Product sells out after marketing funds shifted to securing prominent placement on retailer sites.
A global consumer electronics company had to introduce products with increasing frequency, but the cost of broad marketing support for each launch was prohibitive. The CEO understood that digital marketing would be part of the solution, because many consumers evaluate products online. He was aware, however, that creating and approving online content for dozens of countries would be cumbersome and quality was inconsistent.
The CEO engaged McKinsey’s Digital Marketing service to address the product-introduction problem and identify changes in processes and organization that would make digital marketing a competitive advantage for the company.
The McKinsey team started by studying the consumer path from research and consideration to purchase and brand loyalty. Using McKinsey’s Consumer Decision Journey model, they confirmed that digital is critical: 65 percent of customers in the consumer electronics category research and evaluate products online. They also found the “decision journey” across brands and through the shopping/purchasing cycle was disjointed and frustrating: A third of shoppers wound up walking out of stores without purchasing because they could not find the model they had selected online—often because model numbers did not match.
The most important insight, however, was finding where the client could most effectively invest in digital media to influence purchase decisions. Using proprietary clickstream data from a McKinsey partner, the team found that paid media (online display ads, search) did not drive preference strongly, but material placed on online retail sites did. While few consumers actually purchased online, most bypassed search engines and went straight to retailer sites to research products; less than 10 percent bothered with manufacturer sites.
The client agreed to a pilot launch in a single market. Funds were shifted from paid media (online, print, and TV) to channel support to secure prominent placement on retailer sites. Meanwhile, the McKinsey team helped implement process and infrastructure improvements to speed up production of consistent high-quality content for use across touchpoints (online and in-store), smoothing the decision journey. To support required organizational changes and build capabilities, McKinsey helped launch a digital-marketing academy for employees.
The product in the pilot launch became the top-selling model in the market, and store inventories sold out. The client quickly committed to expanding the program based on projections of more than $300 million in incremental sales from using the new approach globally.
The success of the pilot also convinced the client to commit to a broader transformation to weave digital marketing throughout the organization. The client is building centers of excellence in digital analytics, social media management, and post-purchase online service. To support wider deployment of the model, the company organized a digital-marketing advisory board, led by the CMO and including business-unit heads and the CIO.