Insight to Action
With consumers increasingly elusive to reach, private label competition continuing to erode market share from branded goods and mass-channel retailers demanding higher price discounts, marketers are increasingly put under the microscope to show return and results. Today's marketers must be able to read, track, quantify, monitor and demonstrate the specific results for their marketing initiatives and spending in all areas--and not just in equity. Toss in federal legislation like Sarbanes-Oxley and suddenly, a shift in business process appears, with the subtlety of a tidal wave, forcing some of the best marketers in the world to race back to the drawing board in order to re-think how they track and quantify marketing expenditures.
Just a few short years ago, Kimberly-Clark (K-C) was caught within the crosshairs of this new age of marketing challenges when the company's business and IT leaders came to the realization that its marketing and research departments had not received the level of technology investment that would heighten their ability to be responsive. The $15 billion dollar global health and hygiene corporation was responding well to customer demand from a supply chain standpoint, however, the leading-edge manufacturer and marketer within the consumer goods arena, whose inimitable brands include Kleenex, Huggies, Kotex and Scott, had not developed technical capabilities for its marketers that would allow them to advance as effectively as they could. "We said to our senior leadership that we wanted to ratchet this up over a period of time so we simply began adding funds to the budget and investing resources into the best ideas," says Terry Assink, chief information officer, Kimberly-Clark. "The insight that the group gleaned was the need for additional process-thinking around our marketing." The result was the creation of the internet-based Brand Builder, a new Marketing Resource Management (MRM) tool that continuously captures key marketing learning and provides dynamic management of marketing insights, spending and campaigns.
This new way of thinking, thus far, appears to be working. In 1Q 2005, sales rose more than 5 percent to $3.9 billion, establishing an all-time quarterly record at K-C. Top-line growth, along with continued success in reducing costs, contributed to the improvement in first quarter earnings per share. These positive factors enabled K-C to overcome inflation in key cost components totaling approximately $100 million and to fund more than $20 million in marketing and research spending for new and improved products.
Insight to Action
This Marketing Resource Management (MRM) strategy--a singular set of tools within research and marketing that connect to capture data and manage knowledge--is the engine that will power K-C's insight to marketing action. The tools enable the specific requirements needed for each marketer to leverage insight around trade promotions or advertising spend, for instance. But the biggest opportunity within the MRM tool set is around synchronizing marketing efforts with selling and supply chain efforts to K-C's competitive advantage. "As we move forward, it's becoming more obvious that this process cannot sit on its own," says Assink. "We have so many touch points from one process to the other. As a consumer goods company, the more we can have insights to our users, shoppers and customers, the better off we are. It's critical to our existence."
In response, IT made certain that its data became much more than just a repository or a library. "The idea becomes one of how to connect these data houses to glean the connected ideas and turn them into even deeper insights about users, shoppers and customers," says Kim Feil vice president, senior marketing officer, K-C. "It's not just enough to say a certain amount of diapers are used per month-- it's got to be how and what lifestyle situations and what does a consumer or user do in terms of diapers morning, noon and night and how that varies by consumer group."
Custom-Built Analytics
The MRM system at K-C contains a custom-built guided analysis and thinking process to help its marketers create integrated marketing campaigns in a more consistent manner while leveraging the kernels of truth that make a difference to top and bottom line growth. "It's more than just technology for the sake of storing, managing and shuffling data from place to place. It's really about adding good thought value to it along the way," says Feil.
For Assink and his tech team, this is the big "Ah-ha!" around the system--the fact that it adds up to so much more than just a data repository with a search engine to find all of the relevant facts. Another critical component that bolsters the ongoing success of the MRM system is an emerging technology called "Template Knowledge Collection," an approach that allows the opportunity to ask questions relevant to what's going on in the marketing process at a particular point in time. "It's not like writing a Word document and then putting a little summary at the top that becomes the life of that document," says Assink. "It's more about understanding what happened and having the insight at that point in time."
The next stage in the process re-confirms that that understanding is still valid. The ownership of that understanding is established as well as the life expectancy, a point that Assink underscores by citing the world-is-flat puzzle solved by trailblazing explorer Christopher Columbus. "If we were to go out and examine the knowledge bases throughout the world, we'd still find that the world is flat," says Assink. "Nobody has actually extracted and carried all of the references to tie together the journeys of Columbus. This system allows us to establish ownership--it has expiration dating in it--it causes us to re-visit and re-validate things we talk about and it's relevant not only to marketing but research as well. K-C can now avoid going backwards by learning from mistakes that other users have made. It's a truly dynamic piece of technology that ultimately becomes a partner to marketing."
Learning the Fundamentals
Two fundamental pieces--a knowledge repository and overlaying tools needed to bring the repository to life--fire up the MRM engine. Separate Brand and Digital Asset Libraries (packaging, advertising, design art, etc.), Integrated Campaign Activity Management and a calendar of all marketing activity are complemented by another tool to measure trade spend in the marketplace.
Other pieces include Insights Management, Workflow and Marketing Mix. These pieces are the ones that actually allow the libraries of information to come to life by addressing specific pain points. "Marketing Mix" for instance, addresses the specific category of where K-C should spend millions of dollars in marketing expense. "On an ongoing, proactive basis are we responsively changing the direction of that spend so that we know that we're getting the most out of specific campaigns in a very competitive environment," says Feil.
In the past, K-C retained a lot of information in different places--including people's heads, according to Aida Flick, director, North Atlantic brand equity management, K-C. This approach obviously doesn't properly facilitate knowledge transfer and speed to market. "Recognizing the need for one version of truth that everyone can go to get the latest information from, was of utmost importance," says Flick. "We also need to make sure that this tool becomes interactive, so if I want to access the system and create a "what if" scenario and pull together a series of different facts and leveraging information across all departments--it will allow me to do that and also allow me to act much more quickly."
Addressing internal issues that K-C recognized by questioning, for instance, if the company wants to be faster with speed to market while also being able to ensure that all of the knowledge is transformed into true insights and taking advantage of that quickly was the thinking behind the creation of the MRM initiative in place today and the vision that K-C holds looking towards the future.
Names and Places
Many of K-C's MRM capabilities are interwoven into the business processes the company is executing. This process guides users when to use the tool, how to use it, how to capture knowledge and how to retain the knowledge to pass it on--the latter of which is woven back into the company's SAP Enterprise Resource and Planning (ERP) system.
"Integrated Campaign Activity Management," for example, is a part of SAP's TPM capabilities, a tool that enables K-C to do integrated planning across marketing disciplines. "These groups get together and collaborate on how they will execute the major objectives for the year, and the major programs K-C will go after for both long and short term," says Neil Prom, manager, marketing business systems. "The tool supports top-down planning. Once that is completed, we can begin the bottom up planning so that each individual area--for example promotion versus advertising--can go in and define their campaign."
From there, the information gets integrated back into R/3, SAP's ERP solution. Workflow now enables the authorization of marketing expenditures. As soon as a user is ready to execute a marketing campaign, a workflow item is submitted for approval. Once approved, it integrates into back end office so that the user can then begin to create purchase orders and start capturing actual cost. "It is a closed-loop tool in that I can plan and execute with pre and post analysis," says Prom. "If a campaign didn't turn out as profitable as initially planned, the system can help answer some of the questions as to why."
Measuring Return
According to research generated from the 2005 Sales & Marketing Report, a joint study created by Consumer Goods Technology and AMR Research, over 80 percent of participants said they still do not measure the return on their marketing investments, a fact that does not surprise the marketing team at K-C. Having worked with other CG companies prior to joining K-C, Kim Feil says the industry is still learning and evolving. CG firms today typically look for ROI on trade spend and coupons when they should be more focused on trying to assess the long term lift from equity programs that drive consumer awareness and understanding. "There is increasingly, a real need for it as consumers are harder to find and pin down," says Feil. "Meeting environments are so much more fragmented. The consumer demographics themselves are reshaping so much that it becomes an absolute urgency that the industry finds a way to evaluate a return on all of its marketing initiatives." And while K-C has been involved with measuring its traditional marketing ROI for the past three years, the company is still on the front edge of assessing equity programs.
K-C admits the less tangible elements of marketing in the past have been more qualitative and creative, which is why it is being placed under the microscope for scrutiny, in terms of needing to show its return, according to Aida Flick. "That's the stuff that we now pay more attention to--wanting to understand what we are getting for the investment that we are making. Anything that involves advertising is getting much more scrutiny. We're recognizing that today, consumers are fragmented. They have messages coming in from all angles and you cannot assume that everyone is going to see your commercial or pick up a Sunday circular." Even things like event marketing, grassroots campaigns and PR did not, until recently, possess the necessary metrics at K-C that the company took for granted with its trade and coupon initiatives. Today, those areas are being measured at K-C.
Facing a Loyal Future
A big metric emerging today within the consumer goods space, and also among retailers, is loyalty. Retailers are constantly on the prowl to figure out how to bring consumers into stores on a continuous basis in order to grow their market basket. In turn, K-C also tries to determine how to attract, retain and develop consumers within its own franchise and portfolio brands. With many of the loyalty programs that retailers conduct, and their willingness to share that loyalty data with K-C is a "new frontier" according to Kim Feil, who says that K-C will be pursuing the loyalty space very aggressively. "Loyalty to retail, to brand and company franchise--those measures are going to become increasingly important over the next 10 years."