Driving Growth in the Digital Age Insights From the European CMO Conference

 

Driving growth in the digital age: Insights from the European CMO Conference Rick Russell Warc Exclusive October 2011

 

 

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Driving growth in the digital age: Insights from the European CMO Conference Rick Russell Warc Exclusive October 2011

 

Driving growth in the digital age: Insights from the European CMO Conference Rick Russell Warc Presentations at The 4th European CMO Conference in Zurich, Switzerland addressed a highly relevant topic for the audience of senior client-side marketers attending the two-day event: driving growth in the digital age. Reebok: the fun of repositioning The opening keynote from Richard Prenderville, Head of Global Brand Marketing at Reebok, explained the challenges faced by Reebok prior to its acquisition by adidas in 2006, and the strategy the firm had since adopted under its new owners. In the early to mid-2000s, the Reebok brand was confused and diluted by many different designs. Its products were often oversold and devalued by promotional tools such as discounting in retail outlets. Reebok was perceived as a "women's" fitness  brand; moreover, it was even losing both its brand equity and number one position in the women's fitness market. Responding to these problems, Reebok chased after the men's market and tried to offer a product for all sports. Prenderville  and his team focused on the core strengths of the brand and set about associating Reebok with exercise being "fun". This differentiated the brand from Nike's "win at all costs" positioning. The brand used humour and a degree of irreverence to convey its new core product proposition. It also used technological innovation and creativity in design to build its global brand status. The transformation used the 'Ree' stem to recapture its market position. 'Ree-think', 'Ree-sport' and 'Ree-joy' were concepts in all advertising to make the target audience think again about the brand and how exercise should be fun. Prenderville's team positioned the product 'Ree-volution' to 'Ree-tone' and 'Ree-shape' your body and introduced new product technology for men with 'Ree-zig', a revolutionary shoe technology for men to improve their athleticism, creating trainers that provided 'an energy drink for your feet'. Prenderville also took a new approach to the use of celebrity in advertising and promotion by introducing Swizz Beatz, a lesser-known, up-and-coming rapper and producer, with interests in music, fashion and philanthropy, to crowdsource the brand, which gained 100,000 social media fans on the first day of an integrated advertising campaign. He stressed throughout his presentation the importance of aligning the product with all marketing efforts. Its advertising was Downloaded from warc.com

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designed to display optimism, resilience, confidence and fun: characteristics associated with the target audience. The repositioning work took years, with the physical rebrand itself taking 24 months alone to align all the signage. The attitude of women was central to its success, and its slogan, "Every woman has the right to a great butt", highlighted its cheeky and irreverent style. But the net result was that 81% of women and 78% of men were interested in the brand and its products, representing a strong turnaround in market sentiment. Read Reebok Easytone, a case study from the Warc Prize for Asian Strategy, for an example of Reebok's marketing in India. Tesla Motors: automotive innovation Tesla Motors is an automotive start-up currently offering just one electric car to the market: the Roadster. But according to George Blankenship, the firm's VP Worldwide Sales and Ownership Experience, Tesla wants to change the world. The company began life in 2003 with five employees and the lofty ambition to rethink car manufacturing. As of September 2011, it had 1,400 employees and a market capitalisation of $2.5bn. Its focus is on new technology and a whole new customer experience. Tesla designs, manufactures, sells and services its clients. It has no franchises, instead opting to sell direct and manage the full client life-cycle. The company is re-engineering the customer perception of car manufacturing by offering a high-performance electric car and a high-performance customer experience designed to be the envy of the industry. Its mission is simply to deliver the most innovative cars in the world to as many people as possible. Tesla clearly draws inspiration from the product innovation of Apple, and Blankenship spent several years with the company. The premium pricing for its innovative initial product may be prohibitive to the mass market at the moment, but Tesla plans to  roll out its mid-range family sedan next year. Bayer HealthCare Pharmaceuticals: Branding in a generic market As the focus changed from innovation back to global brand marketing, Luca Cripps, Country Head for Bayer HealthCare Pharmaceuticals, Croatia, presented a different challenge: the evolution in healthcare provision, as blockbuster, mega-brand drugs lose patent protection and fall prey to more affordable generic alternatives. In fact, Cripps said that $85bn of drugs revenue will lose its patent protection over the next five years, leaving it down to the marketing skill of individual pharmaceutical companies to preserve the value of their branded drugs. Inevitably, it's impossible to compete effectively forever against cheaper, 'me-too' incarnations and the large pharma houses are now acquiring the generic drug companies or forming joint ventures to preserve revenues as much as possible. Equally, government policies are pushing healthcare outside the hospital and functional foods like Danacol – high-margin foods offering demonstrable health benefits – will be the likely drivers of future success for these organisations. Digital innovation is also changing the industry. For example, diagnostic results are being shared between hospitals, health seminars are available through YouTube and wireless monitoring of medical devices are all improving healthcare provision around the world. EuroDisney: Customer growth from moments of digital magic

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Cripps's challenges are very different from those of Federico J. Gonzales, Senior VP Marketing and Sales, EuroDisney Destinations, EMEA. The sheer size and scale of the EuroDisney operation is quite staggering. Gonzales, who previously worked for Procter & Gamble, oversees some 85 restaurants, two Parks, seven hotels, eight associated hotels, two conference centres, 55 stores and one golf course. They attract 16 million visitors and provide 30 million meals per year. They represent the 4th biggest tour operator and 3rd largest French restaurant generating 6% of French tourism revenues. In building and developing the brand, Gonzales's focus has been on creating and maintaining a culture of excellence through the experience. Employees are part of the 'cast' and each visitor is a 'guest'. There is a focus on every detail, and the company aims to exceed expectations and create a total experience through four quality standards: safety, courtesy, show and efficiency. The experience is enhanced by innovations such as FastPasses and iPhone tips showing waiting times for attractions. To increase visitor numbers, which had been static over the seven years to 2007, Disney created celebrations such as the 15th  Anniversary and Mickey's Magical Party. It also eliminated obstacles to growth by, for example, offering free entry to kids under seven. Digital plays a very important role in the firm's marketing strategy. Facebook has disrupted traditional channels by offering a wide reach and the ability to re-contact and engage directly with the target market. Disney is able to contact guests frequently and at much lower cost. The company has segmented its market into 'lookers' and 'bookers' and differentiated the web experience for each visitor, based on where they are in the purchase process. As a result, engagement levels are now much higher, with Disney able to create tailored communications by uploading 'magical moments' and spreading them virally, without the pressure to ostensibly 'sell' with every communication. Anecdotally, Gonzales explained how the firm's reach is now ten times what it was ten years ago thanks to the development of digital technology. Havaianas: Creativity revives and globalises a Brazilian brand The story of Havaianas, the Brazilian flip flop company, is a story of how creative excellence can transform a brand's value proposition and market positioning. According to its CMO, Rui Porto, Havaianas traditionally sold low-cost flip flops as a commodity offering. By 1988, volume sales and profitability started to fall at a rate which, when extrapolated, suggested the business would disappear by 2005. Porto responded by repositioning the product and changing its value proposition. Havaianas flip flops became a desirable fashion accessory brand available in many different shapes, sizes and colours. The fundamental proposition of a rubber flip flop endured but its image was transformed. Where previously the product was sold in local supermarkets, it was now a fashion accessory available through Harrods in the UK and sold in Soho in New York. It was a captivating exposition of the transformation of a brand and an organisation. It equally facilitated brand extensions into bags and other accessories. The brand was exported to many overseas markets, proving hugely successful in Australia as a secondary market. Porto is now looking to the US market as the next target market for growth. Read Havaianas – Identity, a case study from the 2011 Cannes Creative Effectiveness Lions, for more on the Havaianas story.

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McKinsey: Consumer decision making in the digital world Day two opened with Pater Dahlstrom, Senior Partner of McKinsey's EMEA Digital Marketing Practice assessing the hugely disruptive effect that digital media is having on traditional business. There are 2.5bn internet users in the world (1bn of which are in Asia) and 61% of access to the internet is via the mobile web. As a result, opportunities and threats abound. Tesco, for example, is testing shopping with customers using mobile phones and QR codes to select goods, combining the in-store experience with that of home delivery. Similarly, new telcos are offering free SMS, undermining elements of the business models established players. In the new digital age, crowdsourcing for customer insights can create invaluable means of differentiation – such as McDonald's creation of new burgers or Starbucks' development of new drinks. But social media can both "engage or enrage," Dahlstrom said.  Forexample, poor customer service led to the humiliation of United Airlines, when a US music group published  the song United Breaks Guitars to the web. Dahlstrom shared insights into the difference between internet use across different age groups with "grey gold" sought from older online users to generate new sales. Price comparison sites make it harder to hide price differences by product, geography and market. Dahlstrom talked about the impact of automated interactions, the use of metrics, a talent gap and organisational structures in a digital age. All provide potential disruptive influences to business models and it is therefore even more important to be crystal clear about your customer offering and the many pitfalls that the digital age may highlight. BWP: Using PxIxTxA to build a brand AJ van Triest, CMO for BWP, a joint venture between Coca-Cola and Nestle, discussed how the company was driving growth globally through innovation and connecting with global customers. Triest's challenge was to increase consumption of an iced tea product, Nestea, against a backdrop of an ageing target market. Triest needed to connect both young and older consumers to the brand, increase consumption from existing purchasers and attract new customers to the franchise. Iced tea, he said, is the fastest growing drink category in the world, yet the product was still seen as an alternative in the market. To be successful, the product needed to be positioned as aspirational. The campaign used comedy in its advertising to make people look and think differently about the brand. It succeeded in increasing consumption, but van Triest drew attention to the need to apply the simple model of PxIxTxA to succeed. (PxIxTxA is a marketing methodology whereby practitioners grow a brand by measuring the size of the population [target mkt], the incidence of sales, the number of transactions [times bought] and the amount [volume] sold.) These principles and tenets of marketing are, Triest said, just as relevant in the digital age as they were in days of yore. EffectiveBrands: Winning global brands A double act of Simon Clift, consultant and former CMO of Unilever, and Marc de Swaan Arons, Co-Founder and Chairman of EffectiveBrands, walked delegates through the challenge of how to be global and lead a global brand. They looked at what  keeps marketers awake, the characteristics of winning brands and how to make a global brand work effectively. They introduced the session by highlighting how they had created a benchmark survey of 250 global brands to measure the effectiveness of global brands in general. Their research found that 80% of such brands fear they are not leveraging the

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global brand as well as they could. Moreover, their study confirmed that it remains a huge challenge to clarify the roles and responsibilities between local and global managers when managing a global brand. Winning global brands, they said, share a universal truth, purposeful positioning and a total brand experience. Universal insights need local execution to be successful and not all brand themes and concepts travel well around the world. Care is needed to preserve the local culture whilst embracing the global brand benefits of the universal truth. Purposeful positioning involves the selection and marketing of key brand tenets but, in the digital age, consumers are in control of the medium. For example, Dove's attempts to position itself as a caring, environmentally-friendly brand through its Self-Esteem Fund have been parodied by Greenpeace for the use of palm oil in its products which were still extracted in a non-sustainable way. To be successful, Clift and de Swaan Arons suggested that brands must do five things: connect, inspire, focus on aligned  KPIs, organise (the role of marketing) and build the category and brand's emergence. It is no mean feat to achieve this with a  global team operating in local markets without diminishing a brand's value. But, to succeed, all five elements must be achieved. eBay: Managing the marketing mix Change was a common theme running through the conference. And Alexander von Schirmeister, VP of Marketing, Operations and Advertising, eBay Europe, covered many of them in his presentation on managing the modern marketing mix. For example, the possibilities offered by geo-location tagging, QR codes and omni-channel rather than merely integrated-channel management all present the marketing discipline as one of both art and science. To thrive, said Schirmeister, modern organisations need to evolve and embrace digital, social and mobile as very different functions of the modern marketing department. And innovation is the only way to stay on top with your brand. Strategic marketing needs to embrace insights and campaign development across all channels and the consequence of this great diversity is the emergence of a new breed of CMO. Simon Clift suggested that the role of CMO may well transform into something more social. It was clear from von Schirmeister's  presentation that the multifaceted, multi-skilled requirements of a modern marketing function are very different from at any time in the past and that the need to embrace all these changes is at the very heart of a successful marketing department. Panel: Cult brands Michael Conrad, Berlin School for Creative Leadership, hosted a panel session on cult brands with Peter Kowalsky, CEO, Bionade; Hanns-Peter Cohn, CEO, Vitra; and Rui Porto, CMO, Havaianas. The group looked at how to establish and market a brand to become a cult success beyond its own borders. The common themes that cropped up from all the panellists were that brands need to be innovative, have a distinct personality and share a common focus.  Building a brand in a global  market requires a consistency of approach and dedication of the people working within the brand organisation to constantly  deliver the quality of brand to market at all times. In conclusion One prevailing theme emerged from the conference presentations: marketers must innovate and adapt in the digital age, and, if they fail to do this, they risk extinction. There is no hiding from the potential threats to those who fail to adhere to the latest rules of marketing around the top table. Downloaded from warc.com

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About the Author Rick Russell is Product Development Director at Warc.

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