January 15, 2020
Many believe that technology drives disruption, but technology is just an enabler. Customers drive disruption. These days, changing demographics worldwide drive it faster than ever. Once, marketers could convince customers to buy products through emotional appeals and sleek advertising, and companies could count on customer loyalty. Today, changing demographics and widely available information have changed marketing forever.
A Harvard Business Review article proclaimed in 2012 that traditional marketing — including advertising, public relations, branding, and corporate communications — is dead. Yet businesses across industries continue to spend a significant amount of money on old-style marketing and advertising. Marketing professionals continue to promise that advertising can persuade customers to choose their products over their competitors’ products. Investors also believe in advertising, thinking brand-recognition means long-term value. That may have been true but isn’t now, for two reasons:
Millennials trust peer reviews far more than advertising and brands, according to this Forbes report. They don’t believe ads, and they don’t value celebrity or third-party endorsements.
Across generations, people simply are seeing and watching fewer ads. They use adblocks online and various services to avoid ads on cable. Many don’t even have cable, so TV ads are reaching fewer people. Even major events like the Super Bowl, Oscars and Olympics have smaller audiences each year. When viewers are forced to suffer through ads, many choose not to watch at all.
Recognizing this, in their desperation to catch customers’ attention, companies like Coca-Cola and Pepsi switched from advertising to in-store promotions and point-of-sale marketing such as putting products near the checkout counter. Their logic was that if people saw the product while they were waiting to check out, they’d buy it impulsively. But this doesn’t work as well as it once did, either. Customers are not looking around them; they’re on their smartphones.
Marketing and advertising can’t sell products
The age of marketing selling products is over, and ads are proving to be less effective than ever. Millennials have always been brand-fickle. Gen X and Baby Boomers see fewer ads than they once did and trust them less, too. Instead of spending inordinate amount of money on advertising, companies should find ways to get genuine customer reviews that Millennials and Gen Z will trust.
Many big companies realize this and have cut their marketing and advertising budgets. Many small and medium-sized companies fall for claims from Google and Facebook about the high ROIs on their ads. But without third-party validation, these claims mean nothing. P&G reduced online spending significantly as their third-party validation concluded it was a waste of effort and money. Uber believed their mobile ad agency had billed them for fake clicks and filed a lawsuit. So, companies must stop relying on advertising—including online advertising—to get customers to buy their products: It doesn’t work.
Marketing is not dead
However, marketing still has a significant role to play, even given changing customer needs. Marketing can build customer awareness, and that’s where it should focus its efforts. Genuine customer reviews play an increasingly large role in convincing customers to buy products and services. Instead of focusing marketing efforts on the end of the sales process, it may be worthwhile to focus on building awareness so companies can cut through e-commerce/storefront clutter.
Also, marketing departments must educate leaders on changing customer needs. This means more than doing market research. Evaluating the underlying need is something marketing should focus on. The customer’s need for speed in transportation or simplicity in electronic gadgets will not change, but companies must find better ways to address those needs. There is no field better positioned to do this than marketing.
The role of marketing must change along with the increasingly informed customer. It’s time for marketing to redefine its mission. Today’s marketing departments must create customer awareness and understand evolving customer needs, while and corporate leadership is too far removed from customers to be able to address either successfully. Marketing must do it, and so marketing has a new and powerful role to play in the days of customer disruption. If marketing teams limit themselves to selling products or services, their credibility in the eyes of leaders and customers will continue to decline and their tenure continue to shrink.
Suman Sarkar is a partner with Three S Consulting and an international consultant who has advised more than forty Fortune 500 companies in strategy and operations. His new book, Customer-Driven Disruption (Berrett-Koehler, 2019), is a blueprint for showing how companies must adapt to ever-changing global demographics and markets. It draws on the author’s extensive experience and features case studies from companies around the world that have thrived in volatile, highly competitive marketplaces. He has published numerous articles in business journals and his first book, The Supply Chain Revolution, is an Amazon top-seller in its genre.
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