Monday, May 18, 2020

Evangelize-Convert-Optimize: The Fundamental Purpose and Core Tasks of Consumer Marketing

Let’s talk about consumer marketing.

More specifically, the industry of consumer marketing, its fundamental purpose, core tasks, market structure, dynamics and size.

This article, focusing on the fundamental purpose and core tasks of consumer marketing, is the first in a series on how to strategically evaluate the marketing services industry landscape, make sense of the trends and competitive moves impacting it, and think critically about the various industry players and their strategic position and significance.

Consumer marketing is evolving at a dizzying pace, and so is the marketing services industry landscape. Major players, like Microsoft, Salesforce and Verizon, who are not indigenous to the industry are entering the space with ambitious agendas and vast resources; digitally native startups are proliferating in every corner of the landscape, disrupting long established business models; and industry veterans, like the top agency holding companies (e.g., WPP, IPG, Omnicom) or retail merchandising brokers (e.g., Acosta, Crossmark, Advantage) are looking to reinvent and secure their strategic footing in the marketplace.

First, some helpful definitions: What is marketing? According to the latest definition approved by the American Marketing Association (AMA), “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” Sounds like everything and everyone involved in creating products and services, making customers aware of and interested in them, making them available and accessible via distribution, and finally selling and delivering them to customers.

This definition, while useful for providing a panoramic, full-value-chain view to CMOs and management consultants, is too broad for the purpose of the industry analysis we will embark on. Instead, we will limit the definition of marketing to the traditional ‘AIDA’ marketing funnel developed in 1898 by Elias St. Elmo Lewis, an American advertising pioneer. In that model, marketing starts with awareness, develops into interest, accelerates to desire, and culminates with action. In other words, marketing starts after the product is created and ends as soon as it is purchased by the customer. Then, the cycle starts all over again.

So here is a simple way of looking at this very complex industry (see Figure 1). The basic purpose of consumer marketing is to motivate consumers to move down the AIDA funnel and convert them into buyers. To do that, consumer brands spend their marketing budgets to reach their target audiences and achieve three things:
  1. Deliver brand equity messages to make consumers aware of and interested in the product
  2. Provide purchase incentives to nudge consumers to buy the product
  3. Gather consumer insights to plan and measure the success of the marketing campaigns
Figure 1. The fundamental purpose and core tasks of consumer marketing

Equity messages are about telling the brand story, surfacing a consumer need or pain point that the product addresses, and creating an emotional connection to build brand equity with the consumer. Equity messages are more often than not broadcast to wider audiences; their goal is to cast a wider net, spread awareness and generate broad momentum. They are primarily delivered at the top of the funnel, in the earlier stages of the consumer shopping journey, with continuous reinforcement as the consumer travels down the funnel. Equity or awareness marketing is usually the realm of mass media, is usually funded by manufacturers’ centralized national brand budgets, and its delivery vehicles and success metrics are aligned with its core purpose: to evangelize.

Purchase incentives are about converting a target consumer into a buyer – ideally, a repeat buyer. They are about overcoming an objection, breaking a habit, seizing an opportune moment. The marketing tactics include store discounts, manufacturer coupons, cashback offers, but also free sampling, product placement and displays, special promotional events, and many more. The right context, the right moment, the right venue and a relevant offer are key to the success of purchase incentives. That’s why they are more commonly delivered near or at the point of purchase – at a store, on an e-commerce website or in a shopping app – also known as the bottom of the funnel. This is the realm of performance media and shopper marketing; it is usually paid for by manufacturers’ retailer-specific shopper budgets, and the ways promotional marketing is activated and measured are attuned to its main purpose: to convert.

Consumer insights (CI) are the feedback loop that helps brands ensure they are achieving their marketing objectives, while spending their budgets efficiently. CI informs and shapes every stage of the marketing value chain – from campaign design and planning to audience targeting to media activation to performance measurement to spend optimization. Customer data obtained from consumer polls or shopper behaviors, such as traffic patterns or transaction logs, are the lifeblood of CI. This is the realm of marketing data science, consumer panels, marketing mix models and marketing ROI. It drives how brands (i.e., their brand managers, CMOs, CFOs, and even activist investors) decide how much money to spend on which medium and which tactic, and thus its core purpose is: to optimize.

Any framework is an oversimplification of the complex world it represents – this one is no exception. But simplicity is an important strategic tool – it helps provide clarity of understanding, vision and purpose.

The three core tasks above are at the core of the consumer marketing industry – they shape its landscape structure, competitive dynamics and strategic opportunities. To make sense of the industry when analyzing different industry segments, marketing players, service providers or emerging technologies, it is useful to examine them against these core tasks consumer marketing is designed to achieve. The capabilities needed and strategies deployed to successfully drive brand equity are different from those to drive conversion or to extract and apply consumer insights.

In our next few articles of this series, we take a closer look at the consumer marketing industry structure, and discuss different ways to segment and study the players that populate the marketing services landscape.

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