Embracing Web 2.0 to gain consumer attention

Consumer product companies are reliant on strong brands to maintain and gain market share. As a result they are increasingly under competitive pressure to market themselves and their products more effectively. Optimising the effectiveness and return on investment, and maintaining consistent values across different brands, media, alternative channels, and across different geographies poses particular challenges.

Ernst & Young recently asked a pool of analysts to list and to rate (on a scale of one to 10, with one having the least impact), the 10 most significant trends or uncertainties that may impact companies, and to provide commentary on why these are important to their industry. Marketing and branding was considered to be in the top five most significant business risks to consumer product companies.

Value of a brand in a tough economic climate can prove to be the differentiator from competition. Manufacturers need to maintain strong brand equity by portraying a consistent message across different media.

Reaching the next generation

The inability to reach the next generation of consumers is a major strategic challenge in the retail and consumer products sector closely linked with the threat of the declining effectiveness of ‘standard' advertising. Embryonic efforts to respond to this threat range from major consumer product companies adopting advanced technologies to the use of social networking sites to reach a new target audience.

Social networking is emerging as a powerful consumer driver. This goes beyond just blogs, but also to YouTube, MySpace, Facebook and other technologies that put consumers directly into the experience and allows them to drive the process.

Advancement of technology has brought with it sceptics. An important factor to consider is that on the web, information flows both ways. As a result social networking sites can afford businesses the ability to track consumer behaviour and motivations on an ongoing basis, in real-time and in a cost effective way. The consumer intelligence that is available from these sites is not only instantaneous, but often richer than information collected through traditional market research methods such as focus groups and interviews. Companies can gather valuable information about their customers' needs and create value. Intensive, real-time sharing of information can also be used to drive innovation, improve supply chain efficiency and improve overall performance. On the other hand, consumers now have the ability to do more homework regarding a product. Retailers now have to deal with a tougher, more knowledgeable consumer.

Altering interaction

The internet is changing how companies operate and interface with consumers, who are in turn becoming a powerful force in shaping product trends and brand values. It is also changing business dynamics by reshaping relationships with customers, retail customers and suppliers. Ultimately the growth of social networking sites will shift the power dynamic even further in favour of buyers.

Clearly, digital word of mouth is a powerful influencer, and the internet is a ubiquitous bulletin board for consumer opinions that can have enormous implications, good as well bad, for consumer product companies. Consumers are increasingly influenced by what other buyers say. Many leading companies are developing a presence on the internet with great success. However there is no definitive measurement of success, but this comes with the territory given the evolving nature of the internet.

Managing the online image

These new ways to reach consumers can take companies into unfamiliar territory, creating unexpected risks. Companies therefore need to actively and aggressively invest in managing their image on the internet. More avenues of information create a greater likelihood for misreporting and for opinion masquerading as fact. Blogs can be particularly harmful, since there is little accountability for posts and a high degree of digital permanence.

Protecting your IT systems has become a prerequisite for ensuring the trust and confidence of your stakeholders, from customers and suppliers to senior management and employees. Mismanagement of the expectations of any one of these stakeholders can have devastating consequences. To build trust and confidence, you need to prove that both your e-commerce related business processes contain proper controls and that your policies surrounding the use, sharing and storage of identifiable and confidential information embrace consumer needs — not just minimum standards.