The latest Ernst & Young Item Club Report signals 10 years of slow growth austerity in the UK market, quoting all the usual suspects including depressed wage growth coupled with rising inflation (the politicians’ solution to a flat market) with possible interest rate rises, shortage of credit, a further dip in confidence and rising commodity prices – all likely to make consumers even more cautious and savvy as the decade unfolds.
However, it is worth bearing in mind that all market indicators are averages, merely aggregating a combination of highs and lows by consumer expenditure, retail sales and supplier product performance.
In practice, there will be spectacular performers responding in so special a way to consumer need that the market will reward them with double-digit growth. Some will burn out, some will be found out, but deep down those with quality delivery of performance, positioned to optimise routes to consumer via a demonstrable value-for-money proposition that is better than the competition, will achieve sustainable growth.
In other words, consumer need has to be the main driver. If a company has brand and customer portfolios that are sufficiently flexible so it can anticipate and meet evolving demand, and has the determination to jettison redundant features without compromise, it should be possible to strip out cost more effectively than the competition. This means that a brand’s combination of Product, Price, Presentation and Place has to be maintained in a perfect match with consumer need, and be demonstrably better than alternatives available from competitors, in shops where the consumer expects to find them, within a category-context that meets shopper expectation.
So much for those fortunate enough to operate within an exciting new category…
But what if in the end you are left with ‘the same old stuff’? First, it is never the same old stuff, and even if it were, it should have been one of the first casualties of the current economic crisis.
In reality, this is one of the most dynamic market environments ever. Nothing is the same, in terms of consumers, markets, retailers and suppliers. The competitive-set is entirely different. In effect, selling and marketing is now about meeting new needs of ‘new’ consumers, shopping in different ways.
As far as channels are concerned, the same rules apply. For instance the high street is failing because the model is no longer appropriate and cannot survive in its current commercial circumstances. Instead in some cases it will morph into a means of enhancing the shopping experience like in the case of Apple stores, where tactile appetite will be stimulated and satisfied, leaving product purchase to be fulfilled online.
Meanwhile, any number of government surveys aimed at identifying root causes of terminal high street decline hopefully will not take too long to realise that upward-only rent reviews, empty-shop taxes, inadequate or over-priced parking will not help…
In the new reality we have to rediscover our brands from the perspective of a savvy consumer as if we were launching a new product in an entirely new market. Ansoff still applies in that our most valuable resource are current users of our current products, the difference being that our brand is now ‘new’, therefore we have to rebuild our base of current users, ‘rediscovering’ their needs, re-positioning our brands to fit, and helping them to re-discover us.
The focus then becomes a process of reassessing consumer shopping habits and facilitating availability. We need to ensure that the brand is special, has a distinctive and desirable competitive-set in order to lock in current users.
Only then can we re-introduce current users to other parts of our portfolio, new products from their perspective. If, in spite of our efforts, a new product is not a perfect fit, speedy withdrawal and replacement with something better can still optimise the investment.
The next target has to be a search for new consumers that have similar profiles to existing users. We then try to sell them our most successful products, the logic being that if our users of similar profile find the brand satisfactory, so consumers of similar type are likely to feel the same about our successful products.
Finally, for some extra excitement and risk, it may be tempting to try to sell entirely new products to entirely new consumers, people who do not know us, do not know our products and anyway are too busy surviving…
