The Channel Is NOT Your Customer

Most CPG companies call the channel (retailers) their customers, and the end-customer is referred to as the consumer. Nice way to differentiate the two, but it’s created a generation of marketers that are customer-focused and consumer illiterate. In truth, most big retailers know more about consumers than do many CPG marketers and thus the retailer not only has bargaining power due to their size, but knowledge power because the CPG marketer knows too little about the consumer, due to their “customer-centric” focus.

This was brought home again in an article in Advertising Age on how Kimberly Clark is getting serious with their digital coupon tracking. Really, just now? Unfortunately yes.

Paper coupons have always had a problem of not knowing who redeems them, and whether they are helping to create new users or simply offering existing consumers a discount. It’s been known that a huge percentage are never redeemed.

The advent of digital coupons several years ago should have fixed all that. It didn’t because marketers simply used them as a low-cost “paper” coupon. The delivery method was less expensive and the consumer carried the printing costs. Big win here as the cost of delivering coupons dropped. However, the key knowledge of who used them and how was not improved. Why not? Perhaps, because marketers are just too focused on their retail customer.

The following excerpt from the article sums it up:

“K-C has begun regularly tracking not only how often and where people redeem digital offers, but how widely they share them with friends and through which social channels, according to Dan Kersten, senior consumer-promotion manager for Kimberly Clark. It’s also starting to analyze which of its consumers are most influential in spreading offers to friends, and at which retailers they have the most impact. So instead of (fully anonymized) consumer-data sharing being a one-way street from retailer to manufacturer, K-C is compiling deal data that it can share in the other direction.”

Why did it take so long for a great company like Kimberly Clark to catch on? And why are they leading the pack after several years? Marketers need to get back to understanding the consumer. Retailers carry what the consumer wants to buy. If CPG (or other companies) abdicate that knowledge to the channel (retailer), brand value will diminish and private/house brands will rise. Brand marketers (house or otherwise) have to understand the consumer. Nothing else matters near as much.

Mitch

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This entry was posted in marketing performance management, promotion, retail and tagged , , , , . Bookmark the permalink.

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