What can entrepreneurs learn about marketing from industry giants?18 May 2017 Category : Entrepreneurship
For entrepreneurs wanting to take their company into the big league, there’s much you can learn from those who have already made it. Whether you’re in tech, consumer goods, or media, you’re likely more than aware of the titans in your industry – and the size of their marketing budgets, that regularly hit the headlines.
But what should the entrepreneur looking to start their company in the UAE take away from the big players? Sure, your budget and reach may be leagues apart, but is there a way to relate what they do, to what you do, when it comes to marketing?
To answer these questions and more, let’s take a look at three key industries where there are a large number of startups rubbing shoulders with established companies. Just how much are the big boys spending – and what on? And most importantly, what insight can you take from their marketing strategy to improve your own?
Titans of technology – the dangers of sitting still
It may not come as a surprise that, according to the annual Forbes review, five of the top ten most valuable brands in the world are in the technology industry. What is surprising however is that the link between brand value and marketing spend isn’t very clear.
It may not come as a surprise that, according to the annual Forbes review, five of the top ten most valuable brands in the world are in the technology industry.
The most intriguing entry on the list is Apple. The tech giant takes the number one spot as the world’s most valuable brand in Forbes’ list but comes in with a relatively low marketing spend of just USD 1.8bn. Much of this outlay goes on adverts, something which Apple has always spent comparatively little on given its brand position. And it has worked – Apple has topped the list as the most valuable global brand for the past five years.
Supported by its loyal community of evangelists, the company’s position has always seemed set in stone, seemingly without needing a huge marketing budget. This looks set to change however. With iPhone sales on the decline, last year Apple reported falling revenues for the first time in 15 years – which experts believe has caused its brand value to fall by 27%.
For the up and coming entrepreneur, there is a lot to be gleaned from Apple’s current plight. There’s no doubt Apple are still a huge force to reckon with and just one successful product launch could reverse their current fortunes. But the message to take from this is clear: don’t get too comfortable.
Apple has long sat in a groove – releasing new versions of the same signature products at glitzy keynotes every year or two and watching sales go through the roof. Unfortunately, it seems in recent years that these new iterations of the same thing are no longer hitting the mark with their target audience. Then there’s the fact that rivals in the device space, such as Google and Samsung have very much caught up in terms of product design, usability and – most damagingly perhaps – brand awareness. Whatever the root cause, the fact is sales are falling and Apple have a problem to address.
So don’t fall into the same trap, never assume that because customers aren’t actively complaining, that your offering is fulfilling every one of their needs. Equally, just because you may be streets ahead of the competition now, don’t assume that you can sit still for a while – because they certainly won’t be. Keep in touch with your customers – if you know what they want, you know what to market to them.
Giants of CPG – the importance of knowing your customer
If we look specifically at advertising spend – arguably the lion’s share of most firm’s marketing budgets – there are three brands that lead the way overall: Pampers and Gillette, both with USD 8.3bn, and L’Oreal close behind with USD 8.2bn. Interestingly, these companies all sit within the consumer packaged goods (CPG) industry.
A look at marketing spend overall further highlights the might of the CPG sector. Deloitte’s 2017 CMO Survey found that marketing accounts for nearly one quarter of the total budget in CPG companies, the most in any industry.
But what are they spending it on? As you would expect, digital takes a huge share. Five years ago, digital accounted for only 7.1% of total spend. For 2017, it’s projected at nearly 20%. Shopper marketing is also growing in importance, almost doubling its share of spend in five years as the CPG industry appears to shift its focus from traditional marketing channels.
Five years ago, digital accounted for only 7.1% of total spend. For 2017, it’s projected at nearly 20%.
A great example of this approach to marketing – and a brand from which entrepreneurs can learn a lot – is Pampers. Pampers embody the key principle of any successful marketing strategy: know your customer. Pampers’ audience want to be engaged, they want their feedback heard and want to see products improved accordingly. Pampers knows this. That’s why it puts consumer insight at the centre of its brand strategy.
Pampers typifies the movement away from traditional broadcast-centric marketing into channels that provoke and inspire dialogue, such as digital and in-store campaigns. And clearly, it’s been a success: Pampers topped the Group XP Experience Index in 2016, an accolade indicating the best consumer brand experience in the world.
The Pampers approach to marketing perfectly highlights the fact that no two audiences are the same. A blanket approach might work to begin with but once you build a customer base, it’s time to start finding out what makes them tick. Keep in mind that marketing spend is not just about getting your message out there, a large part of it should be dedicated to deciding what that message should be.
Mammoths of media and comms – original ways of reaching your audience
The media and comms industry is spending more and more on marketing each year: the IAB Annual Report found an increase in communications marketing spend of almost two-thirds from 2004 to 2014. The same report also showed strong growth in internet and mobile advertising spend, particularly video and social, compared to a decrease in classified and display advertising.
Just like the CPG industry, media and comms businesses are moving away from traditional marketing channels and fully embracing the digital age. It should come as no surprise then that the vertical which dominates this industry, according to Deloitte’s 2017 Media and Entertainment Outlook, is video-on-demand. Services such as Netflix and Amazon Video are the epitome of user-centric products and, as Deloitte puts it, they place the ‘consumer in the driving seat.’
This is a trend that carries across from the industry’s products into how they market them. Consumers are now gravitating towards shorter, bitesize web content, and the line between media and marketing is becoming increasingly blurred. Both content and marketing are becoming more personalised – thanks to the exponential growth of behavioural analytics – and companies are working harder to align themselves to their consumers.
Netflix is the total embodiment of this approach. Despite doing little in the way of traditional marketing, Netflix won the award for AdWeek’s Marketer of the Year in 2016. Why? Because it has set itself apart by using smart analytics to really understand its consumer.
While Netflix’s spend may be relatively low – a reported total global advertising budget of around USD 714m in 2015 – the company does hit the mark in terms of targeting. Of course, Netflix is in the enviable position of having a raft of data on its customers by default – registration details and viewing habits, for example.
However, it is not only its use of analytics that makes the company stand out. Netflix’s marketing strategy is best described as atypical. Sure, it runs traditional TV ads but it’s the use of experiential marketing, virtual reality and live broadcasting that really catch the eye. Netflix is blurring the line between marketing and media – and reality too. In recent years, the company has promoted its flagship show Black Mirror by releasing the ‘Rate Me’ app which features in the series, and sent the internet into meltdown with its 2017 April Fool prank, Netflix Live.
There’s plenty to be taken here for the entrepreneur looking to reach their audience. Firstly, just like Pampers, Netflix’s success goes to show the power of knowing your customers. The more you know about them the better you can tailor your marketing to provoke an emotional reaction. But don’t worry if you don’t have access to the well of customer data at Netflix’s disposal, there is more that we can learn. One of the biggest take-homes here is to break the mould, particularly if you’re on a smaller budget. You may not be able to compete in the print or TV press, but viral videos, prank advertising, and flash mobs are great – and relatively cheap – ways to captivate your audience.
The more you know about your customers the better you can tailor your marketing to provoke an emotional reaction.
Learning from the big players
You don’t need to be able to match their budgets to learn from the marketing strategies of industry behemoths. The core messages are the same, whether you’re spending USD 1,000 or USD 1m, it starts with this: know your audience. Apple earned brand dominance for so many years, despite relatively low marketing spend, because it knew its customer. Pampers knows its customer. Netflix knows its customer. And they engage with them accordingly – be it through in-store demos, spoof TV shows or slick keynote speeches.
But remember, as Apple are arguably finding out, this is an on-going process. Don’t assume that your customer base isn’t going to shift and change over time. Of course it is, and your offering needs to do the same.
Marketing spend is not all glitz and glamour, TV ads and product launches. It’s customer surveys, sales analytics and feedback forms. Ultimately, your message comes from your market – so get to know your customer and the rest will follow.