A reversal in marketing tactics is happening on the quiet, and the benefits of this much-needed about-face would be far greater if they were made public. After decades of occupying the high ground, fmcg marketers are ceding their authority to the business-to-business community.
It may be galling to admit, but many of the “big ideas” being discovered by consumer goods companies are, in fact, well-worn ideas from the backwaters of marketing.
Back in the Eighties, of course, all the traffic was one-way. That was the heyday of marketing. Financial services and business-to-business companies were realising that their solely sales-led operations were not producing best results. It dawned on them that branding really matters, that even the hardest-nosed business-to-business buyer isn’t immune from the influence of a strong brand. They rushed to worship at the fmcg shrine, eager to learn the sophistications of advertising, design and PR from London luvvies.
Headhunters began raiding blue-chip companies for brand-management talent and fmcg notions were soon being touted in new territories. Slick corporate image advertisements became common. Marketers tried to create standalone financial service brands, such as Midland’s Vector and Meridien.
These strategies were often pursued to disastrous effect. The banks wasted tens of millions of pounds on advertising before they realised that quality of service meant more to customers than mere ads. Marketers who joined these new companies soon found themselves stifled by a culture that still, despite the rhetoric, saw marketing as a satellite division – nowhere near the heart of things.
The few campaigns that worked, such as BA’s 1983 Manhattan ad, only did so because they were the tip of an iceberg of corporate change. They signalled and encouraged BA’s newly affirmed commitment to total quality and customer service.
Now the wheel has turned almost full circle. Consumers, marketers have discovered, are rational and calculating about their purchases – rather like the traditional business-to-business buyer. Concepts and practices that have been commonplace among the Cinderellas of marketing have been received as flashes of inspiration – witness the way loyalty marketing has taken off. Most business-to-business marketers held onto the feeling that their existing customers were the meal ticket and have practised loyalty marketing principles for so long they hadn’t even come up with a name for it.
In fact, fmcg marketers have been learning from their humbler colleagues in wide range of areas. Business-to-business marketers were among the first to recognise, and use, the power of direct marketing and the database. Business-to-business companies have long realised that the corporate brand – their company’s reputation – is crucial to their success (though many felt almost ashamed of it, corporate brands somehow weren’t “real”.) Now, such endorsement is seen as the future for the majority of companies, including many in fmcg.
In addition, it has long been recognised in business-to-business circles that the way to gain an edge in commoditising markets is to add as many layers of bespoke service as possible. Fmcg marketers are only waking up to the huge potential of this idea.
And it is in business-to-business that the concept of relationship marketing is (again) almost second nature. Of course you try to get to know the individual needs of each, named customer. Of course you try to use this understanding to anticipate these needs and meet them. Of course you try to maximise the two-way flow of information. (Trendies call it “interactive dialogue” nowadays. Fuddy-duddies from business-to-business call it talking to people.)
In fact, if you look at the admittedly highly caricatured portraits of the two different approaches (see box), it’s clear where the centre of gravity lies.
There’s probably still more for fmcg marketers to learn. The power of the alliance would be one lesson. In tackling the business market, airlines have long tied up with hotel and car-hire groups. Similar strategic marketing alliances (including customer data-sharing) between complementary consumer goods companies could have tremendous power. We have seen only the start of joint promotions.
Another lesson lies in the concept of supplier partnerships. Car companies such as Rover have long realised that by sharing information with a small number of “preferred suppliers” costs can be cut, ideas shared and new product development speeded up. In consumer goods, the idea of the company/consumer partnership has yet to come to fruition. Currently, consumers are still “targets”.
In truth, neither fmcg nor business-to-business marketing will ever be “better” than the other, but what is happening is that they are beginning to converge – and the sooner that both sides learn they have a lot to learn from each other, the better.
Only arrogance (usually on behalf of the fmcg marketer) stops it happening. According to Heinz managing director Malcolm Ritchie, one of the most significant changes over the past year is not its direct marketing initiative or even its move into own-label production. Both are predicated on an even more fundamental shift: a reorganisation of the business into three divisions to focus on the specific needs of their [retail] customers.
In other words, Heinz has realised that one of its biggest challenges lies not in its consumer marketing, but in its business-to-business marketing: its ability to build relationships with its retail customers. If fmcg companies had admitted this ten years ago, they might be in a very different position now.