For an increasing number of advertisers, a physical presence in markets has become a luxury that can no longer be sustained, with regional-based models of operation being revived. Will such a shift in policy come back to haunt brands, asks chief executive of Grey group MENA, Eric Hanna.
Here’s the truth. There are concerns about the strength of the global and regional economies, environmental and political uncertainties, the shift of power from West to East, the digitalization of life, and the total unrelenting speed of it all. The world is in a perpetual state of change and it seems that life has become more about exhausting the old and revealing the new, always in search of new possibilities.
In this context, there was a time when marketers believed the ideal way to further build business was to drive brand preference by getting as close as possible to those customers and consumers on the ground in whatever market they were in. It was all about getting granular with a view to uncovering those nuggets that would stimulate affinity for the brand and, consequently, business results. While the principle still holds true today, the need to continuously improve bottom lines is encouraging a culture change in favour of those consolidated regional management models discarded a decade or so ago.
Guided by the belief that less is more, many marketers are increasingly choosing fewer centres of excellence to cover larger geographies. The view seems to be that physical presence in markets has become a luxury that can no longer be sustained. As a result, regional-based models of operation are being revived and gradually rolled out to further squeeze value out of the system.
The challenge many have had to deal with is the extent of the change, or evolution, towards more hub-based practices without diluting brand support on the ground and – most importantly – relevance amongst those people of interest in a region or a specific country. It’s in that spirit that unacceptable compromises are now being ratified as an integral part of this new world of managing brands and businesses, with risks often downplayed by faith in the transformational role digital is continuing to usher in.
Yes, the digital revolution has redefined the way we go about our lives on a daily basis. From the internet to mobile, social media and other, these solutions have encouraged everyone to rethink the goalposts – discover the new or simply stay in touch. And along the way, it seems the boundaries between the real and the virtual have faded, to the extent that there is little or no limit to what could be achieved. Suddenly everything is possible, including the successful management of more territories from just a few conveniently (or strategically) located centres of excellence ... as was the case in the past and subsequently ruled out, until now. And because it only takes one to quickly drag others down the same path, the overarching sentiment is that this approach is the new order in the future of managing brands.
Irrespective of the new regional management formulas adopted, the reality is that brands are physically stepping away from their constituencies in many markets. And whilst the cost savings of doing so have probably had the desired impact on profitability, I believe those who went all out will be forced to revisit their strategy as and when their top line growth comes to a halt or regresses. After all, wasn’t profit the main reason for brands and businesses to decentralize and expand presence in markets in the first place?
Today, the view that one size can (potentially) fit all is suddenly growing in popularity. And with great results on balance sheets, marketers are going about reshaping the management of brands, pulling further away from customers and consumers in markets along the way. On the ground, teams are made to believe in this new order and, subsequently, instructed to implement the transition. And the word from the top of every chain is to make it all work by leveraging digital as a solution to iron out any of the resulting complications.
Far from advocating a reliance on the old ways, I feel striking the right balance between business requirements and those brand relationships in individual markets or regions is paramount. I for one appreciate the wisdom behind the expression ‘Don’t throw the baby out with the bathwater’. This is to say that, whilst I strongly believe there is and will always be room for improvement, I am convinced there is often merit in the learnings from previous efforts vested to keep the finger on the pulse of those in specific markets of interest. And harnessing the power of digital to sit at the heart of any suggested way forward should help complement – not eradicate – past investments to build and strengthen relationships with individual consumers and customers.