Using Archetypes to Capture Growth in Consumer Goods
William Shakespeare wrote in his play, Coriolanus, “What is the city but the people? True, the people are the city.”
Consumer goods companies spent decades evolving from local players with a strong regional touch to global powerhouses. One particular vein that promised to yield astounding growth over the years is emerging markets. But now those markets have softened and according to the IMF, will continue to decline into 2016.
What’s more, the local competition in these countries is much more sophisticated. They know where to focus and are more agile than their large global counterparts. Some companies have had to scale back their growth ambitions in emerging markets in the past, overwhelmed by the local variations in consumer preferences, channel structures and routes to market that create significant complexity and cost.
And ultimately, the old school way of targeting customers is unsustainable. But with urbanization a growing trend around the world, there’s a new form of segmentation that allows companies to act locally without losing large-scale delivery. Using a city archetype approach can enable companies to capture these opportunities without adding complexity or cost. How? By capturing the similarities between different types of cities and reaching out to consumers through digital channels to become truly super global and super local.
If you don’t win in cities, you don’t win
Why are urban areas so critical to the growth of consumer goods companies? Because they are growing in size and stature.
Consider this: a major drinks company could address 70 percent of the spirits market in Brazil by operating in just 60 of the 1000 city clusters. That’s because cities have a disproportionate share of growth, wealth and consumers and are increasing in importance. Urbanization is impacting shopping habits, consumption patterns, customer needs and route to market. Because of their pull in terms of demographic weight and buying power, consumer goods companies need to use cities as a basis for grouping markets instead of using the old geographic models, using the common characteristics of often far-flung locations instead of geographic proximity.
Creating the urban archetype
By creating city archetypes, consumer goods companies can drive the efficiency and scale needed to profitably grow in an increasingly complex environment. How to begin the process? By looking at commonalities. Not all cities are alike. But given global macro trends, they’re not all that different either.
Trends like globalized media consumption that stretches across borders so that a customer in Sao Paolo is as likely to know about popular programming as one in San Francisco. And population mobility where consumer targets are more likely to be familiar with London and La Paz. The characteristics companies should look for in order to pool into archetypes: population concentration, evolving customer base, distribution network complexity, and differentiated consumer demand.
Tackling the world through the lens of a city archetype ensures efficiency and scalability. But what are the steps for changing from geographical pooling to one that leverages urban archetypes?
Develop a playbook: To get savvy about city archetypes, consumer goods companies need to first develop a playbook to guide efforts. That starts with the definition of four-to-five city archetypes that groups locations by common success criteria.
Define the approach: Define the specific approach required for each archetype, including marketing mix, sales organization and route to market, and the capabilities required to enable this. Analytics can be used to analyse each archetype and prioritize them based on the opportunity each represents. One Brazilian ice cream manufacturer used geo marketing to identify attractive outlets in Sao Paulo not sufficiently served. By focusing their efforts on the city, the company increased the number of outlets served by 30 percent and increased sales by more than 60 percent—all whist reducing cost to serve by 15 percent.
Pilot archetypes: Pilot the approach in one to two select cities and rapidly operationalize to prove the concept. Refine and scale the capabilities to develop the city playbook for each archetype: a handbook for how to win in each unique location, tailored to local sensitivities, but powered by global capabilities.
Continuously evaluate urban growth areas to ensure that you continue to invest in the right locations, and are deploying the right strategies to meet growing demand.
Beyond city archetypes
Naturally, city archetypes aren’t the only game in town for Consumer Goods players. Markets can also be approached by region or by consumer archetypes (similar to more traditional market segmentation strategies that focus purely on consumer demographics, psychographics and behaviors rather than the broader commercial environment).
A few examples of consumer archetypes that can be used in combination with city or regional archetypes to target specific groups of people are:
• Over 50: addressing aging populations with health and products for those near to or in their retirement years.
• Health conscious: For people interested in organic and health and wellness categories.
• Super premium: Wealthy consumers in both developed and emerging markets.
Center on the city
Although cities are not the only market archetypes companies can pursue, they are increasingly important. They are bigger than ever. And there are more of them than ever before. Holding more consumers and more demand for products and services. By understanding their individual dynamics and clustering them into archetypes, consumer goods players can more effectively achieve global scale while maintaining a local feel. Ultimately achieving an increasingly elusive goal: growth through more satisfied customers.
_____________________________________________
By Larry Thomas, Managing Director, Consumer Goods & Services, Accenture Strategy (North America) and Till Dudler, Managing Director, Consumer Goods & Services, Accenture Strategy (Global)
Consumer goods companies spent decades evolving from local players with a strong regional touch to global powerhouses. One particular vein that promised to yield astounding growth over the years is emerging markets. But now those markets have softened and according to the IMF, will continue to decline into 2016.
What’s more, the local competition in these countries is much more sophisticated. They know where to focus and are more agile than their large global counterparts. Some companies have had to scale back their growth ambitions in emerging markets in the past, overwhelmed by the local variations in consumer preferences, channel structures and routes to market that create significant complexity and cost.
And ultimately, the old school way of targeting customers is unsustainable. But with urbanization a growing trend around the world, there’s a new form of segmentation that allows companies to act locally without losing large-scale delivery. Using a city archetype approach can enable companies to capture these opportunities without adding complexity or cost. How? By capturing the similarities between different types of cities and reaching out to consumers through digital channels to become truly super global and super local.
If you don’t win in cities, you don’t win
Why are urban areas so critical to the growth of consumer goods companies? Because they are growing in size and stature.
Consider this: a major drinks company could address 70 percent of the spirits market in Brazil by operating in just 60 of the 1000 city clusters. That’s because cities have a disproportionate share of growth, wealth and consumers and are increasing in importance. Urbanization is impacting shopping habits, consumption patterns, customer needs and route to market. Because of their pull in terms of demographic weight and buying power, consumer goods companies need to use cities as a basis for grouping markets instead of using the old geographic models, using the common characteristics of often far-flung locations instead of geographic proximity.
Creating the urban archetype
By creating city archetypes, consumer goods companies can drive the efficiency and scale needed to profitably grow in an increasingly complex environment. How to begin the process? By looking at commonalities. Not all cities are alike. But given global macro trends, they’re not all that different either.
Trends like globalized media consumption that stretches across borders so that a customer in Sao Paolo is as likely to know about popular programming as one in San Francisco. And population mobility where consumer targets are more likely to be familiar with London and La Paz. The characteristics companies should look for in order to pool into archetypes: population concentration, evolving customer base, distribution network complexity, and differentiated consumer demand.
Tackling the world through the lens of a city archetype ensures efficiency and scalability. But what are the steps for changing from geographical pooling to one that leverages urban archetypes?
Develop a playbook: To get savvy about city archetypes, consumer goods companies need to first develop a playbook to guide efforts. That starts with the definition of four-to-five city archetypes that groups locations by common success criteria.
Define the approach: Define the specific approach required for each archetype, including marketing mix, sales organization and route to market, and the capabilities required to enable this. Analytics can be used to analyse each archetype and prioritize them based on the opportunity each represents. One Brazilian ice cream manufacturer used geo marketing to identify attractive outlets in Sao Paulo not sufficiently served. By focusing their efforts on the city, the company increased the number of outlets served by 30 percent and increased sales by more than 60 percent—all whist reducing cost to serve by 15 percent.
Pilot archetypes: Pilot the approach in one to two select cities and rapidly operationalize to prove the concept. Refine and scale the capabilities to develop the city playbook for each archetype: a handbook for how to win in each unique location, tailored to local sensitivities, but powered by global capabilities.
Continuously evaluate urban growth areas to ensure that you continue to invest in the right locations, and are deploying the right strategies to meet growing demand.
Beyond city archetypes
Naturally, city archetypes aren’t the only game in town for Consumer Goods players. Markets can also be approached by region or by consumer archetypes (similar to more traditional market segmentation strategies that focus purely on consumer demographics, psychographics and behaviors rather than the broader commercial environment).
A few examples of consumer archetypes that can be used in combination with city or regional archetypes to target specific groups of people are:
• Over 50: addressing aging populations with health and products for those near to or in their retirement years.
• Health conscious: For people interested in organic and health and wellness categories.
• Super premium: Wealthy consumers in both developed and emerging markets.
Center on the city
Although cities are not the only market archetypes companies can pursue, they are increasingly important. They are bigger than ever. And there are more of them than ever before. Holding more consumers and more demand for products and services. By understanding their individual dynamics and clustering them into archetypes, consumer goods players can more effectively achieve global scale while maintaining a local feel. Ultimately achieving an increasingly elusive goal: growth through more satisfied customers.
_____________________________________________
By Larry Thomas, Managing Director, Consumer Goods & Services, Accenture Strategy (North America) and Till Dudler, Managing Director, Consumer Goods & Services, Accenture Strategy (Global)