McKinsey: Rethink and redefine your marketing models

In a crisis, it is natural to focus only on near-term business results and adopt a pure survival strategy. But that could mean winning the battle but losing the war. A McKinsey study on managing the COVID-19 crisis and planning for the future revealed that while no one can know what the recovery will look like or when it will come, when we do hit rock bottom consumer demand will start to climb back up. 

According to the report, companies that thrived after past recessions were those that kept constant communications with consumers through the downturn. These companies also took a more active posture, focused on through-cycle interventions, and acted with urgency. As such, marketing leaders should now consider how to re-architect their current marketing models, approaches, and tools to get ready for the turnaround.

However, companies should not wait for a completely clear picture of the future to emerge, where marketing leaders can then step up to help the CEO and the business as a whole to start reimagining the future. 

Companies should develop deeper insight and seek foresight now. Going forward, it will be crucial for marketers to take a much broader view of their consumers. This means gaining insights from beyond their industries and beyond their shores. New attitudes and behaviours might first appear in China or Iran, and new buying behaviours and habits might solidify in categories that have undergone the most significant change during the crisis. Beyond trend spotting, marketers can find foresight with well-designed research as well. Techniques such as market structure or consumer decision-journey mapping can uncover newly emerging unmet needs, and when these are used in agile sprints, marketers can get insights in two to three weeks.

Marketers and CEOs should ideally start ideating now. It is possible that entirely new businesses and business models will emerge from the crisis. Virtual-based revenue streams such as app-based services may have more promise, and new ecosystems and marketplaces are likely to appear. With uncertainty likely to be the norm for the foreseeable future, it will be important to develop a portfolio approach to launching initiatives, tracking, and reallocating resources based on how each performs.

Marketers should act as a catalyst for action by bringing their insights and ideas to the rest of the organisation to begin this discussion. 

Here are three quick tips to start catalising:

1. Rethinking strategies and media plans

Since consumer behaviours and attitudes will continue to change, marketing strategies and media plans should follow suit. That means essentially starting from scratch on strategies and plans, because marketers are facing such a divergent market dynamic that previous assumptions and accepted truths may no longer apply.

Discipline is needed so marketing leaders can rethink their companies’ value proposition to consumers, reassess which products and services can best deliver on that value proposition, and re-architect how they’re delivered to each geography. This start-from-scratch mentality should carry over to developing media mixes to maximise the impact of marketing dollars. To help drive those decisions, marketers will also need to develop new demand models since most current marketing models are based on historical data—promotions, assortment, growth maps, MROI, etc.—that will be less relevant in tomorrow’s marketplace.

2. Winning the battle for brand awareness

McKinsey’s analysis of consumer decision-journey behaviours showed that 87% of consumers shopped around, and were willing to consider other brands. The report predicts that behaviour could be even more drastic given the scale and nature of this disruption. 

China again offers an indicator, as in McKinsey’s latest survey, about 33% of Chinese consumers have switched brands based on convenience and promotions. While, 20% of that group intend to stick with the new brands they have tried. 

Hence, marketers should begin revisiting what their brand means to customers.

These include agile marketing practices – typically focused on performance marketing—which will need to be adopted at the brand-building level, with communications managed rapidly in test, learn, and refine cycles of continuous improvement.

3. Redefining loyalty

The program benefits, promotions, and other incentives that drove loyalty last year are unlikely to apply going forward. According to McKinsey, it will be important to get the input of loyal consumers to understand what they expect to see from brands and companies, since what they value may have changed. 

Positive brand impressions are driven by how companies handle their customers and themselves throughout the crisis. Creative acts of generosity to help the larger society and how they have treated their employees, as well as actions taken to support their customers, could have significant impact on loyalty given the severity of the pandemic. Continuing to invest in personalisation techniques and technologies can help to drive more relevant interactions—offers, benefits, promotions—that can build loyalty with new customers and fortify it with existing ones.

And when everyone finally re-emerges from the COVID-19 crisis, it will be the “next normal”. Albeit too early to tell what that will look like, what behaviours will stick and what technologies will have firmly taken root in people’s lives, among others, there will certainly be changes in consumer psyche. 

Traditionally, marketing has been the business function that best understands the customer. How well marketing leaders can continue to be relevant as their customers change will play a large role in determining how businesses will weather the COVID-19 crisis and meet the needs of tomorrow’s consumers.

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