An effective brand strategy will help you define your market position, understand customers better and create revenue growth. However, are you torn between performance marketing and brand building? Wanting to invest in your brand’s future but also to secure the bottom line and ROI? In either case, the struggle is real – and happens on a daily basis.
To help you stay ahead of the branding game, we select valuable insights from the best experts out there who can shed a light on modern marketing challenges. Such an expert is the brilliant Mary Kyriakidi whom brand consultant and virtual marketing professor Mark Ritson called “one of Kantar’s greatest weapons”, adding: “they need to clone her”. As Kantar’s Global Thought Leader, she recently presented their latest guide named Modern Marketing Dilemmas. It’s a thought-provoking and evidence-based read, where industry experts offer solutions to the day-to-day challenges marketers face to help them protect their margins. Paired with Mary Kyriakidi’s practical insights shared in the related webinar, it provides a more balanced view on the dilemmas backed with empirically proven data and actionable tips to help you strengthen your brand’s intangible perceptions in the mind of consumers.
Intrigued? Check out Part I of our selection of key takeaways from Kantar’s guide and webinar:
- The clash of performance marketing (short-term results) and brand building (long-term results). According to Kantar, a radical view that persists in our industry is that your Marketing ROI is all you need to measure marketing effectiveness. It’s a very easy metric to calculate and you can use it to justify your expenses as a marketer in the boardroom. Called „a silly metric to some degree” by Mark Ritson and “a stupid metric” by Byron Sharp, ROI is frequently criticised by the marketing academic community as, when used on its own, it can entrap you into a biased measurement system. According to Kantar, the top argument against Marketing ROI is that it excludes longer-term results and creates a fallacy of growth that comes at the expense of building long-term brand profitability.
To truly get the most out of your marketing, you should be building up your equity in the minds of your consumers and customers. There is inalienable evidence that unbalanced brands won’t win in the long term. Multiple Kantar studies reveal that if marketing mix allocation consistently favours performance marketing, baseline volume sales will steadily weaken. Similarly, data from Kantar BrandZ forewarns of restricted growth when brand building declines. Between 2019 and 2021, brands with growing equity increased their brand value by 72% compared to just a 20% increase for brands with declining brand equity.
The solution? Go beyond the traditional marketing mix models and measure not only the direct, but also the indirect impact, i.e., the equity impact of marketing on sales. To get the balance right, use analytics – a holistic framework that measures and optimizes effectiveness across all marketing channels.
- The role of brand in the consumer decision journey. Consumers and consumer journeys are becoming more and more complex. Therefore, marketers are facing the following dilemma: Does mental or physical availability trigger people’s choice? Should we be concentrating on making our brand easier to find, or should we be focusing on making it easier to the mind? The vast majority of sales executives tend to believe that everything we do needs to have an impact right now. According to them, as cash flow is the life blood of business, let’s put all our effort on customer activation because this will help us reengage our customers. In other words, let’s forget about the future – we need sales now.
But others might believe that actually, we should be focusing all of our efforts onto the future. We should be strengthening our brand’s equity now and not be bothered too much about the present and the sales that we are getting now; we should be taking care of the long term and let the short term take care of itself.
To find balance, according to Kantar, we need to consider what brand value is and how we can you grow it. A brand’s value is compatible with its brand equity, the power in the mind of the consumer that is revealed in their choices. A brand’s ‘easy to mind’ and ‘easy to find’ qualities are co-dependent and influence one another throughout the consumer decision process. Given a choice, people will pick the brand that comes to their mind fluently; an action activated by what we call mental availability.
The solution? Kantar has found that brands that succeed in the three facets of the consumer decision journey (Experience, Equity, Activation) realise a phenomenal 46% growth. Maximising the customer retention (experience) leads to +7% growth; pre-disposing new customers to buy a brand in the future (equity) results in +27% growth, and capturing shoppers that might or might not have been pre-disposed to a brand ‘Activation’ generates up to 12% growth.
- Is brand differentiation an effective way to reduce customer price sensitivity? Arguably, distinctiveness and knowing how to answer our clients’ frequently asked question: ‘how can I make my brand more distinctive?’, is one of the greatest challenges for brands. According to Professor Byron Sharp in ‘How Brands Grow’, possibly the most popular marketing book in circulation, if a brand is salient, distinct and present at the category entry points – the moment a consumer enters a category, sales and growth will follow. Differentiation, on the other hand, is the intended brand image that you, as a marketer, hope to achieve in the mind of the consumer through positioning. Brand differentiation offers an opportunity for brands to go beyond the borders of distinctiveness, to find product-based, experience-based, even emotionally based differences that break through consumers’ expectations of parity.
Kantar analysed 40,000 brands in their Kantar BrandZ database and found a very strong relationship between increasing relative uniqueness and a consumer’s willingness to pay more for a brand. More than boosting trial and share, achieving a differentiated brand position can lower customer price sensitivity, yield healthy margins and increase profitability. As per Mark Ritson, distinctiveness and differentiation have “equal weighting”, working to achieve and improve marketing effectiveness. This combination of positioning and codes is the “important dual engine for brand success”, in his opinion.
The solution? According to Kantar, good branding is about a well-integrated story with distinctive branding coming at the most memorable moment. A differentiated brand can desensitise its customers to higher prices. And just like that, you are no longer fighting against competitors on price and consumers feel that paying more for your product or service is justified.
- Price increase or price promotions? We are facing the highest inflation over the last 40 years – a challenging time for marketers. According to Kantar, a focus on growth alone is not enough and can even be dangerous. Pricing and profitability are unquestionably linked. It has been almost 20 years since McKinsey published evidence that a price increase of 1% could generate an 8% increase in operating profits. Seven years later, foremost pricing expert Rafi Mohammed revisited the question in his book 1% Windfall, in which he argued that profitability would shoot up by more than 10%. Not many want to pull it though: according to surveys, 3 in 4 CMOs question whether pricing is even part of their remit and many succumb to the lures of price promotion. Although the very essence of marketing is to sell more stuff to a greater number of people at higher prices, marketers often resort to price promotions. Perilous downsides will come from it: firstly, price promotions are often a magnate for existing customers – half of them would have bought your product anyway (at full price) and secondly, your competitors will follow suit with a similar sales promotion act. The temptation to do it again the following year just to hit your sales targets will likely land you in a price war, or a ‘spiral of doom’ cycle, and decimate your profits.
The solution? Price is one of the 4Ps of marketing and well within a marketer’s remit. It has the greatest impact on profitability. According to Mark Ritson, pricing is back on the agenda big time. Kantar BrandZ database reveals that Consumers are willing to pay 2X more for brands that have high Pricing Power compared with those lacking it. Therefore, a brand’s greatest strength is its ability to justify its price – its Pricing Power – and should be seen as the first line of defence against rising prices and inflation. According to Mary Kyriakidi, pricing is just a muscle that we shouldn’t neglect building, more so in prolonged inflationary conditions. As this muscle gets stronger, it yields healthier margins and better-shaped profits.
As per Kantar, ancient Greeks strongly believed that you should live your life choosing the mean (average) and avoid the extremes on either side, as much as possible. Because having ‘everything in moderation’ produces harmony, goodness and beauty. In marketing specifically, this leniency generates greater returns in the future. To learn further valuable insights, stay tuned for Part II of the modern marketing dilemmas and their balanced solutions.
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