Manufacturers and retailers recognize the massive benefits that Direct to Consumer (D2C) models support by providing more control over pricing and promotions, allowing them to influence margins and set prices to align with their view of the value of their products. By the end of 2024, the U.S. D2C channel is expected to reach $212.90 billion, with a 12% annual growth rate anticipated in e-commerce from 2020 – 20251, a powerful indicator of consumer behavior.
This growth has given shoppers countless options to select the perfect product from multiple competing brands. To try and meet that demand companies introduce nearly 30,000 products every year. Harvard Business School research found that only 5% of those new product launches each year succeed2.
Manufacturers and retailers are faced with a new challenge: Is it worth it to be the first mover, or should we wait? The answer varies by product, industry, and even geography, but real-time market data is a critical tool to leverage in refining their product development efforts to successfully capture the market.
Should you Act as First Mover? What does the Data Tell You?
Today, speed to market can be the difference between domination and irrelevancy. We have recently seen product development launches occur in as little as 2 months from ideation, compared to 1+ years for the same development in the early 2000s due to the advancement of technology and globalization.
Over the past few decades, first mover advantages have become especially pronounced, as being the first typically enables a company to establish strong brand recognition and customer loyalty before competitors enter the arena. Other advantages include additional time to perfect products or services, as well as setting the market price for new items.
We have seen companies achieve the following benefits as the first mover:
- Brand Name Recognition is a major factor in a consumer’s decision to purchase a product. 59% of shoppers prefer to buy new products from brands familiar to them3.
- Economies of scale allow for a longer learning curve, frequently enabling the company to establish a more cost-efficient means of producing or delivering a product before it competes with other businesses.
- Switching cost for the consumer reaches beyond the financial impact to include procedural costs, losses stemming from evaluating potential alternative offerings, set-up costs, learning/training fees, rational, and costs; the losses from ending long-term business relationships, as well as giving up loyalty perks and incentives for long-term customers. This dynamic raises the bar for competitors to provide a strong enough value proposition to entice the customer to move to a different brand or product4.
However, there are potential drawbacks to the first mover advantage. The first mover may invest heavily in persuading consumers to try a new product. Later entrants would benefit from these informed buyers and not need to spend as much on educating consumers5. Due to the limited market research available, if the launch is unsuccessful, competitors can take advantage of using key findings to improve on the first mover’s product and take advantage of them and become the market leader6.
Real-time market data is a critical tool to capture first mover advantage, sometimes pinpointing product opportunities with little to no competition and relatively high profit margins. By carefully examining unmet or overlooked shopper needs, manufacturers can create valuable points of uniqueness against competitors, create leadership, and spot untapped white space.
The Value of Real-Time Marketing Data Can Validate Risk & Reward
Proctor & Gamble provides a memorable example of a marketing plan that was validated by real-time marketing data. In 2010, they confronted an image issue impacting their bottom line. The company’s Old Spice brand was not relevant or attractive to a younger demographic, and was seen as a “product for grandpas.”
In the past, Old Spice had a targeted audience of 40-60-year-olds. However, with the emergence of social media platforms, the market trend identified an opportunity to recruit younger consumers, 18-34 year-olds.
The new campaign was titled “The Man Your Man Could Smell Like.” P&G arrived at this opportunity with the following data insights:
- At the time, YouTube had nearly 100k unique monthly visitors, with an average of 1 hour and 12 minutes spent on the website7.
- 50% of YouTube site traffic users were 20 years old or younger.
- 60% of all male toiletry products were purchased by women (suggesting they should use an attractive male spokesman).
The advertisement launched online in early February 2010 and in 3 days, racked up 20 million views. After a month, Old Spice had become the #1 all-time viewed brand on YouTube. According to P&G, the campaign produced the following results:
- 2700% increase in Twitter followers
- 800% increase in Facebook fan interaction
- 300% increase in website traffic
P&G’s initial sales goal for the campaign was a 15% lift. But by May 2010, sales had increased 60% from the previous year, and by July, that number was 125%, an all-time high for the brand. Shortly after the campaign, they became the top brand in the men’s body wash category8.
The campaign, though targeted at Old Spice’s body wash, had a massive carryover impact on the rest of the Old Spice product portfolio. According to P&G, the campaign has significantly impacted the overall Old Spice franchise9. Shortly after the launch, Old Spice became not just number one in body wash but also number one in deodorant, holding this position until 201810.
Even though P&G took a huge gamble with a uniquely creative ad campaign, they understood the behavioral analytics of the targeted younger demographic with the data available for the emerging social media platforms and used it to launch a low-cost approach that successfully captured this audience and resulted in a resurgence and category growth of the Old Spice brand.
Agile Processes Support A Successful Marketing Plan
With an understanding of the data insights available, marketers can leverage these findings to review their marketing plans and move to implement them with an Agile approach, adjusting the plan to optimally address market conditions.
- Think Agile more as a process (Backlog management, iterative review, customer input)
Real-time data and technology are nothing if an organization does not have the teams and processes in place to support them11. If an organization wants to capture the speed and benefits that data and technology can provide, then it must adopt an Agile mindset across the whole organization. It is important that Marketing is constantly engaged with Business and Technology partners, as well as with customers, asking questions and identifying how to meet their needs. These feedback loops, both internal and external, will provide meaningful insight to the current environment, driving an understanding of the conditions they will face as they develop a marketing strategy and allowing them to pivot as the environment evolves.
- Continuous Exploration
An Agile organization must always focus on continuous improvement, with a key piece of the Agile process being the concept of Continuous Exploration. Continuous Exploration’s focus is to determine what needs to be built and to adjust as new feedback is gathered. Based on market research or customer feedback, organizations can identify what is needed to meet the needs of the market/customer and quickly provide solutions to meet that need. This approach can help replace the up-front, rigid definition of requirements and allow the implementation of meaningful changes in the portfolio backlog to support planning for the right marketing initiatives12. Again, for example, “The Man Your Man Could Smell Like” campaign … Thanks to the real-time data at their fingertips, and the advent of social media, Old Spice was able to quickly switch their target consumer to users in the 18-34 age range. In true Agile fashion, after the success of the initial campaign, Old Spice continued to engage with customers on YouTube and adjust the campaign. Over the course of two-and-a-half days, a team of creatives, digital strategists, developers, and producers filmed 186 video responses to fan’s and celebrity’s questions that had been posted across social media13.
Now that companies have better access and visibility to real-time marketing data, the real challenge begins: How do you help your company properly adjust as the environment around us is shifting at such an incredible pace?
Research has shown that almost 65% of consumers wish companies would respond faster to meet their changing needs, while almost 90% of executives think their customer bases are changing faster than their businesses can keep pace14.
By leveraging data and machine learning tools, you can respond faster to changes in the quality of traffic brought by advertising campaigns. As a result, you can devote more time to creating hypotheses rather than carrying out routine actions.
- Explore what the customer is interested in at the moment. You can use this data to formulate the right notification method and product recommendations (like or similar) to purchase. The result is the creation of more personalized offers, increasing the chances of sales versus cart abandonment.
- Predictive targeting can leverage hundreds of user parameters with different values beyond just age and location demographics, delivering ads to users who would likely make a purchase, but would not know to search for the product, thus increasing the effectiveness of their campaigns15.
Applying Agile concepts like Continuous Exploration will allow marketing teams the ability to understand the data findings, review their marketing plans each quarter to better assess what initiatives in the backlog must be prioritized for the next quarter, and identify quick win and long-term optimization efforts. Having marketing resources embedded in the product teams and Agile processes will allow the product teams to truly grasp the voice of the customer and adjust plans based on feedback.
As external factors like inflation change customers’ behavior, marketers must abandon a ‘one-size-fits-all’ approach to products or services and focus on flexible options supported by the data16. This focus will allow companies to pivot their marketing strategy to fit the voice of the customer, which will in turn help relieve general market pressures, generate deeper brand trust and loyalty, and create opportunities to better maintain a portfolio backlog that improves speed to market in the most cost-effective way.
Thought Logic’s Sales & Marketing, Data & Analytics, and Technology experts can help you explore your available marketing data to implement a successful Agile plan that will allow you to capture your intended market and make the required adjustment based on findings. Our practices are well versed in industry-leading methods, leveraging years of big-four consulting experience, and supported by our unique culture of client partnership focused on delivery of big results. If you would like to learn more about how we can help your organization, please contact Pete Tunkey at email@example.com.