David Bruel – Marketing, as we learned it, is dead.
We were Kings.
I graduated from college in 2001. If you wanted to learn Marketing at that time, you had two options: join a consultancy firm or work in FMCG, ideally in the food industry. I had the privilege to be selected by one of the most admired companies in the world; and, one that was regarded as a true Marketing ‘Academia’ in Italy. Rightfully so: our Brands were so relevant to consumers and growing steadily. At that time all our Brands were going through exercises of ‘value-up’ or premiumization, with plenty of line extensions. The amount of information available to us was staggering, thanks to data coming from both Retailers and Research companies. Marketeers would spend endless hours analyzing market data, adjusting the mix, working on growing the consumer base (penetration) or the purchase frequency. Product development would take a considerable amount of time, typically two or three years, between concept development, industrialization and commercialization. Many of us, Brand Managers, considered the development of a TV commercial as the pinnacle of the whole Marketing experience. We would feel like stars, directing dozens of people from well paid advertising and media agencies; and, we would shape a whole Brand strategy into a thirty seconds dream, ready to seduce millions of consumers. Packaging development was particularly time consuming in the endless quest for perfection: we would work weeks to fine tune a logo, even if no one would even notice in the end. Private labels were growing, but still relatively under control. The rest of the competition was made of small local players, which would mainly copy the established Brands, offering a knock-off proposition of our best sellers. Life was busy, and so good. We felt in control. We felt like we were running the show. We were kings.
The Big Bang.
One day, Online showed up. All the big Brands decided that they could not miss the train, and created instantly new communication channels, entering the era of social media. We decided that we had to be there, without understanding in full the ‘why’ and the magnitude of the change. We were curious to see how a direct interaction with consumers would look like. I could see the terror in the eyes of all Senior Managers, when a leading Brand had to give its first answers to vocal fans complaining via facebook. A lot of work, enthusiasm and passion went into these new social media; but, looking at the first results, we did not see any tangible benefit out of all the money invested in facebook or Youtube. The return on investment was hardly measurable. Even the quality of the conversations with consumers turned out to be quite superficial, often transforming our facebook page into a public customer care forum, where consumers could download and amplify their frustration in front of thousands of people. We lost the ability to target, or talk to, our consumers; moreover, the cost to reach a single consumer was higher than ‘classic’ media, such as print, TV or radio. At the same time competition was starting to bite, our Marketing budgets kept declining, as margins were eroding due to overall costs’ inflation or distribution fragmentation, and year after year the products would disappear from TV screens, being replaced by phone or high tech companies. As a result, we kept increasing the portion of our time allocated to product margin optimization initiatives, becoming some sort of supply chain experts, or packaging engineers. We could save a few cents on the dollar by reducing the numbers of colors in the packaging print process, or by making the cardboard case a bit lighter, or by downsizing portions. All of sudden it felt so strange, as if we were missing the essence of Marketing. As if we were no longer in control.
Fast forward to today. Try to ask a fresh college graduate where he or she sees their future. The food industry has completely disappeared from their wish list, and it has been replaced by tech giants, or by companies that chase a broader purpose than mere profits, or sometimes by informal and smaller start-ups. Food manufacturers are struggling. M&A is probably one of the very few levers to grow. Private labels are more relevant, pushing hard on local and organic products. Small, artisanal Brands are popping up everywhere, exposed by new media, which allow them to be incredibly precise in targeting their lovers. Go to any pub, and observe what types of soft drinks are ordered by Millennials. You can feel almost ashamed if you just order a plain, old coke. Brands that were flourishing for entire decades are starting to dry up, like flowers in the desert. Not only are they becoming irrelevant, they are becoming as annoying as a parent to a teenager. Using the words of an enlightened CEO, ‘the food industry is broken’ (Emmanuel Faber, CEO Danone). This is the end, or is it?
Where did we go wrong?
In my opinion, it’s mainly two things which connect together. First, the role of food in people’s lives. Second, the role of Brands for consumers. Brands appeared during the 20th century, for very clear reasons. They would stand for quality and for safety. In a context where you could be poisoned while consuming food, would you not rather rely on known Brands, which offered a great and safe product experience? Today we give it for granted that food must be safe. In developed countries food is considered safe by definition, and this part of the Brand added value to consumers is not relevant anymore. But, the biggest miss for big Brands in the past two decades is probably around the ‘how’ to shift from product to experience. I bet everyone saw the rise of small, artisanal and authentic propositions, like the organic trend. The biggest issue is exactly how established Brands have reacted to these trends. They have tried to appeal to both core and new niches, chasing large volumes and at the same time ultra-demanding consumer needs, therefore answering in a very ineffective way to known and new needs, and ultimately losing credibility and purpose. What really matters today is the experience, which identifies you as a person. This is exactly what you want to share on Instagram. You don’t need Brands unless they are a part of the experience that you are living. Experiences have a value, almost a monetary one. As a matter of fact, most people today are willing to pay for an experience, even without any tangible product attached to it. That’s one of the reasons why the out of home food industry is growing so fast: it is building its main promise upon the unique experiences that it can offer to consumers.
While big food companies were focused on being more efficient and would stop any attempt to create a new Brand, because considered too expensive, a plethora of small, innovative Brands was popping up everywhere, starting with means so small to make any classic Marketeer laugh at them (take the example of Halo Top). Established Brands don’t laugh anymore.
Where is our way out and up?
Besides M&A, food companies will need to change their approach to how they manage their Brand portfolio. They will need to embrace what they have been fighting against for years: inefficiency. For example, the inefficiency of starting something small, and of having several (new) Brands that carry smaller volumes. Moreover, they have to change mindset, and embrace, again, the inefficiency of taking risks, of challenging all departments to be creative, rather than letting efficiency kill any new idea. Finally, they will need to accept failure. Innovation means, by definition, failure. For every successful start-up (i.e., Beyond Meat), there are so many failing miserably, and that’s the reality. Companies will need to create the right environment, where ideas can be killed early enough, where tough conversations can take place ‘before’ rather than too late, and where mistakes are not stigmatized. But, how can innovation thrive again inside companies? And, what is the role of innovation teams and of a culture of innovation? We’ll see this in my next piece.
Frank Pagano – Chaos is King.
Who did you think you were?
David Bruel argues that we lost it, completely. I agree with that. It was, as David says, partially our fault, ‘our’ meaning us – Marketeers, but it was also a structural collapse: Brands, as we encountered them when we started Marketing as a profession, were designed to function in sync with classic media and traditional distribution, and were meant to succeed via a high-volume supply chain infrastructure and a multi-year strategic plan. If all of this is over, it’s actually a good thing.
As a seasoned Marketeer – which means that I am not a Millennial, I agree that our Marketing job did change dramatically, mainly due to the advent of participatory media and the decline and fragmentation of traditional distribution. There is no such thing as local news anymore. Even the smallest Brands or some unknown start-ups can gain immediate global exposure thanks to a good idea, a distinctive product proposition (be it decent enough), and especially an extraordinary, entertaining and highly contagious communication strategy.
Guess what? I don’t miss the good old days. The hierarchy, the hyper-structured analysis, the gravitas, the pomp, the discipline, the tie every day, and the control of the old Mad Men days: all of that was an illusion. We never owned a Brand, we never had control. We were never in charge. That was all a farce, which could produce results only thanks to unilateral, classic media and a stiff, powerful distribution network, which forced consumers into the usual journey, the usual funnel, which in the end was fairly predictable and killed any innovation and testing. Everyone had to milk it, in order to survive. Capgemini (2017) shows that global innovation centers failed to deliver breakthrough innovation, and ultimately to change the innovation culture of large corporations. This is not simply the outcome of someone’s fault. Not entirely. This is also the byproduct of a structural inadequacy of blue chips. Today’s world needs participation, co-creation, relentless adjustments, and a flexible supply chain and strategy in the end. Brand Managers of the past are not even needed today. The old model had to fail, as there was no other alternative scenario. Dear Marketeers, and here I am talking to myself as well, success means loss, success means diving into a world of chaos, and success means service (‘experience’, in David Bruel’s jargon). We were kings, and we were in control. We are now the servants, if we want our Brands and our work to have any value. We serve our lovers, our communities and a larger purpose than just milking the cow. Don Draper is dead. Good riddance.
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David Bruel, Innovation Director EAME at Givaudan, is a passionate business developer, with a twenty-year career in innovation, new product development and business turnarounds, across FMCG & B2B. He is an expert in Marketing strategy, NPD, and international business. He is French, Italian, a bit Swedish, with his heart now in Switzerland.
Francesco Pagano, Vice President, EMEA Head of Portfolio of Licenses Brands at Fossil Group Europe, is passionate about craft brands, innovation, brand management, brand communication and international business. He is always up for irresistible product concepts, ultimate communication via integrated campaigns and great Italian food.