Martin Hayward, director of strategy and futures, dunnhumby, urges marketers to read the signs and react faster
There is a new urgency in consumer markets in 2008 that hasn't been felt for many years. Over the last decade or so, it hasn't been too onerous a task to make a decent return in an environment that delivered consistent healthy growth in consumer expenditure year after year.
However, the reality that consumers were spending money they didn't actually have is beginning to become clearer, and the implications of over-borrowing, under-saving and asset price bubbles are due to make the next few years a very different trading experience.
An AXA-sponsored survey published recently suggests that 70% of households plan to cut their spending this year. When money is tighter, accurately understanding what consumers want and need is crucial for commercial success. Consumer priorities are changing fast as they react to a rapidly evolving economic picture.
Compared to previous downturns however, today the marketing community is much better served with accurate insight into what consumers are doing and thinking than it has ever been. Putting aside whether you actually believe the government's published statistics any more, new sources of insight such as internet activity, on-line polling, the massive panels of shopper loyalty scheme data and others are all providing a breadth and depth of insight, more detailed and faster than before.
When I started my career in the 80's, it took about three months to get an accurate read on grocery sales of a product, provided by bi-monthly retail audit data, gathered through a field-force of researchers visiting shops to count how many products had left the shelves. Today, marketers can access hourly sales data based on the behaviour of over 13,000,000 shoppers within days.
So just when we need it most, we have access to timely, robust and accurate insights into what consumers are doing and why they are doing it. What worries me is our ability to act on this information.
Most marketing departments are just not able to act quickly enough to gain maximum benefit from these new insight developments. While the speed and accuracy of the insight available has undergone a step-change in recent years, most marketing planning processes have hardly changed at all. Marketing plans are still produced annually, it takes ages to plan and execute marketing communications and promotions, and insight is shared occasionally rather than continuously.
There is an enormous opportunity ahead for those that can learn to embrace the new accuracy and rapidity of insights available. Marketing is about listening and responding to customer needs. Customer needs are changing faster than we've seen for some time. Listening just got a whole lot easier, but responses are still generally pedestrian and based on a past world where it took months to read the market.
As Jack Welch of GE once famously said: "There are only two sources of competitive advantage: the ability to learn more about our customers faster than the competition and the ability to turn that learning into action faster than the competition".
Read the full transcript of Martin Hayward's opinion piece in the Read section of the website