Three shifts are underway and impacting marketing. How will they affect you?
1. No More Rising Tide of Population
A tour de force white paper has just been published by McKinsey. It looks back to the turn of the century and ahead to the next decade to paint a challenging picture for big CPG companies. Growth and margins were under intense pressure in the decade before the pandemic. Small brands were in the driver’s seat of innovation. Weak topline growth forced big CPG companies to manage earnings through cost reductions and productivity. Post-pandemic, it’s worse-growth has become all price, no volume. Add to this a confluence of four macro forces. Slowing population growth is slowing macroeconomic growth. Digital and GLP-l’s are steadily fragmenting the mass market on which big CPG was built. Mass merchandisers are squeezing supermarkets. Costs are rising and volatile, especially from climate change. McKinsey recommends fundamental shifts in portfolio and performance-among them, new lines of business, Al-powered marketing, and innovation and pricing targeting upscale households. The population slowdown is the biggest part of this. Big CPG could probably muddle through if it could keep riding a rising tide of population growth. Instead, a fundamental shift from mass to niche is in store for global mass marketers.
2. The Paradox of Quality
About a year ago, an essay by Epoch strategy director Alex Murrell went viral. Entitled “The Age of Average,” he made the case that visual culture has become homogenized. He illustrated his point with images galore showing everything looks alike-cars, Airbnb listings, skylines, coffee shops, models, movie posters, brands, social media photos. Music, too. A similar point about brand logos has been made by web developer Radek Sienkiewicz. Murrell explains this with an observation made years ago by Jim Carroll, former U.K. chairman of BBH. Carroll complained about ‘wind tunnel marketing.’ Relevance now trumps difference, he said, because agencies create ideas in the same way, which ensures identical work. Perhaps. I have a less chastening thought-the paradox of quality. Take cars. The laws of physics apply to every car, so to get the best gas mileage, every car must look alike. However, every car is also better. So, too, with everything. There is a best way. When one brand pioneers it, all follow. Thus, as quality has gone up over time, difference has gone down. Not from of a dearth of genius, but from a surfeit. Carroll is right about the sweat required, though. No more low-hanging fruit. At the very moment when macro forces require greater originality, breakout ideas are harder and costlier to come by.
3. Promotion Over Product
Natasha Degen, who teaches at the Fashion Institute of Technology, wrote in The New York Times earlier this year that consumers have forged a new connection with advertising. No more of the jaded cynicism of the nineties, when ads had to talk to consumers as insiders too in the know to be taken in. These days, it’s an immersive, participatory, suspended-belief engagement that finds expression in crazes about marketing rather than the product. Marketing has become the experience, if not the benefit, of the brand. As Degen noted, it used to be that product came first, then persuasion. Nowadays, persuasive hype shadows over the product, almost making the product irrelevant. It’s a virtuous cycle of marketing, buzz, media, clicks, views, shares, stories and comments. Barbie mania, Degen observed, more than the Barbie doll or movie. Marketers are leaning in not only because that’s how social media work but because products have come to an “impasse,” to quote Degen. This echoes McKinsey and Murrell. But Degen has an added thought. What’s consumed these days is culture. That’s the impasse. A product is a product. Marketing is culture.
A recurring theme of the late Harvard marketing guru Ted Levitt was that people buy solutions not products. The common thread in these three pieces is the urgent necessity of imaginatively refreshing our understanding of the solutions people need. That’s the only way to grow, to be different, to break through the buzz. In other words, if we are to measure up to the future we must get back to basics.
Contributed to Branding Strategy Insider By Walker Smith, Chief Knowledge Officer, Brand & Marketing at Kantar
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