom of speech and freedom to operate.
Furthermore, post-Enron the public has a renewed interest in how business is done, and burdensome pressures have been put on business reporting. So it's no longer good enough to do a P&L; you need a CEO to attest under oath that his or her numbers were correct. Big change. Restrictions happen because trust has broken down and there's clearly been a breakdown of trust underpinning these curbs.
There are more people concerned about how things get done or how products are made, and there's more processes supporting this than ever before. How a company operates has become part of the evaluation criteria that consumers apply to a brand or a service.
CHALLENGE 5: THE RISE OF PRIVATE EQUITY
The final issue is the rise of private equity. About a quarter of the UK food industry is private-equity owned. In the minds of the public at large and in the minds of much of the marketing community private equity is short term whereas brands are long term – therefore a marriage made in hell.
There is no doubt in my mind that being in a private equity environment changes the rhythm and the tone in which brand management is done. But, in fact, it's for the better because what it means is that private equity provides a chance for marketing to become more accountable. In the first year of the Birds Eye Iglo business we increased marketing expenditure by 7%. Private equity may not be a panacea for everyone, but marketeers should see it as less of a threat than changes in talent and resource allocation, and the challenge to 'licence to operate'.
Those are my five key challenges to marketing. So in the face of them, we've got to get a lot more radical in thinking about what brand marketing needs to do to operate in this environment.
THE SOLUTION: RELAUNCHING BRAND MARKETING
Companies that produce high-quality brands, whether at the low end or the high end of the market, are profoundly important for society. We can't detach the increase in standards of living from the successful working of the market, so we need to be vigilant in continuously explaining how brands contribute to the public good. If we give up on this we're all going to be poorer for it.
Brand management needs a re-launch. And it composes five steps.
SOLUTION 1: BACK TO BASICS
First, we've got to get back to basics on brand management. Twenty-five years ago brand management was relatively easy to learn – lots of people and resources. We've got to find a way to provide that same kind of learning in this new and more complex world.
The first basic we've got to fix is the separation between setting strategy and executing it. We need to get back to a more holistic way of operating where we connect thinking and activation – ideally in one head, in one individual, or certainly one department. So that's the basic number one.
The second basic is a truth that's been ignored. And that is the tendency to over-value 'difference' and under-value 'better'. This isn't an original thesis: Barwise and Meehan's excellent book called Simply Better does a better job of explaining that than I will. But the obsession with differentiation came from Michael Porter who said 'if you compete against a competitor on the same dimensions, you're running the same race faster, so you must differentiate'. This has turned into spurious differentiation, which overlooks why people are buying something in the first place.
'Better' has been behind the success of Tesco. Tesco didn't reconceptualise the shopping experience, they just did every bit of it better. Another example is Walkers Crisps. In 1993 Walkers had been in decline for about three years. There was lots of growth in what we call the extruded snack sector and processed things that looked like crisps – brands like Roysters, Discos, and Frisps.
So what was to be done about this? After a lot of discussion we came to a simple conclusion: Walkers decided to to make a better potato crisp, every day, every bag, every bite. And apply some of the principles of more exciting marketing that you've seen in the world of snacks to potato crisps. It was a better, not a different, strategy.
The final back-to-basics point is to learn how to embrace continuity.
Marketing managers get bored with campaigns and ideas much earlier than the consumer does. There's a real boredom trap in business – often it's the new brand manager cycling in every couple of years who wants to put his or her own stamp on the process. I'm not saying don't be challenging, but the first instinct shouldn't be to change something that's working.
SOLUTION 2: APPLY MARKETING PRINCIPLES TO PUBLIC AFFAIRS AND PRESSURE GROUPS
We need to apply some marketing principles to the issue of external affairs and pressure groups. All public affairs issues are not equally important. We're operating in a world that engages pressure groups and civic society widely, but every issue is different. Choose your issues carefully, don't feel you have to respond to all of them, and when you do, do it well. Do some segmentation to prioritise issues.
In other words, don't let events run your business. For example, in our business sustainable fishing feels like a massively important idea but, I'm a little less sure whether sustainable packaging is quite up there. When we make a decision to do something it will be based on enlightened self-interest and we'll do it well.
Linked to that is the more systematic measurement of social attitudes in planning, so that we don't get surprised by things that we shouldn't.
SOLUTION 3: TRUST CONSUMERS
The third part of the relaunch is: trust consumers. It sounds like a bit of a platitude but it's all part of holding our nerve. If we are clear about what consumers really value, we don't have to worry about our brand's reputation being on a razor's edge all the time or if your supply chain isn't as professional as it could be. Consumers don't suddenly shift if fundamentally the proposition is right.
We need to understand what the consumers really value versus what they say is important. How can we improve fish fingers we ask people? 'Make them twice as big and half the price please'. If you unthinkingly do what consumers ask, you go out of business. It's all about managing trade-off.
SOLUTION 4: PRIVATE EQUITY IS AN OPPORTUNITY
The fourth part of the relaunch is to recognise that private equity – if it owns your business – represents an opportunity. There's no way that a business that goes up for auction with private equity can be justified by cost savings alone. So the only way for 99% of any private equity deal to work is to create value and you create value through building demand.
So there's a unity of self-interest. In my case, it's not because anyone in Primera or CVC has got the remotest interest in the process, in the philosophy or in the craft of building brands: they don't. They are business people and are quite cold and calculating. But if you've got a business that is growing sustainably and is underpinned by a good level of advertising and promotional support you will get a higher price for it than for one that has had the guts ripped out of it.
In fact, what has been quite beneficial about private equity in my new business is that while they're neutral about how you get growth, there is a great culture of measurement. There is an almost naive curiosity about how these measurements work. So this culture of measurement of brands has been a good thing and, consequently, private equity is a non-issue when it comes to the pressures facing marketing.
SOLUTION 5: BALANCING SHORT AND LONG TERM
The final thing is that managing a brand is a bit like how you should manage your own life in the sense of trying to achieve balance. We know what an unhealthy lifestyle in brand management looks like: it's obsessed with extremes – either too focused on the long term or too focused on the short term.
So we've got to achieve a balance that tells us what the right short-term measures are and, at the same time, what the prospects are for longer payback. We need a balanced lifestyle, because if we don't we're going to fail.
This article featured in Market Leader, Autumn 2007.