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RETAIL
MARKETING 2010
While the
first signals of recovering the damages of the global economic
turbulence have been arrived to us during this year, year 2010
is expected to be the one which will be determinant of the speed
and momentum for the retail market recovery. During next year,
we will get the answers fro two questions: When the upward
movement in markets will gain momentum? Are we going to see the
old good days in the markets? Explanations made on the subject
include many different recovery shapes for the markets. The
latest consensus is that the recovery will take some more time
by proceeding slowly and it is not expected to see the old
brilliant days in the market. The situation means the following:
We are about to enter to a new period and now it is halftime of
the game. Although it is expected to have more recovered and
vivid markets compared to the last two years, at the same time
the signs show that everything will be different, complex and
more difficult. So when the half time will start? In this
perspective, year 2010 is the half time where the dynamics of
the new period will take shape. Consequently, year 2010 is the
period which should be used by retail companies to make
preparations, to restructure and make the right investments. If
we don’t face turmoil like in the movie named “2012”, 2010 and
following years will bring different dynamics and more
competitive structure in the retail market. Those companies, who
won’t be ready for the new market conditions, will probably face
the judgment day. So, how the retail companies should use the
half time to be prepared for the new period?
The first step to success: Marketing Management and Manager 2.0
Human factor
is still an important asset for all companies despite the
growing penetration of technology and automated systems in the
business life. Especially when we talk about retail industry,
due to the nature of the business, human factor becomes more
important for the companies. The need for human vision,
understanding, perspective and approach of the retail companies
in terms of marketing, cannot be created by technology and
automation but can be only supported. Consequently, human factor
and organization will be two of the leading assets for the
companies in the coming years. These important assets have to be
restructured as the keys to success in the new period. Year 2010
is expected to provide robust opportunities to companies in
terms of human resources and organization. Increasing
unemployment and unsatisfied professionals, caused to job
seeking activities. Consequently, there are vast opportunities
for the companies to hire qualified professional with lower
costs. So, those companies who are aware of what they need will
be able to hire these professionals effectively and efficiently.
What are the important points that should be taken into
consideration while hiring the marketing professionals? What are
the characteristics of marketing manager 2.0? Before answering
these questions, it will be useful first to summarize the job
description of
 marketing
manager and then to explain the characteristics fitting to this
job description. Market conditions become more complex,
difficult to control and more competitive day by day. One of the
most important prerequisite of being successful in these markets
is to restructure the marketing function parallel to the market
realities. The first step should be taken in order to accomplish
this task, is to redefine the responsibilities of the marketing
manager in order to fit to the tight control and sophisticated
skill requirements of the markets. In this perspective, there is
a need to enlarge the nucleus structure of marketing function
and to create more centralized and umbrella shape (multi tasking
and area responsibility) structure. This structure, which
started to be applied in large corporations, will soon become an
industry standard in retailing. The reason is clear. Based on
the new market structure, marketing function requires being
active in all dimensions of the retail operation where customer
(internal and external) contacts the company. Those companies,
which keep conventional and narrow focused marketing functions,
will suffer from ineffective marketing function and consequently
poor bottom line results. This is why; it is vital to establish
a marketing function and management with enlarged responsibility
area and extended authority. This structure should be accepted
as an industry standard independent from the size of the
companies.
Chief Marketing Officer (CMO) as the
control and decision authority
After we
stated that the marketing function should be restructured, it
will be useful to explain the main job description of CMO. With
his enlarged responsibility area and extended authority, the CMO
should be directly reporting to CEO. Contemporary applications
are the same. CMO, under an umbrella structure, should be the
control and decision authority for all kind of strategy
formulation and tactical moves in operations performed to
fulfill the needs and wants of customers. The operations which
are in this scope are as follows:
-
The
determination, planning, control and result monitoring of
market, brand and communication strategies in conjunction
with senior management,
-
The
strategic planning of all product/service categories and
controlling and monitoring of all tactical moves supporting
the above mentioned strategic plans,
-
The
planning, execution controlling and result monitoring of all
corporate and marketing communication activities (agency
relations included),
-
Strategic
planning, execution control and performance monitoring of
all distribution channels and customer contact points,
-
The
planning, execution control and performance monitoring of
strategic, operational and analytic customer relationship
management activities,
The important
point has to be stressed here is that CMO should be the control
and decision authority rather than an execution mechanism. In
practice, all the functions which are mentioned above are
performed by different divisions within the organization. In
this perspective, the main function of CMO should be to perform
as an authority above all divisions and to provide effective and
efficient execution of the functions parallel to the corporate
strategy. After the explanation of the new structure of
marketing function and the job description of CMO who is
responsible for the execution of function, it will be useful to
explain briefly the characteristics of professionals who may be
the candidates for CMO position.
Marketing Manager 2.0: Analytical like “İndigo”,
creative like “Crystal”!
The first step
to take for the success in today’s markets is to bring together
the right organization and human force. After the explanation of
required organizational characteristics and CMO job description,
it is now useful to explain what should be the characteristics
of CMO? Changing organizational structure and new job
description of marketing managers require different and more
qualified characteristics for professionals who will be the
candidates for CMO position. It will be useful to analyze the
characteristic requirements in three parts-professional,
personal and psychological characteristics.
If we analyze
the requirements from professional characteristics perspective,
it is obvious that because of the control and decision making
tasks in more than one organizational function, new CMO’s should
have enough professional experience and knowledge on these
functions. In other words, new CMO’s should have enough
professional capabilities in order to be a decision and control
authority in strategic planning, brand management, communication
management, three types (strategic, operational and analytic)
CRM and distribution network management. When we look at the
responsibility areas we listed above, it is obvious that we need
professionals holding many characteristics at once to handle the
decision making and control functions required. Required
characteristics show that candidate CMO’s should efficiently use
both left and right brain functions at the same time. This case
directs us to the professionals having combined outstanding
characteristics of “Indigo” and “Crystal” children. It will be
useful explaining the above mentioned terms in order to inform
those readers who have no idea about their meaning or to refresh
the memories of those who are familiar to these terms. Indigo is
 the
term used to describe those children who generally born at the
end of 1970’s and show some outstanding psychological
characteristics. Among those characteristics, strong analytical
skills and differentiated ideas can be listed. Having these
characteristics, Indigo children can be classified as left brain
people. On the other hand, crystal children, show similar
outstanding characteristics like Indigo’s and generally they
were born after 1995. Among their characteristics, extreme
creativity and strong empathy are the leading ones. They are
also known as having strong social relations and charismatic
personality. Consequently, crystal children can be regarded as
right brain people. The multi task obligation of CMO’s requires
them to have both Indigo and Crystal children characteristics
such as having an analytical and at the same time creative brain
functions. Customer intelligence (data and analytical analysis)
is defined as the key success factor in today’s modern retail
business. This factor, which includes left brain activities,
requires CMO’s to have enough analytical skills to perform as a
decision making and control authority. On the other hand, it is
obvious that innovation is also regarded as the key
differentiation and success factor in retail business. In this
perspective, CMO’s should also have a creative ability which is
a right brain function.
Another
important characteristic is the empathetically advanced skills
which CMO’s should hold. The two points which this
characteristic is important can be classified as internal and
external relations. Currently emotional intelligence and empathy
are the two most important factors which play a role in the
success of relationships between staff, manager and board of
directors. Efficient internal communication is required for
mutual understanding and the ability to analyze the expectations
and results within the parties. This is why CMO’s should have
advanced empathetically advanced skills in order to have
synchronized mindsets. Another point which requires strong
empathy is the management of external relations. Especially,
when we consider the successful management of customer
relations, we are talking about the need of CMO’s with no-gender
mindset, strong empathy skills and ability to effectively
analyze, estimate and understand the needs and wants of customer
segment.
As a result,
in order to be successful in the markets after 2010, the first
step which should be taken by retail companies is to complete
the above mentioned reforms in organization and human resources.
All retail companies should see the marketing management
(marketing management 2.0) extended to a macro level and hiring
of CMO’s who are capable to execute this function as the first
two steps to success in post-crisis times.
The second step to success: Right actions!
Yes. In order
to be successful we need to take the right actions at the right
time. This is why we used “Right Actions” message as the second
step to success. We already stated that 2010 will be a
transition year and it is the half time between the two periods.
This is why companies should take the advantage of the half time
at maximum. It will be right to explain the strategic and
tactical actions have to taken in three parts. These are current
customer base, target and third wave customers.
Right Action 1: To be as tasteful as
summerhouse restaurant!
There are some
places, places which you feel happy when you’re in. The
emotional value you get may be invaluable when you’re there.
When I go to that restaurant in my old summerhouse place, I fell
unconditionally happy. There is no any high Standard of the
restaurant without the taste of the meat ball. To be and spend
some time there is invaluable. As all of you will easily catch
the reason, the reason of the happiness is the customer
experience. Which experience? It is the experience of being with
old childhood friends, feeling peace and having delicious food.
These are the moments when old childhood days flashed back and
have been lived once more. Geçmişin güzel hatıralarının göz
önüne geldiği anlar ve tekrar yaşanan çocukluk zamanı. This
summer house restaurant creates an invaluable customer
experience by providing the best total value which even many
outstanding places in modern city cannot. The benefit of this
experience for the restaurant is unconditional customer loyalty
(Actually this experience is mostly created by the advantage of
the location so the restaurant has no role at all in this
experience. The restaurant explained as the case study because
it is a good example of how a total experience consisted of
logical and emotional dimensions can be formed in consumers’
mind).
We don’t need
explain the customer experience subject in detail where there
are lots of books and articles on the subject. In opposition
with the general belief, human brain does not take all decisions
on a rational basis. In contrary, our brain can process
logically only 5 % of the data received / exposed in a second.
The rest of the data which is 95 % is handled in irrational
basis with reflex type behavior. In other words, human brain let
us the first behave and then rationalize our behaviors.
Especially, reflex based behavior is more common than rational
behavior in low involvement products or services. This means
that if there is no disturbing situation of the status quo,
consumers keep going on reflex based behavior. This is why
customer experience is much important in order to retain the
existing customers. Customer experience can be created in
different types on the basis of activity type and conditions.
The main rule is to try to code the brand into the irrational
part of consumer brain rather than the
 rational
one. For example, in an academic study which we conducted about
Starbucks, despite the fact that it was a new brand in Turkey,
the research results showed that the “Starbucks Experience “has
been created on Turkish consumers. Starting from coffee taste
and smell in the stores, to the store environment and high
quality service, Starbucks was creating a total customer
experience in Turkey. Actually, this result is known in many
countries when we talk about Starbucks and it is the main reason
behind the global success of the brand. In the new period, the
only way to retain the customers and to have the unconditional
customer loyalty potion is to create a customer experience model
consistent with the activity type. It is expected that the
customer experience will evolve from being a proactive
differentiation strategy to an industry standard and obligation.
Retail
companies should start to think and take actions regarding the
creation of customer experience before they start to face
increasing churn rates. When companies to deal with the creation
of such experiences, they should focus on the determination of
factors which will satisfy the customers both rationally and
emotionally. In addition, these factors should be used and
communicated in all contact points with the customer.
Right Action 2: Social brand is the only
solution!
It is expected
for ecological, health and social life problems, which increase
their share in customer mind, to play much important roles in
consumers’ purchase decision equations. Moreover, it is expected
for the consumers to behave much more logical, selective and
careful in their purchase decisions. Consequently, consumers
will start to think social consequences of their decisions too
when they make a purchase decision. The social reaction towards
GM foods in Turkey is a good example on the new trend. The
problems in terms of ecology, health and social life will start
to effect more deeply the consumer decision making. Latest
research results also support this estimation. A recent research
conducted by Euro RSCG shows that 82 % of American and European
consumers believe that companies should contribute to the
society and social causes. In the same research, 74 % of
consumers stated that companies have the same social
responsibility as government has. The picture is quiet clear. As
we stressed out in your previous articles, the key success
factors in the new period is the complete the transition and
advancement from customer relations management (CRM) perspective
to social relations management (SRM) perspective. The pressure
for social contribution will be increasing day by day and those
companies who will and show their social motivation will gain
competitive advantage.
The right way
to show and code the social motivation and human face of the
company into the brain of the consumers is to use the right
tactical tools and communicate these actions to the consumers.
If we call these actions as “Social motivation based marketing”,
we can list the two important activities within these group as
cause related marketing and sponsorships. We already made our
explanations about these two types of activities in our previous
articles. Cause related marketing activities are good tools to
increase social motivation perception of consumers and to
suppress the commercial motivation perceptions. With these types
of activities, companies should allocate a proportion of their
income to a cause and in return should increase the social
motivation perception of consumers. One of the good examples on
the subject is the campaign executed by Toys”R”Us. The
company, which is one of the biggest chain of toy stores,
started a successful campaign which combines a cause related
activities with the social media usage. The brand donates 1 $
to their charity fund-which sends toys to children who need-in
the name of each new member subscribed to their Facebook fun
page. It is expected that this successful campaign will
increase the social motivation perception about the brand.
The second
important tool of social motivation based marketing activities,
which should be used heavily, is the sponsorship programs.
Sponsorship activities are good tolls to reach efficiently to
the target media especially when the traditional media is
dominated by the competitors and there are budget restraints. In
the new period, this tool will have another important role in
the communication activities and will also help to increase the
social motivation perception of the brand on target consumers. It
is better to repeat once more the statements which we made about
sponsorships in our previous articles. In the context of
empowering social motivation perceptions, the sponsorship of non-profit
organizations and social events are expected to create higher
value for the company than being the sponsor of commercial
events or organizations. In addition to this, sponsorship
activities should be leveraged via other communication
activities in order to get better returns on this investment. In
the second place there are donations which are more concentrated
indicators of social motivation for a company. These are also
expected to create and boost the perception of social value
creation of companies as it is in sponsorship case. The
important point which should be taken into account is to plan
these activities with the social communication contribution. The
difference of communication activities in donation activities is
that these activities require reversed communication sequence
which means the beneficiary party to which donation is made
should make the communication of such donation to the social
community. This reactive structure of communication is expected
to increase the positive effects of such donation activities.
In addition to
the social motivation based marketing activities, companies may
plan also social responsibility projects which are also expected
to increase the social motivation perception towards the brand.
These types of projects mainly include the organization of
contributions to the society to improve social, economic and
ecological conditions. Among the examples which we can give from
Turkey, the foundation of Coca Cola-Contribution to Life- and
Turkcell’s- Volunteers
of Turkcell- can be listed in the first place. According to the
information taken in the press conference of Coca Cola company,
the foundation plans to contribute around 5 million TL (around
3.75 million $) in 2009 and 2010 for projects which target to
improve social and environmental conditions. Turkcell has also
successful activities on this subject. The brand, which started
many projects from sports to education and from technology to
employment, especially increased the social motivation
perception with the education Project called “Kardelenler”. The
important thing here is that, all these social motivated
marketing campaigns and / or social responsibility projects can
be planned, organized and executed in all types of companies
independently from the scale and budget of it. In other words,
whatever the scale (market leader, player in the market, new
entrant to the market) of the company is, they can plan and
execute such activities according to their budgets. At this
point, the critical factor which will increase the social
motivation perception towards the brand is how the activities
are communicated and perceived rather than the size of the
activities. So, the project, which will be prepared effectively,
should be bought-in, supported and perceived as sincere by
target segment. Whatever the size and scope of the project,
those companies who create the above mentioned customer
reactions, will benefit from these activities. There are two
invaluable communication tools in the hands of all companies
independent from their sizes and positions in the market:
Social media and their human resources. When social media
communication has been planned correctly and company staff
became a part of the socially motivated company culture, than it
will be easier for the companies to realize their targets.
Although leading companies in retail industry have the
opportunity to communicate their social motivation based
marketing activities and social responsibility projects using
conventional media, smaller companies in the market can have the
chance to communicate their activities via social media,
organizational announcement, sponsorships and events with lower
costs than conventional media.
2010 is the
half time. It is a very valuable opportunity for the companies
to restructure their organization and strategic roadmap.
Although this does not mean that the business will stop in 2010,
it is obviously will be a perfect last chance to prepare for the
new period. This is why, all retail companies should make their
preparations for coming years mostly based on the above
mentioned strategic roadmap. There are three important strategic
tasks to be completed. First, the scope and structure of
marketing management should be renovated. Second, parallel to
the new organizational structure companies should hire required
professionals in all levels. Third, the transition from customer
relationship management (CRM) to social relations management (SRM)
within the organization should be completed. These are the most
important steps which should be taken in order to be in the
market in the new period. It is better to jump into the last
wagon than missing the train at all.
I wish you a
very happy and healthy new year!
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