The old marketing system’s notions of value – for all its rhetoric about consumer focus – are producer-centric.
Take the classic icon of packaged goods marketing: soap powder brands. These were not invented to meet a human need but to help manufacturers sell what they made in their factories. And what is made in factories isn’t necessarily what consumers really want.
From the customer’s point of view, the real answer to “What does the consumer want?”, isn’t necessarily a type or form of soap powder. It’s just as likely to be “fresh, clean clothes, ironed and ready to wear”.
So, when a soap powder marketer says his job is to find out what the consumer wants and to give it to them, he means: “Given that we make soap powder, what sort of variation is the consumer most likely to buy?”
And no matter how much extra choice of soap powders he offers (the head of P&G global fabric care division recently complained you need a PhD to understand the differences between them), the one choice he does not offer is a service that provides fresh, clean clothes, ironed and ready to wear.
That’s not on his agenda, because it is a completely different business – from his point of view.
We can see this trend towards consumer, rather than seller-defined notions of value, with Unilever’s launch of Myhome.co.uk. It offers domestic and clothes cleaning services, instead of just products used in those services.
With this experiment, Unilever is bravely trying to move beyond selling mere ingredients to solutions, and to start selling complete solutions themselves.
And we can see this demand for complete solutions everywhere. Manufacturers such as RHM and retailers like Tesco are still basically in the ingredient-marketing business. Home delivery pizza parlours and new outfits such as Pret ÃÂ Manger, on the other hand, are in solution selling.
While many ingredient markets are stagnating, solutions are a big growth area. And that’s because they address another key element of buyer-centric marketing: value for time. Under the old marketing system, the focus of marketing is on product quality and value for money. That won’t ever go away. It’s incredibly important. But it’s “value for time” that’s moving centre-stage.
Another word for value for time is “convenience”. But there’s a problem with this notion of convenience as there is a limit to how much you can embed convenience into a product. If you really want to offer value for time, you have to go beyond the product to address the consumer processes surrounding it. In other words, what is involved in turning the ingredient into a solution.
That’s what home delivery pizza parlours do: address the processes consumers have to go through in surrounding ingredient products. In fact, if you look at the cost of the ingredients of a pizza – flour, yeast, tomatoes, cheese, toppings – they’re tiny compared with the costs the consumers have to incur in shopping, preparing, combining and cooking them.
By failing to address these extra consumer process costs, or customer economics, and focusing instead solely on ingredient price and product quality, US grocery marketers have managed to lose over 50 per cent of market share. The lost share has defected to the fast-food, food-to-go and home delivery markets. The UK is going a similar way.
The alternative is to take a broader view of value, to address what Mercer consultants Adrian Slywotzky and David Morrisson call “customer economics”.
Increasingly, superior product price and quality is no longer enough for winning marketing. What’s needed nowadays is value for time and superior consumer economics.
And that leads to the ultimate characteristic battle marketing needed to win in the new environment. The shift beyond pure product quality, to total brand experience.
There are two basic ways to get better value for time. The first is to spend less time doing the things we don’t want to do.
The second way is to enrich the time we spend doing the things we have to do, or want to do.
The birthday cake is a good example of the way things are going. About 100 years ago, mum made a birthday cake using commodities such as eggs, flour, milk and sugar. Then brand manufacturers such as P&G and General Mills came along with cake mixes. The next step came when people started buying complete, finished birthday cakes such as those produced by Avana Bakeries.
But another stage is emerging, where companies such as the Discovery Zone or McDonald’s stage a complete birthday party, cake included. Where, in other words, they attempt to offer a complete solution – the experience itself.