GLOBAL MARKETING TRENDS FOR CONSUMER PRODUCTS

1. GLOBAL MARKETING TRENDS FOR CONSUMER PRODUCTS Kostas Dermoussis

2. GLOBAL MARKETING TRENDS • The following three (3) areas are covered: • Marketing Practices • Consumer Behaviour • Retailing

3. A.MARKETING PRACTICES REAL PRODUCT DIFFERENTIATIONS ARE BECOMING MORE RARE • Companies struggle for launching NEW products which will be different from the existing ones • Consumers’ perceptions for what a new product is, do not coincide with companies’ marketing strategies and policies • Big supermarket chains “encourage” companies for new differentiated products

4. A.MARKETING PRACTICES MARKETING EXPENDITURES WILL CONTINUE TO RISE • Regardless of sales increases, marketing budgets will be higher: • due to competition (impact on advertising and promotion spending) • due to complexity of distribution channels and the increasing requirements of retailers for shorter delivery times and more regular shipments (impact on logistics)

5. A.MARKETING PRACTICES DRAMATIC INCREASE OF OUTSOURCING • During the last 2-3 years, we have experienced a considerable increase of outsourcing in marketing and sales • For the next 3-5 years, the expenditures related to outsourcing will be dramatically increased in the following areas: • Marketing communications • Logistics • Marketing and sales strategy & planning • Marketing and sales training • Outsourcing will be a suitable strategy for large and SME companies • Main reason for outsourcing: Cost reduction and “fresh”/ more creative approach by a third party

6. A.MARKETING PRACTICES EXCEPTIONAL CUSTOMER SERVICE WILL BE A KEY STRATEGY • Customers recognize excellent service as a unique differentiating factor • One unsatisfied customer talks about his/her negative experience to seven people • Mass advertising and promotion activities can not easily reverse the situation • We are going to see: • A bigger number of customer service departments • Friendlier call centres • Service oriented and customer-focused employees • Better trained people in customer service • An increasing number of customer satisfaction measurements

7. A.MARKETING PRACTICES MOVING FROM CALL CENTRES TO CONTACT CENTRES • Today, the main purpose of call centres is selling products/services • During the next years, their image will be “redefined”. Their new name will be “contact centres” and apart from sales, there will be greater emphasis on high quality service • Main characteristics • Handling of complaints • Customer satisfaction measurements • Information to consumers • Profit centres • An integral part of the marketing and service strategy

8. A.MARKETING PRACTICES HUGE INCREASE OF CALL CENTRES WORLDWIDE • 50% increase in Europe, Middle East and Africa, up to 2008 • According to research in 26 countries, the number of call centres will exceed 45,000, employing more than 2,6 million people • Threat: Many call centres will operate in countries with low labour cost and low taxation • Call centres will be specialized, covering new markets: hospitals, clinics, hotels, restaurants, department stores, public services.

9. A.MARKETING PRACTICES COMPANIES FOCUSING ON THEIR MOST PROFITABLE BRANDS • Product portfolios are shrinking, especially in multinationals • Products with lower brand awareness and brand purchase will be eliminated • Concentration in mega-brands with big market shares and higher profit margins • Advertising investments in mega brands • Risks • Consumers acceptance of global brands is not the same everywhere • Consumers may switch their brand which has been abolished with a competitive one • A new war in supermarkets for shelf dominance

10. A.MARKETING PRACTICES INCREASING SCEPTICISM OVER ADVERTISING MESSAGES • Too many advertisements - clutter effect • Advertising promises are not taken into consideration by consumers resulted to a lower degree of brand loyalty • Research shows that viewers do almost anything during a commercial break except watch the TV • Implications • Companies will increase the frequency of social marketing and cause related marketing programmes, decreasing budgets of the traditional commercial advertising

11. A.MARKETING PRACTICES SALES PROMOTION IS BECOMING A STRATEGIC MARKETING TOOL • As a result of advertising clutter, an increasing number of marketing people have started to use sales promotion as a main element of their marketing strategy • Sales promotion objectives: • Increase sales - short and medium term • Increase brand loyalty - long term

12. A.MARKETING PRACTICES CO-ADVERTISING AND JOINT PROMOTIONS ARE BECOMING COMMON PRACTICE • We are going to see: • Joint efforts between two or more brands of the same company or between different companies • Joint efforts between retailers and their suppliers • Why? • Lower advertising budgets • Marketing synergies with complimentary or non-competitive products

13. A.MARKETING PRACTICES LOYALTY MARKETING CAMPAIGNS WILL BE ENRICHED • Although the number of loyalty programmes are increasing, consumers require more creative and innovative approaches • Consumers have experienced loyalty cards, air miles, etc, but now they want more in terms of quantity and quality • Implications • Companies will have to use new techniques which will require deeper consumers’ involvement • Loyalty campaigns will be an integral part of the marketing communication strategy.

14. A.MARKETING PRACTICES MYSTERY SHOPPING COMES OUT OF THE SHADOWS • Mystery shopping is more than “spying” on the staff • Companies focus on improving the service offered to consumers by their staff • Mystery shopping is used as part of the training process which is related to personal selling, negotiation skills and customer service • Companies receive accurate information, regularly, about the shopping experience of their customers at the time of purchase • It is going to be used as a motivational tool for people • Spending on mystery shopping will be steadily increasing

15. A.MARKETING PRACTICES USE OF ON-LINE SURVEYS TO INCREASE • The on-line market research sector in Europe and N. America is set to rise, according to a recent survey • More than 80% of interviewed managers expect that on-line research will be booming since it is a cheap and fast way of collecting data

16. A.MARKETING PRACTICES CRISIS IN BUSINESS DECISION-MAKING RELATED TO MARKETING • Two surveys - in Europe and USA - reveal the continuing trends of marketing executives making more complex decisions in less time, flooded by data • The main problem will be the volume of data which will double and triple compared to previous years, making decisions more complex • SOLUTION • Development of CRM and MIS from the company’s centralized data warehouse which will act as information provider to the marketing and sales departments

17. B.CONSUMER BEHAVIOUR AGE COMPLEXITY • Children are becoming teenagers before reaching their teens. Today, a 12 year-old kid is more likely think he/she is 17. • So, manufacturers are developing children products with “cool teen” attributes

18. B.CONSUMER BEHAVIOUR INDIVIDUALISM • Consumers want even more personalization. Therefore, we are talking about one-to-one marketing instead of mass marketing

19. B.CONSUMER BEHAVIOUR SENSORY EXPERIENCES • We are becoming more tolerant of risk and change • We are actively seeking out more intense experiences. Hence, the increase in extreme sports and short and busy weekend breaks • Consumers are more prepared to experiment with new products, discover ethnic foods and try new tastes

20. B.CONSUMER BEHAVIOUR HEALTH • Three-quarters of Europeans are now more concerned about their health and well being • People will put greater value on healthiness such that sales of healthy, de-stressing and self-medication products will be booming

21. B.CONSUMER BEHAVIOUR SUPERMARKET SHOPPING WILL NOT BE A “DECLARATION” OF LIFE STYLE ANYMORE • During the past years, consumers were buying products from supermarkets based on their brand image. “Prestige” as a brand value was taken seriously by consumers • This has started to change and in the next few years, consumers will express mainly their need for self-esteem and recognition, by buying products and services which have higher prices, such as cars, holiday packages, etc.

22. B.CONSUMER BEHAVIOUR PRETERMINED PURCHASES AND HIGHER FREQUENCY OF SHOPPING VISITS • An increasing number of consumers visit supermarkets having a predetermined shopping list. The picture was not the same 5 years ago • Reduction of consumers’ disposable income • Consumers prefer to visit supermarkets more often (European average: twice a week), spending less each time

23. B.CONSUMER BEHAVIOUR CRITERIA FOR PURCHASING A NEW PRODUCT IN THE SUPERMARKET • The type of sales promotion activity is one of the most important criteria for consumers to buy a new brand for the first time • Although, consumers act less and less impulsively, certain sales promotion techniques will help new brands to achieve higher rates of brand trial. • Consumers prefer the following types of promotions for new products: • Free samples • Coupons • Displays/ Point-of-purchase (POP) material • On-pack promotions

24. C.RETAILING INCREASING POWER OF LARGE SUPERMARKET CHAINS • Quick expansion of discounters • Strong competition between retailers • Price war and “squeezed” profit margins • Impact on suppliers • Higher listing fees • Lower prices • Bigger quantitative discounts and year-end-discounts

25. C.RETAILING CONTINUING EXPANSION OF DISCOUNTERS IN EUROPE • WHY? • Consumers are becoming more price-conscious • They are less brand loyal • They are less interested in brand image • Main characteristics of discounters • Smaller outlets • Less staff • Limited product categories/ product lines • Private labels

26. C.RETAILING DOMINANCE OF PRIVATE LABELS ? NO!! Brands will prevail • However: • Private labels are gaining consumers’ acceptance. They are not considered as “inferior” products • They are cheaper or much cheaper compared to advertised brands • Private labels will make marketing people’s life more difficult since they have to develop and pursue strategies aiming at: • new product development • continuous advertising and promotion support • focus on merchandising stronger presence in supermarkets • quality improvements

27. SOURCES • Marketing Society • Marketing Week • Point of Purchase Advertising Institute • Product Development & Management Association • Sales Marketing Network • World Advertising Research Center • Goldman Sachs Research • A.C.Nielsen • M&M Eurodata • UBS • British Market Research Association • Advertising Research Foundation • American Marketing Association • Association of Relationship Marketing • Business Marketing Association • Datamonitor • Euromonitor • Forrester Research • Federation of European Direct & Indirect Marketing • Institute of Sales Promotion • Marketing Research Association