Is the Year Ahead a Threat or an Opportunity?
For Marketers of High-End Brands, the Answer Is Yes
Your consumer is evolving in dramatic ways, your job may be in jeopardy, and your team is cranking out irrelevant content. Nobody ever said it would be easy. As marketers of high-end brands face down the new year, there are a number of threats and opportunities looming on the horizon, which will directly drive the level of success that brands might attain.
To begin, let’s take a look at consumer trends. As Justin Lahart observed recently in the Wall Street Journal, “getting richer doesn’t make people spend like it used to.” Simply put, there is less and less of a positive correlation between a strong economy and strong consumer spending.
“Consumer spending has been tepid, and people have been far less willing to tap wealth to fuel spending than they used to be,” wrote Lahart. “Bank of America Merrill Lynch estimates that for each dollar gain in housing wealth, people increase their spending by just two cents, versus five cents in the mid-1990s. For stock gains, the figure has slipped to one cent from four cents.”
We can attribute some of this behavior to lessons learned during the financial crisis, but I also think we must also attribute it to the growing concentration of wealth among the UHNW Americans. Rupert Neate wrote in the Guardian, “The world’s super-rich hold the greatest concentration of wealth since the US Gilded Age at the turn of the 20th century, when families like the Carnegies, Rockefellers and Vanderbilts controlled vast fortunes. There are now 1,542 dollar billionaires across the world, after 145 multimillionaires saw their wealth tick over into nine-zero fortunes last year.”
One of the biggest challenges for a high-end home brand or other luxury item is that the super-affluent don’t always spend like the middle or upper classes, putting even more pressure on brands.
Compounding this challenge: “the world’s wealthiest households recognize that many non-luxury brands are able to offer highly refined products and experiences without the luxury price tag,” according to recent research published by YouGov, an international market research and data analytics firm. “While luxury has traditionally been synonymous with exceptional quality, and exceptional quality with higher prices, this distinction is waning…. Increasingly, a significant segment of the global affluent are looking for brands they can relate to on a much deeper level, and brands that share their values.”
So, do these trends represent an opportunity or a threat? From the consumer perspective, I believe that brands can prosper when marketers demonstrate authenticity and real-ness – helping consumers feel even more emotionally confident in their buying decisions and experience after the sale. “In other words, brands they can trust, brands that are competent and consistent, and brands that won’t let them down,” according to YouGov.
Changing consumer behavior isn’t the only opportunity/threat this year. Another is the current state of the CMO. As the average tenure for CMOs continues to decline, marketers also face a perception gap in the C-suite on the true impact and potential of marketing.
“The average CMO…tenure is the shortest of all C-suite titles, at only 3 years, or less, depending on verticals,” wrote Avi Dan, a contributor to Forbes. “This means that in many cases the average CEO will go through as many as at least three CMOs during his or her tenure. As any incoming CMO is likely to affect changes and, being aware of the relatively short stint that awaits them, they will naturally strive for short-term tactical solutions rather than strategic initiatives that may benefit their replacement. As a result, many companies suffer from a lack of consistency in their growth plans.”
Adding to the pressure on CMOs is an ongoing misperception among C-suites and boards over the proper role of marketing. “When people argue that marketing doesn’t matter, they usually have a different meaning of what marketing is than those who understand how marketing contributes to firm performance,” said Jen Pike, of Rockethouse Consulting, in a recent Forbes interview with contributor Kimberly Whitler. “Marketing should be about defining a unique position in the marketplace that allows you to charge the most money you can for the services and products you provide. Those who often misunderstand marketing believe that it is only about advertising campaigns and media plans. I’d argue that marketing is essentially the core of business strategy because it is about understanding the consumer and creating products and services that the target is willing to buy from a brand they feel emotionally connected to and willing to trust.”
With regard to the state of the CMO, do these trends represent an opportunity or threat? Again, as a glass-half-full kind of person, I think that they represent a fantastic opportunity for the CMO willing to work on his or her acuity. Sharpen your strategic vision and orient your growth plans so that you can succeed with both long-term brand equity and short-term sales results. And let me suggest that you also take up your education of the C-suite a notch in terms of demonstrating how your team is connecting your brand with consumers in a meaningful way.
And speaking of marketing teams connecting with consumers, the final opportunity/threat requires a close look at your brand’s output. We’ve reached the point where most of the content being created by the world’s leading brands is essentially…crap. Writing for Marketing Week, Sarah Vizard said, “Some 60% of the content created by the world’s leading 1,500 brands is ‘just clutter’ that has little impact on consumers’ lives or business results.”
The opportunity here is an intentional and straightforward alignment of how your brand best syncs with the needs of your consumer. Vizard quotes Maria Garrido, of Havas Media Group, who created a study on ‘meaningful brands’. “What brands need to do is break down their content, take a step back and ask, for their industry, what the role of content is. Whether it is to inspire, educate, help, reward, inform or entertain then rank them and work out what is a ‘must have,’ where the opportunities are and what they should not be focusing on at all.”
There you have it. The evolving consumer, the short-term window for CMOs, and the quality of marketing produced by your team. There’s no question that all of these issues can be threats. But my money is on the smart CMOs who can adjust on the fly; partner with the right resources; and drive success in the midst of chaos, uncertainty, and the high-stakes climate.
Good luck this year.