In a fast-changing world, where social media is influencing consumer demand, brands are adapting to new market conditions, as Jason Hesse reports
Brands are increasingly being called upon to take significant responsibility for resolving some of the world’s most intractable problems, from global climate change to the health of employees.
Yet there is often a split between what society demands and what brands offer. “Businesses, even some that have been greatly admired, are increasingly being challenged by politicians and the general public to answer the question: ‘Is your product or business model – and your marketing of it – morally correct?’” says Jim Prior, chief executive of brand consultancy The Partners.
One recent example is when Coca-Cola and McDonald’s, two of the world’s biggest brands, were challenged by the Academy of Medical Royal Colleges – the body that represents every doctor in the country – over “irresponsible marketing” which is said to have contributed to the obesity epidemic. The Academy called for a ban on fast-food sponsorship deals.
Brands traditionally respond to such criticism, says Mr Prior, by countering the claims with evidence that they do act responsibly.
Leading businesses are working closely with stakeholders to understand their views
“It’s a kind of offset equation,” he explains. “Even if some things they do or make are unavoidably not ideal, there are other positive things that must be taken into account.” This could be the brand’s role in stimulating the economy, their support of social welfare programmes or how they fund initiatives, such as the Olympics, which might not otherwise exist.
But consumers, too, increasingly want brands to be socially responsible. In a survey by the Carbon Trust earlier this year, 57 per cent of young adults said they would be more loyal to a brand if they could see it was taking steps to reduce its carbon footprint.
“It’s a big area of interest,” says Tom Cumberlege, consultant at Carbon Trust Advisory. “Brands are expected to play a role in encouraging customers to live sustainably. From a customer’s perspective, it’s about trust.”
Brands have catching up to do, he adds: “Many haven’t necessarily listened to consumers’ interest in environmental issues. They haven’t invested the time or effort to understand the full impact of what they provide.”
This is changing. Leading businesses are working closely with stakeholders to understand their views. Brands are keeping their ear to the ground to gauge consumers’ interests and incorporate them into their strategic decision-making processes.
“Retailers are getting wiser and wiser as to the value of launching line extensions and products in ‘beta mode’,” says Toby Southgate, chief executive of The Brand Union, a WPP global branding agency, recognising the growing power of social media in branding. “They can launch something that isn’t necessarily finished, using the consumers to test the product and give feedback. It’s more efficient and cost-effective.”
Stakeholders are, therefore, playing a growing role in defining a brand’s values: “Today, if you’re not including consumers in the process, you will be left behind,” says Mr Southgate.
“Organisations are used to pushing a brand strategy at consumers in order to support mass-market communications, in the hope that some of it will stick. But the world is changing very rapidly; there has been a reversal of the classic brand-creation model. Now it’s about engaging consumers earlier in the process.”
Consumers have become a key part of building a brand’s reputation. While brand strategy has traditionally been built around “command and control”, it is now about turning customers into your brand advocates.
“There is a recognition that brands are now less defined by an organisation and more defined by their stakeholders,” adds Mr Southgate. “The experience of the brand is everything.”
The interaction between consumers and brands occurs over a wide range of platforms: social media, focus groups, traditional media and more.
“There is a fundamental shift taking place in the way that brands build relationships with consumers, driven by the combined forces of social and mobile technologies,” says Glen Manchester, chief executive and founder of customer management experience company Thunderhead.
Customers are turning to social and mobile channels for real-time communication with brands. Through targeted communications, social media is now an effective way for a brand to provide an excellent customer experience.
The growing importance of this can be seen with recent acquisitions such as Microsoft’s $1.2-billion deal to buy San Francisco-based Yammer, a messaging tool for colleagues, dubbed “Facebook for the workplace”, which allows companies to create a private social network for employees, or Salesforce’s $689-million acquisition of social-media marketing platform Buddy Media.
But how deeply can a company engage with customers and partners across these touchpoints?
“While mass-media marketing still has its place in building awareness, brands now need to engage with today’s always-connected consumers at every touchpoint and in real time,” says Mr Manchester. “However, businesses face an even bigger challenge in managing these conversations throughout each customer’s journey, anticipating their needs and responding at each step.”
The key to success is to engage with consumers rather than just pushing the brand message out. “How effectively businesses are able to do this will determine who are the winners and who are the losers,” Mr Manchester concludes.