John Shannon: More control to the consumer

New technology, particulary the Internet, means that customers can and will define your brand values for you; following their lead will make you a leader.

A number of global changes and developments are giving consumers far more power and making them much more demanding. This has far-reaching implications for manufacturers, retailers and brands in general.

Foreign direct-investment has increased by 700 per cent since 1990, resulting in too much capacity chasing too little consumption in a range of sectors and leading to price deflation, which we have already seen this year in the automotive market. There is a strong likelihood that international prices will become standardised and move downwards, particularly under the influence of the Internet.

Similarly, products and brands are becoming standardised, with the consequence that value will be created at one end through genuine innovation or at the other through customer service. All the areas in-between will be commoditised.

Indeed, customer service and the “brand experience” customers receive from their purchases are becoming more important elements in brand marketing. It is getting to the stage where, to the consumer, cars equate with “mobility” or “freedom”, groceries are about “home management” and insurance promises “peace of mind”.

Besides service and the brand experience, customers – influenced by the arrival of the Internet and mobile phones – want their brand to be at their disposal at any time. For example, banks are now receiving many more website hits and phone calls between 6pm and 9pm, while BT is experiencing much more usage between 2am and 3am. All in all, we are becoming a 24-hour, seven-day society in practical rather than theoretical terms.

For this reason brand owners, whether manufacturers or retailers, are being forced to put more investment than ever before into what has been called “consumercentric” strategies. Furthermore, a new survey of global companies by Deloitte Consulting demonstrates that these strategies pay off.

According to the report, there is a clear distinction between market “leaders” and “followers”. Retail leaders, defined as “companies with consumer loyalty strategies in place and which calculate the profitability of their individual customers” gain definite advantages: increases in shopping frequency, average purchase, traffic, sales and margins, improved customer satisfaction and improved shopper conversion rate.

Similarly, manufacturing leaders – those which operate consumer loyalty schemes and can identify preferred consumers on an individual basis – gain similar benefits: growth in satisfaction, brand recognition, average purchase, sales and profit margins, brand loyalty, category or brand shopping frequency and lifetime value of individual customers.

According to the survey, this leader and follower gap is particularly pronounced among European retailers, with an average difference of 60 per cent in profit margins.

It’s clear that consumers will be increasingly in control – much more so than now – and able to make clear what they want from a brand and determine how it is delivered.

Brand owners will have to produce outstanding output (the ads or equivalent) and have the culture and systems that make them responsive to the input (the customer feedback and usage). Whatever happens, it won’t be dull.

John Shannon is president of Grey International

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