Field and Binet: Addressing acute short-termism in FMCG
- 27 November, 2019 08:09
The seductive appeal of short-termism is "very acute" in the fast moving consumer goods space, according to
Peter Field and Les Binet, two of the most influential marketing commentators in the world. And it shouldn't be.
The pair shared their thoughts on marketing, brand building and creating an emotional connection with customers in a specially recorded video at the inaugural FMCG Forum in Sydney last week. The event, hosted by News Corp and supported by the Australian Association of National Advertisers (AANA), brought together senior marketers and agency directors to explore some current and future challenges facing the fast-moving consumer goods (FMCG) category.
Elaborating on the challenges of building a long-term marketing strategy versus aiming for short-term gains, from an FMCG perspective, part of the challenge is the decision-making cycle is short, Field and Binet said.
“The seductive appeal of 'short termism' is very acute in FMCG. And part of it is to do with that short purchase cycle and looking for an immediate response if you're selling shampoo, washing powder or bread, you can see the effects of promotions, discounts, special offers straight away,” they said.
With the FMCG market, the pair stressed it’s crucial to build a strong brand because if you build strong brands, people come into the supermarket primed ready to make that choice. It's much easier to do the short-term activation piece to offer a discount that might not be quite so damaging to the brand.
“Marketers need to remember you can generate the spikes. But one potentially really damaging long-term effect, which particularly in recessionary periods brands learn to their cost, is you start to destroy the pricing of the brand,” the duo said.
“You do this too often. You end up not building positive long-term effects, you're building negative long-term effects, which is the erosion of pricing power, which is horrifically damaging to profitability. So you’ve got to be really careful about what you do to drive short-term sales.”
Another dangerous force at work encouraging marketers to promote price, according to the pair, is the growth of big tech digital economy.
“Because so many of the short-term activation messages served through these media outlets are essentially price promotion messages. It’s more than a decade of people telling us the way to drive short-term sales through digital media is to make deals and offers.”
For Field and Binet, the way to counter the urge to run brand damaging price promotions, is to invest in really powerful emotion-based advertising to create associations around the brand.
“We tend to believe it's better, we tend to read the good stuff about it. So we're drawn to it and the activation sauce becomes a lot easier,” the pair said.
Field said the data he and Binet have been working with for many years illustrates the enormous superior power of emotional advertising.
“It works not just because it influences decision making powerfully, but because it’s durable. It doesn't just have effects now, the memories reside for a long time,” he said. “So we know emotional advertising has a really important impact on price, pricing power and elasticity. And low cost is insane.”
While Field and Binet concede there are new and different challenges today - the increase in choice and options available to consumers along, the fragmentation of audiences, which requires different technologies to reach the audience, and the increase in the volume and intensity of messaging to consumers - there are ways to meet these challenges.
“A lot of marketers think, ultimately, the answer to these kind of issues is always going to be technology. But the technology is available to all your competitors. Instead, it’s about the creativity of the advertising messages from the brand," the pair said. “If you can do that in a more seductive, in more creative way, you will win. And it will trounce the benefits of technology, always.”
Continuing on this theme, Field and Binet advocate using powerful emotional campaigns which get people’s attention and become a talking point in their own right, achieving a degree of fame.
“You take it to a level where they actually want to start talking around this and sharing it. We call these fame campaigns and they get shared and talked about and become part of contemporary culture because they become a talking point for people,” said Field.
“They have all the benefits of emotional campaigns, but they're like emotions on steroids to use that analogy. So they are really, really powerful, difficult to pull off. But when you do it, the benefits are absolutely enormous.
Binet said this opens up that all-important mental availability. "When you get to a certain level of mental availability, if you imagine share of mind was like temperature, you get to a certain temperature, and things catch on. There's a point of awareness, of social currency, where suddenly things take off in a chain reaction,” he said.
Achieving this requires being surprising in the advertising and doing things differently, which they haven’t done before.
“There is an inherent requirement for clients to be a little brave and get outside the comfort zone,” they said.
And it also requires spending money, continuing to invest year after year for long-term brand building with broad reach, online and offline. Field said it requires great creative work from an agency that can produce ideas which are fresh, year after year, but also consistent with everything the brand has done before.
“And if you get all of that right, then you might achieve that top-box level of fame. When you do that, you can have dominant market share, long-term growth, high margins and make money,” he added
Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia.