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 | | What do you mean by "proliferation"? Answer |
| | | | How does proliferation impact companies? Answer |
| | | | Why is this issue important now? Answer |
| | | | Who is/will be affected by proliferation? Answer |
| | | | How does the proliferation challenge manifest itself in different industries? Answer |
| | | | How does the proliferation challenge differ by region/geography? Answer |
| | | | How can a company profit from proliferation? Answer |
| | | | What are the steps they need to take? Answer |
| | | | What should a company do first? Answer |
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| | | What do you mean by "proliferation"? | | By proliferation, we mean the increasing complexity in today's marketing environment:
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the growing fragmentation of customer segments,
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the simultaneous demand for both high-and low-end products and services,
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the declining effectiveness of traditional media and emergence of newer, subscale communications vehicles, and
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the sheer number of touchpoints (or channels) that customers now demand
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This has led to the need for more in all aspects of marketing and sales – more brands, more products and services, more price points, more campaigns and promotions, and more sales and service options delivered through more channels. | | | | | | How does proliferation impact companies? | | | Most companies respond to this step-change increase in complexity by "bolting on" new segment and channel strategies, new organizational layers, like segment or channel managers, and new or increased investments in advertising and promotions.
The net result is an increase in marketing & sales costs and reduced scale, both of which create a host of problems. Companies fail to spot growth opportunities because they have no way of integrating knowledge about customer needs across the growing number of segment, channel, and product category combinations. Customer satisfaction declines due to inconsistent sales and service delivery across channels. Responses to competitive and market shifts are slower as organizations lose agility and allocate resources less efficiently.
| | | | | | Why is this issue important now? | | | The pace of proliferation is accelerating in many markets, while at the same time more and more companies are realizing that historic, "bolt-on" approaches are frequently raising costs and reducing customer satisfaction. For these reasons many leading marketers are now making the conscious choice to transform their marketing strategies and organizations, a requirement for effectively dealing with proliferation. | | | | | | Who is/will be affected by proliferation? | | | Proliferation will affect virtually every company in every industry – the question is not "if," but "when." McKinsey & Company recently interviewed nearly 50 Chief Marketing Officers from Fortune 500 companies across industries – including automotive, basic materials, credit cards, financial services, high tech, industrial, media, packaged goods, pharmaceuticals, retail, telecom, and transportation. In virtually every conversation, proliferation arose as the foremost issue for marketers.
Subsequent discussions with nearly 100 more marketing executives have shown that the challenge of proliferation permeates all major marketing and sales activities related to product, brand, segment and channel management – both on the revenue and on the cost sides of the picture. | | | | | | How does the proliferation challenge manifest itself in different industries? | | | While we believe proliferation is an issue in every industry, the extent and nature of the challenge does differ. Some industries, like pharmaceuticals, retail banking and consumer/packaged goods have struggled with aspects of proliferation for some time. For others, like industrial, post and parcel and telecommunications companies, the proliferation challenge is a more recent phenomenon.
Different industries face the challenge in different ways. For example,
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Automotive and consumer/packaged goods companies tend to struggle most with the fragmentation and polarization of customer segments, and the proliferation of media investment options |
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Telecommunications and retail banks, on the other hand, struggle with the explosion of new channels and customer touchpoints, and the proliferation of product and service offering
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How proliferation affects a company will further vary based on a company’s particular business model and position in the industry. Therefore, while we do see industry trends, we believe each company will face, and respond to, the proliferation challenge in its own way. | | | | | | How does the proliferation challenge differ by region/geography? | | | Our CMO research suggests the proliferation challenge manifests itself in major markets across Asia, Europe and North America. We do see some minor differences. For example, media and channel proliferation is currently more pressing in North America than elsewhere. But we don't think the differences are significant. Virtually all Fortune 500 companies, globally, must deal with proliferation. | | | | | | How can a company profit from proliferation? | | | Proliferation presents opportunities to grow faster by grabbing share in new segments, channels and communication approaches. But doing so requires integrating and connecting marketing strategies and execution to enable the pursuit of growth without the creation of higher costs or the risk of fragmented, deteriorating customer service.
Companies that embrace the complexity in today’s environment have found ways to differentiate themselves, and to profit. Think of IBM’s successful "stretch" of its brand from products to services, Dell's efficient sales and service delivery model or P&G's innovative use of new media.
These companies focus on their particular challenge, be it segment fragmentation, exploding touchpoints, or media proliferation, and adapt their strategies, how they execute and how they organize themselves accordingly. | | | | | | What are the steps they need to take? | | While each company must chart its own course to profit from proliferation, most will need to take at least one, and sometimes several, of five key steps:
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Develop a disciplined approach to managing a brand portfolio
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Build an insights network to identify and capture growth opportunities at the intersection of brands, segments and channels
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Improve sales and service delivery by creating a lean backbone to meet shared customer needs and standard high-touch overlays to serve more exacting customer demands cost-effectively
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Standardize execution of critical marketing functions, such as pricing, customer management, and spend effectiveness, with globally coordinated processes, supporting tools and metrics
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Transform commercial capabilities – including core marketing and sales processes, roles, and capabilities – to create more flexible organizations
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| | | | | | What should a company do first? | | | Which steps a company takes first, and the order they follow, will depend on the company's current situation, capabilities, and strategic objectives. Some companies start with rethinking their go-to-market strategies, from brand to sales as service delivery. Others focus on increasing the discipline in how they execute marketing, by standardizing processes and increasing integration across functions. Still others start by considering the core commercial capabilities they need to build to compete effectively in a proliferating world. | | | | |
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| | Profiting from Proliferation | |
 | Frequently Asked Questions | |
| The McKinsey Quarterly | |
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