Traditional marketing standards are changing. The proliferation of products reduces the number of initial-consideration potential brands, hence the competition. Who wins? Active consumers.
As consumers, we were used to being targeted by one-way communication from companies who offered product recommendations through advertising. If we needed a product we considered it and, if we liked it, we bought it. The relationship between brands and consumers has shifted away from one-way communication during the post-purchase phase, when consumers experience the purchased product.
In an era characterized by an enormous quantity of information in the real and digital worlds, how is the relationship between consumers and big brands changing?
For companies, the crucial point is understanding how consumers make their purchasing decisions.
In certain cases, what leads to a purchasing decision is weariness. Dazed by advertisements, consumers cannot but buy a jar of Nutella. Who hasn’t done it at least once?
In other cases, the awareness of choice matters. After initial consideration and evaluation, consumers choose the brand that suits them best. What is the difference between the two strategies from the point of view of companies?
In fact, no research “supports or demolishes” either strategy. For example, the value of historical brands – the ones that we remember as products that “were always there, hence they are worthwhile” – often comes from a push-style communication, typical of the early days of commercial advertising.
In the case of more targeted communication strategies, that is those aimed at reaching consumers at the moments that most influence their decisions, brands can make the difference.
The proliferation of media has imposed a change from above.
Except for big investors, such as mobile-telecom and car companies, very few can still afford traditional “pushed” advertising. Most brands are moving from “funnel” strategies to “sieve” strategies, where the message is accurately filtered and grasped in solid loyalty programs and the monitoring of purchase habits.
From “funnel” strategy to “sieve” strategy
In the traditional funnel metaphor, consumers start with a set of potential brands and then reduce that number to make a purchase.
The goal of the “sieve” strategy is the circular relationship between brand and consumer, in order to build up a connection where the choice is greater, trying to keep the good from any brand and, more than that, reducing the number of brands worthy of attention from the start.
In the new “sieve” dimension, right from the start consumers name a limited initial-consideration set of brands to purchase.
Consumers invest their time in the selection of products thanks to greater accessibility to content and prices offered by the market. In this context, the value of the brand is a decisive element, which, by the way, needs to be fueled constantly.
Sergio Ferranti, industry lead technology of GfK Eurisko, one of the main research companies on the European market, states: “In the last twenty years we have witnessed a significant change in the relationship between brands and consumers. The vertical, one-way relationship, where brands ruled and directed the purchasers’ choices, has shifted toward a horizontal, two-way relationship that sees consumers, or, to be more precise, certain discerning, well-informed consumers, taking on a
proactive role in the purchase process. Thanks to the wider circulation of information, empowered consumers search for what they need using all possible distribution channels available out there, offline or online. Those brands that have understood this new need for an equal relationship with consumers, that establish a connection with them based on trust, through the satisfaction of basic services in the first place, are well placed to succeed. The others, very possibly, will fail.”
However, all is not lost for new brands that want to reach their potential consumers. In order to do so, it is necessary to interrupt the continuity of trust between consumers and the most established brands. But how?
Again, the crucial point is understanding how the consumer makes his or her purchasing decisions.
And here lie the opportunities: a database of loyal purchasers will contain “active loyalists” but also “passive loyalists” who, whether from laziness or confusion caused by the dizzying array of choices, stay with a brand without being committed to it.
According to Sergio Ferranti: “Beyond factors such as curiosity and the desire to experiment, which are hardly measurable, trust, or the lack of it, is crucial in order to retain the customer, or alternatively to push him away. If a brand is not able to satisfy the customer’s basic needs, if it betrays his expectations, maybe created through skillful communication, if it gives further disservice when assistance may be needed (think about non-existent support when a breakdown occurs), it is very possible that the consumer will decide to abandon this brand for another one. On the other hand, if a brand not only attracts new purchasers but builds a relationship with them based on innovation and trust, a very special bond is established between them that is destined to last.
Apple is an emblematic example.”
In this historic moment, the consistency of the relationship between brands and consumers is an important factor. Consumers compare price and performance. Whoever wins in this comparison acquires purchasers.
For some people, saving is an art form that requires time, effort and a constant willingness to look for the newest promotions. Luckily, technology supports consumers with apps for smartphones and tablets, making their lives easier at every stage of the decision-making journey. All kinds of apps are available: from prices comparisons to those able to find out which is the most convenient gas station. Among the most common features are indicators of prices and offers, reviews and access to retail leaflets. The most interesting is the ability to take a picture of the barcode of an item; the app will immediately tell us the price of the same item in different offline and online stores, directing us to the most convenient purchase.
The value of the brand comes into play in the – inevitable – phase that occurs just after the price comparison. If the brand is valuable, consumers are inclined to reward it. How much? Not that much, because margins for consumers are lower than in the past, but still enough to make the difference. Just try to calculate the value of 2 euro cents per product multiplied by a few million products sold by a company every year.
by Mirko Nesurini, CEO GWH Swiss SA