Last week I wrote about the enormous changes that have taken place in 2013. I wrote about how the use of the internet as a primary source of information is now a global truth; how online shopping is no longer a niche behavior and how the lines between physical retail and online are blurred.

I explained this has some major implications for consumer goods companies, which, as a result of these changes, can no longer depend on traditional media and traditional retail as key pillars of their marketing strategy.  Real competitive advantage is likely to come from bringing shopper marketing and digital marketing into the mainstream. This requires a new blueprint for marketing in the digital age.

What are the key components of the blueprint?

The good news is that just because the world is changing, we don’t have to ‘unlearn’ everything we already know – tomorrow’s blueprint is based on the foundations of over 100 years of marketing best practice. There are four central pillars on the new blueprint that might enable marketers to build on competence they already have.

Define the true target consumer and the behavior that you want from them – The consumer is still king, or queen in the new world. The only way your brand will grow is by attracting new consumers to it and encouraging consumers to use your brand more often and in greater quantity. What has changed is that there is no longer one ‘target consumer’ cast in generic, catch-all terms.

The true target consumer is the person you can identify as being someone whose behavior your communication can influence.

Future brands will have more than one target consumer: there’s the person who doesn’t use your brand but could and should; there’s the person who should be using your brand but is using someone else’s brand; there’s the light user who could be using heavily and the infrequent consumer who could be using your brand habitually and there’s the consumer who so loves your brand that retaining her loyalty is essential. ALL of these consumers deliver value and all of these deserve specific, targeted messages to change or reinforce their behavior. The new blueprint will lay out how behavioral research and consumer segmentation will adapt to cope with the more rigorous demands of the new world.

Convert potential consumers into shoppers – The traditional marketing model assumes consideration will lead automatically to trial and re-use for a proportion of the market. The new blueprint  for marketing in the digital age will not leave this to chance – too much is at stake! Tiered, targeted messaging strategies will be needed to guide target consumers towards a purchase. An inherent assumption of these strategies will be that in order to build trust and strengthen engagement, it will not be the volume of impressions that is important, instead it will be the quality and resonance of impressions. The new blueprint will lay out how consumer goods marketers transition from mass communicators to micro-marketers and how to create coherent links between the consumer and the shopper.

Convert shoppers into buyers – Shopper marketers know that, in-store, even highly loyal targets can be swayed by a plethora of messages and offers. The new marketing blueprint will demand that much less is left to chance. Having earned the permission to ask for a sale, marketers will seek to convert the sale with the minimum possible disruption. This may mean that new routes to market such as direct sale and subscription become as prevalent in the future as physical retail is today. The new blueprint will lay out how to define the optimum path to securing the sale and the most effective environment in which to do this.

Evaluate and refine in real-time – Today’s marketing model is evaluated weeks if not months after its execution (if indeed at all). The new blueprint will anticipate the potential for immediate evaluation, defining clearer metrics and enabling sales and marketing teams to respond to outcomes in real-time.

Whilst many marketers may conceptually ‘get’ what needs to happen to execute a new blueprint for marketing  in the digital age, the reality is that many organizations lack the infrastructure and will to adopt the types of changes that might be needed today. Most will be challenged with the key question, “what should we do now?”

What action is needed now?

There are four actions that are urgently needed to stay ahead of the competitive curve in the coming year:

1. Take this seriously – Changes in the way we learn about and buy products have profound effects on the way they are marketed and sold. If these issues are not a topic of board conversation today, they should be. The next five years will be critical to the future of many consumer goods businesses large and small. The very worst consequence of putting too much focus on this now is that your company will be miles ahead of its competitors in the space. By contrast, the cost of being left behind might be catastrophic.
2. Identify a working group – Large consumer goods companies change slowly and they change by example not by edict. Start the process from a small base of highly competent cross-functional managers working on a specific brand (or brands) in a selected geography and allow them to share their experiences, successes and failures widely across the organization
3. Understand the opportunity – Before asking the team to make any changes, develop a program of research that is designed to clearly measure the opportunity. Target the research on establishing the potential value accrued from changing different segments’ consumption and purchase behavior via new media and new routes to market and ensure that the business case for changing investment strategies is clear.
4. Try, evaluate and revise – Enable failure. The first executions will inevitably be flawed, allow the working group sufficient time to try a strategy, evaluate it and revise it until they begin to deliver results. Then ensure they document their working process and support its roll out.

2014 is set to be an exciting year, and one in which change will accelerate. I’d be delighted to share our thinking on how you might construct a blueprint for change. If you’d like to discuss this, please feel free to contact me.

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So Microsoft is to buy Nokia’s phone division for $7.2 billion. Most commentators are pretty neutral on this and Microsoft’s stock is even down on the day. I’m guessing a lot of people are thinking that departing CEO Steve Ballmer’s swansong (he announced his retirement from the business last week) is little more than a pairing of two dogs and all this will create is a mongrel. On the face of it they may be right – Nokia has undoubtedly failed to bring its proposition into the smartphone era and Microsoft’s mobile platform has equally failed to gain widespread acceptance. Both struggle with some major issues in competing with Apple with iOS and Samsung with Android.

And yet there is a great possibility that the naysayer’s will be proven wrong and this coupling will become a marketing case that B-schools will adopt globally.

Microsoft’s acquisition: Why Nokia is a good buy

Let’s think about the situation: whilst Nokia has struggled to capture the imagination of the affluent west, it has done a pretty reasonable job of making cheap, Internet-enabled handsets available to consumers in the developing world. With 3G networks rapidly become ubiquitous (during a recent walking trip in India, I was able to download email atop a 2600 meter-high Himalaya), the major barrier to internet adoption for many is the availability of affordable devices. Nokia has ample expertise in building these devices and if it could unpick its tangled route-to-market strategy, it could easily take a solid position in the massive untapped market that the bottom of the global pyramid represents.

For its part Microsoft remains the world’s dominant provider of operating systems and programs for home computing. Indeed in conversation with a recently departed director of marketing at Microsoft, I was told that nearly 95% of personal computers in the developing world run on  Microsoft. However, the company has failed to realize profitable revenue streams from this not because consumers reject the brand, but because of the ubiquity of pirated product. The same former exec suggested that converting just a tiny percentage of the world’s pirated users to official licensees would add huge sums to the company’s topline.

As developing world consumers enter the Internet-enabled market, the most common point of entry today is not a desktop but a mobile device. With this in mind not only is Microsoft’s tie up a brilliant opportunity to gain ground back from Google and Samsung, but also it’s a fabulous way to ensure that revenue from licensed software and services (think Skype and Bing) is returned to the company.

Good acquisition – where’s the marketing?

So far this all reads like a great case to illustrate a smart acquisition strategy. But there’s little in this which relates to marketing right? But here’s the thing, delivering on the promise of this tie up is a major marketing challenge. At engage, we advocate the need for Total Marketing strategies – ones that meet the needs of the consumers who will use the product, shoppers who will buy the product and retailers who stock the product. Microsoft can only be successful if the approach they take fully embraces this relatively simple concept. If they do, then graduate students will be studying their marketing success for years to come.

5 Marketing Challenges Microsoft Faces Now

The managers faced with delivering on this challenge now have five key strategic questions to resolve:

1. Which consumers should we prioritize? Most of the hype surrounding mobile devices focuses on the pace at which smartphones have been adopted by the global middle class. Accepting this may be a large potential oportunity for a Microsoft led mobile offer; I would argue that this should not be their priority. Not only have both brands struggled in this space, but also both brands have significantly more to gain from a much larger, less affluent consumer base which as yet no single manufacturer has a monopoly over.
2. What shopping behavior will we have to create to put sets into consumer’s hands? Getting less affluent shoppers to part with a large proportion of their disposable income is a major ask and a significant decision for the individuals involved. Not only will the new business have to ensure the product is available to these shoppers but equally that they can communicate the benefits of the product to them and that they can create an offer in the form of pricing and promotion that will stimulate these shoppers to buy.
3. Which retail environments do we have to be in? Accessing up to a billion new buyers globally is a challenge for anyone and it’s going to demand that Microsoft in particular have a major re-think about their retail strategy. The shoppers they may choose to target don’t all have access to shopping malls and large format stores, so the new unit will have to get the product into retail channels where they may have little or no expertise. They may well be challenged to develop competence in managing extended routes to market and many millions of independent retailers in a way they have not been in the past.
4. What’s the best marketing mix? A traditional approach to media and communication, especially one that revolves around glossy ads and flagship stores will probably not be effective if the new business wants to secure sales to a new cohort of shoppers . Microsoft and Nokia may well have to create massively different messaging and utilize media that to date they may not have considered relevant.
5. What investment is this all going to require? Way beyond the investment in new product engineering, the mobile team is going to have to consider the surgical investments needed to ensure that they secure retailer’s support ahead of brands like Huawei and Samsung.

I for one will be interested to see how rapidly Microsoft are able to embrace these challenges now and how effectively they are able to execute against them in the future. I believe that if they get it right, Microsoft’s acquisition of Nokia could well be a brilliant buy that leaves competitors asking what has happened.

To learn more about how Total Marketing could help your company realize the opportunities you see in the marketplace, contact me by clicking here.

Image courtesy of Flickr user Vernieman