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Spending in the right places to reach more priority customers

New approach across 17 countries increases households reached by 20 percent.

Challenge

The new CMO of a big personal care products company saw significant opportunity to get more out of the company’s €1 billion marketing budget. Spending priorities across products, brands, and countries were less than transparent, brands were positioned poorly against competitors, and the overall mix of media used for advertising lacked full efficiency and effectiveness.

Complicating matters was the need to get the CMOs of all the company’s many different country-based organizations—who had a reputation for independence—onboard with the new plan.

Discovery

To help ensure alignment across diverse organizational units, the McKinsey team worked closely with the client to create an objective analysis of economic, strategic, and marketing-oriented criteria for each brand in two pilot countries.

Working methodically through masses of complex data, the team was able to develop a model that clarified the landscape. The client was able to quickly grasp the optimal budget for the various brands, the most relevant drivers of brand value, the most effective media in which to advertise, and the in-store promotions most likely to succeed. Separate conversations helped clarify and align mismatched marketing and sales targets, a perennial stumbling block for many budget allocation efforts.

With these clear insights in place, the client CMO and team prioritized the brands, creating a model that clearly showed the company was overspending on one brand while under-spending on a few others. Soon all the brands had been sorted into three groups: grow aggressively, grow, and sustain.

The team helped selected country CMOs to allocate budgets, taking fully into account the particulars of each country’s nuanced context. At the same time, the team helped the client design and execute a painstaking internal communications campaign to win vital support in critical sectors of the organization by clearly demonstrating how the new allocations would benefit the company overall.

Impact

After piloting the new approach to allocating spend in two countries, the client rolled it out in 17 countries. McKinsey trained a client team that was able to effectively shift spending from lower- to higher-priority markets and reallocate close to 20 percent of the marketing budget.

A rethink of media vehicles generated a 20 percent improvement in the total number of households reached by the company’s advertising. Overall, the effort helped the company boost net sales by an estimated 3 percent. 

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