One of the special things the team enjoys in our office is the open discussion and the learning that comes from team members of varying backgrounds, experiences and professional roles sharing their thoughts on a broad range of subjects. Over the past few months there have been quite a few new engagements focused in on leveraging purpose to drive profit or leveraging purpose to deliver results on a wide range of business objectives. So, this week we are changing it up and introducing a new segment in which we ask our team members about topics that have been the foundation for internal discussions and share their thoughts with our broader community. This week we sit down with our Group President and CEO, James Chalmers to ask him a few pointed questions on the subject of leveraging purpose to drive profit for consumer brands.
You talk a lot on this subject and for TACK10 this very topic represents a significant portion of work for the company. Why is it so important in your mind?
We are all tasked with doing more with fewer resources in our organizations. To be successful, it is paramount that organizations differentiate and truly understand the value proposition they provide to their customers. The four Ps of the marketing mix are changing. Customers are holding organizations accountable to purpose and the partnerships they cultivate… or don’t. The traditional 4 Ps will drive short term success but largely miss the mark when it comes to creating long term customer loyalty. Miss out on purpose and partnerships and you are missing out on creating a value proposition that connects with today’s consumers which will stand the test of time.
Some might challenge that notion, believing that a company’s attachment to purpose is not a requirement and that the company’s value proposition relies on other Ps in the marketing mix such as product, price or promotion. How would you respond to that position?
I have to disagree. Based on all of the data I’ve reviewed and the research our firm has completed, you simply cannot exclude purpose in your marketing mix. Purpose driven firms are out-performing non-purpose driven firms on the S&P 500 by almost 400% according to a recent EY report. There is no longer any room for argument. Consumers want to buy from brands that are socially responsible and stand for more than just profit. I would also go so far as to say that some Ps within the marketing mix are becoming irrelevant, such as price. It is not that price does not matter, you cannot compete on price as a long-term business plan for success. It simply does not work. Some competitor will almost always be willing to sell for less and as a result, competing on price becomes a race to the bottom.
Wait a second… There are a lot of companies who compete on price and continue to have great success. We were just talking about the growth in the direct to consumer market as an example, and they often compete on price.
My question back would simply be this; do they compete on price or do they compete on value and convenience? Most direct to consumer brands may have promoted very aggressive initial offers to drive new customer acquisition but their longer-term strategy tends to focus on new product introductions which brings the focus back to value and convenience.
Fair point. Well then, what about relying on product or promotion?
The marketing mix works as a holistic system. A product without promotion is not going to have any meaningful success. Promotion, however, is your opportunity to engage. Traditionally, promotion was used to tell a brand’s story. Today’s consumers want to be part of the narrative and part of that includes influencing it. Consumers want to feel they are having daily impact. They want to be baked into your value proposition. How you do this meaningfully and authentically is through investment in purpose.
Purpose is not a magical key. It does not unlock surreal performance. All of the data and research shows that consumers want brands to take a stand on social issues and stand for more than just profit. Consumers and consumer data show that they are willing to switch brands and even willing to pay more to support brands whose values are authentically aligned to their own. As a result, successful brands are incorporating purpose into their DNA and making decisions based on the purpose values that make sense for the brand or organization. The most successful brands are now also leveraging the purpose they have incorporated into their DNA to tell their story. That story is their value proposition. It goes beyond a product or service.