Chasing the Customer … Schumpeter’s Gale

Schumpeter’s Gale

The Winds of Change

P&G Cuts 1/2 Brands

 

P&G Best Consumer products image“Creative destruction describes the “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” Joseph Schumpeter

 Intense competitive and turbulent economic conditions have forced managements to re-examine every aspect of their strategies and tactics — from product portfolio to organization to how they present publicly what they sell.

P&G will discontinue or sell some 90 to 100 brands, according to A.G. Lafley, CEO. They will still be left with 22 brands at $1 billion or more and 19 brands with sales of $500 million or more. The will also retain an unspecified number of brands that remain a strategic fit. That’s a big step for a company who many consider as the best marketer of consumer brands in the world.

It is almost a cliche to reiterate that the Connected Consumer is now driving the product markets. Cell phones have reached a 93% global penetration rate. Internet usage, smartphones, tablets are all growing exponentially while delivering unprecedented customer information — therefore mercilessly exploiting a company’s four structural behavior options of Price Competition; Price Segmentation; Product Segmentation; and Product Augmentation. I suggest that is the new market reality that caused the Lafley team’s strategic re-think.

The New Market Strategy Reality

P&G’s management has been buffeted by the gale force of a  new reality — the economic logic of market strategy. They are, accordingly, making necessary P&L and balance sheet adjustments.

Additionally, there is, I suspect, a proverbial tectonic shift taking place. The traditional theory, understanding and practice of marketing and sales tactics are now shifting / disrupted — driven by the realities of the Information Age and Connected Consumers as those consumers adopt and adapt to the technologies, convenience and experience of the digital age.

The Old Twin Pillars topple

It is quite possible that the old twin pillars of marketing strategy — mass media and mass distribution are about to topple.  No longer can mass media blitzes in legacy media, TV, Radio, Magazines, and Newspapers provide the lift. No longer can the once powerful distribution tactics of slotting allowances and consumer promotion ensure either retailer or consumer acceptance. Yes, they are still important and somewhat viable, but as predicted in Toffler’s Third Wave – the Connected Consumer is now the Prosumer and — in-charge. 

[“Prosumer, a word coined by Toffler, is a portmanteau formed by the contraction of the word PROducer with the word conSUMER. Prosumers are common consumers who were predicted to each become active to help personally improve or design the goods and services of the marketplace, transforming it and their roles as consumers.”]

 

 

The rise of the Prosumer means new rules – new tools

 

There are now two apparently subtle, yet in reality, profound new strategic rules  in play:

  1. Brands can no longer sell what they make. They must make what they can sell!
  2. Retailers can no longer sell what they stock. The must stock what they can sell!

 

New Tools = New Opportunities for marketers

 

The Zeta byte data trail left by consumers give marketers an unprecedented opportunity — to be — marketers. Data to Analytics to Insight to Data, in a continuous loop. Marketers will be joined by content creatives  in a new age of customer specific, content rich communication that entails both customer relationship management (CRM) and customer journey management (CJM).  The Connected Consumer changes the calculus from ‘one idea’ for a brand to multiple ‘targeted messages’ that convey specific customer – unique value.

 

Disruptive change is an opportunity, as Drucker said, for the new and different.

“And it is change that always provides the opportunity for the new and different. Systematic innovation therefore consists in the purposeful and organized search for changes, and in the systematic analysis of the opportunities such changes might offer for economic or social innovation.” Peter Drucker

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Comments
2 Responses to “Chasing the Customer … Schumpeter’s Gale”
  1. Priscilla Berry says:

    As a market driven society, for a long time retailers were able to sell the warehouses full of stock even though there was new technology that would make the products obsolete and less desired. They accomplished this by keeping the market unaware of the next generation of a product. The market can no longer perform this feat because of the new type of consumer, informed and technology armed. The market still reigns but a paradigm shift has occurred and the market demands what it wants, when it wants it, and how it wants it delivered. The days of aweing the consumer are over; hence selling and marketing are forever changed.

    Liked by 1 person

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