As part of The Drum’s Retail Deep Dive, Aurelia Noel of Dentsu X says that, instead of relying on the 4Ps of marketing, high street retailers need to take a leaf from their digital counterparts’ books and accelerate their own transformation before it’s too late.
Online retail has posted incredible growth numbers at the same time we’ve also witnessed the changing face of our high street. Once buoyant, there is now an acceleration of bricks-and-mortar closures. The old retail model is broken, where traditional retailers are relying on the 4Ps of marketing (product, place, price, promotion), more agile competitors are reinventing the rules around the 4Es (experience, everywhere, exchange, evangelism). The high street now needs to take a leaf from their digital counterparts and accelerate their own transformation before it becomes too late.
Despite physical locations closing, retail is in rude health and estimated to grow in the UK by 3.5% in 2021 and 5% in 2022; just like many sectors, what was once dominated by physical sales is now at the peak of digital transformation. In a reality, where consumers literally have the world at their fingertips, what we once considered the Golden Rules of marketing, are in dire need of an overhaul.
As someone who was classically trained, like many of us in the advertising and marketing world, for most of my career Philip Kotler and his 4Ps (product, price, place, promotion) were my ’safe place’. After 18 months’ working from home, I’ve had time to think and revaluate what ‘normal’ really is in this digital and remotely accessed world: “Are those principles still applicable, are data, technology and digital disrupting to the point where none of Kotler’s principles matter any more?”
People want more than a ‘product’, they buy into an ‘experience’
Offering quality goods and services is not enough to guarantee business success. When I started in digital, my main concern was: ‘How am I going to translate the store experience online?’ We can agree the reverse is now true. As online businesses did not have physical stores, they made ‘customer obsession’ their raison d’etre.
Brands are often taking the mistaken view that people are going to digital because of automation and the lack of human interactions. This cannot be less true, as humans we long for interactions and we want brands to form a connection with us. The connection though should not be one sided, to succeed retailers needs to bring the experience back to store and make it the heart of their ecosystem. Authentic experiences will see customers come back for more, so give them as many reasons to engage and experience your brand as possible.
Brands should think about how they could develop an ecosystem around their brand, leveraging all the human touchpoints both in-store and in the digital sphere. This has been achieved to great effect by the likes of Nike which leveraged its employees to become live commerce influencers, something which is now common in China or Ian McLeod Distillers creating an audio program featuring the “industry’s best kept secrets”. In short, consumers only spend 1% of their brand interactions buying the products and 99% experiencing the brand. Make sure to maximize on the latter and consider ways to build a long-lasting experience inside and outside of a physical location.
What is the value of ‘place’ when you can be ‘everywhere’?
When you rely on a physical abode, ‘place’ is everything, it drives footfall, contributes to the prestige of a brand, even gives it a platform to stand out from the crowd. When it comes to ‘place’, digital businesses have the advantage, they are everywhere and at any time. Being a teenager obsessed with glam goth German bands, I remember spending hours in Tower Records looking for the latest ‘import’, my teenage daughter does not share my music taste, but if she hears a song she likes, she can download or stream in seconds, her world fits in one hand and with it, she can access any goods or services, without worrying about time or borders.
On the high street, the dice are somewhat loaded, brands don’t always have the investment or skillset to be ‘everywhere’, instead they must be where it matters most. It’s rare for consumers to now be 100% present, there’s usually some aspect of a digital overlay – be that location based, pre-emptive discovery or a spontaneous ‘near me’ search.
Think about the full remit of the digital realm and consider: ‘What do people see when they search for a store or products?’ ‘What ways are there to leverage the opportunities offered by social commerce?’ ‘Should there be a buy-now, collect in store service?’ Creating a digital ecosystem around a retail brand and location, may be easier than anticipated.
Price is great but driving a positive value ‘exchange’ is better
In 1997, a relatively unknown Jeff Bezos, said his company would never focus on share price or stakeholders, it would instead focus 100% of its energy on building value for its customers. Fast forward 24 years and Amazon now represents more than a third of e-commerce sales in the US and Europe
What was true in the late 90s, is even more today, but back then value was interpreted as ‘value for money’, today consumers are more interested in value ‘exchange’.
Consumer expectations are shifting, price is an important factor in their decision making, but beyond price, consumers are looking for brands that are consistently delivering on value exchange. It is about creating a win-win relationship with consumers, so they can better understand what the brand stands for and to know it ladders up with their own interests, their community, their social capital or their wellbeing.
Who needs ‘promotion’ when you can have ‘evangelism’?
The pandemic has demonstrated “Promotion” alone is not enough, especially at a time where marketing budgets are under threats and uncertainty has changed the way consumers buy.
Digital has given consumers a platform to voice their love or hate for brands, yet brand evangelism is not always leveraged or embraced, especially by traditional retail or high street brands. Digital giants, on the other hand have built empires on harnessing ‘evangelism’, with brands like eBay, Airbnb, Glossier and Asos creating wide communities around their brands.
Genuine ‘evangelism’ is based on a few key principles: Firstly, reputation is paramount, consumers are more likely to buy from a brand trusted by others, especially if this is their first purchase. Secondly, focus on a brand story, a business cannot afford to be one in many, so make it one in a million through connecting with the audience on a personal level. And, by no means least, build a community, don’t think about what’s being sold, but what the brand stand for. Bring the consumer into the brand and make them part of the new retail experience.
In conclusion, the 4Ps so dear to Kotler are still relevant, but not enough to compete with more agile and digitally driven competitors. To survive, high street and traditional retail brands need to build and leverage a digital ecosystem around them. Many brands have tried and failed, as they confused embracing Digital with automation, data and technology but forgot the ‘human’. We need to recognize the simple fact there is currently no algorithm for human behavior and consumers are yearning for ‘relationship’ and ‘connections’. The rules of engagement have changed, beyond the 4Ps, the 4Es focuses less on product and brands and more on Human centricity – and these are the way we save retail.
Aurelia Noel is global head of innovation and transformation at Dentsu X.