ATLANTA -- Effective brand marketing today calls for targeted, not mass communications.
Fortunately, practical tools for targeting consumer messages and their delivery through the store are just now becoming a reality for manufacturers, said Ron Lunde, senior vice president and director of creative marketing for Leo Burnett Co., Chicago.
He said the broader use of new capabilities, such as scan-down information, will enable brand marketers to construct more effective promotions that can build brand equities in the supermarket.
In a talk before the GMA/ NeoTrends Conference here, Lunde enumerated what he called the "new realities" for brand marketing:
Product and service diversity are increasing.
Competition is increasingly global.
Niche has become king.
Brand and product life cycles have been accelerated.
Distribution channels are in constant flux.
Downsizing has altered strategies.
Traditional forecasting and research may no longer provide a clear path of action.
"Retailer merchandising and buying practices have become manufacturers' No. 1 challenge," said Lunde.
For brand marketers to prevail in the current environment, they must adopt a "fundamental refocus" on selling, not buying, he said. From that follows a shift in accounting systems to concentrate on profit needs using activity-based costing on the manufacturer side, and direct product profit on the retailer side.
Such an orientation allows companies to pursue the greater return on inventory investment, which can be derived from a well-managed inventory turn, he added.
Lunde said virtually all manufacturers are continuing to move trade allowances into non-off-invoice forms of spending in an attempt to obtain increased performance from retailers. "Coupon-
ing in general, and free-standing inserts in particular, are going to come under close scrutiny."
He urged brand marketers to target their messages and their delivery to diverse consumers and new communications channels.
"National network television and magazines no longer cut it," he said, adding that the "Life, Look and Lucy" media strategy doesn't reach 98% of the population any more. Advertising agencies like Leo Burnett will need to provide multiple, inexpensive targeted television ads.
They must also approach the brand communications question from a "solution-neutral" perspective, Lunde said, meaning that traditional media must be considered alongside in-store and direct-marketing delivery systems.
"Scan-downs will be an important new way to control costs because they allow promotions to be more consistent with flow-through logistics. Every penny goes to serve the consumer."