Five keys to unlocking growth in marketing’s “golden age”

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New trends have moved marketing the cusp of a new golden age. To deliver on the promise, marketing needs to execute on the 5S approach: science, simplicity, substance, speed, and story. This presentation walks through what marketers and business leaders need to get right to execute all of them. This presentation is based on a public webinar given by McKinsey partners Jonathan Gordon and Jesko Perrey.

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McKinsey Insights & Publications webinar | February 20, 2015
Five keys to unlocking growth
in marketing’s “golden age”

McKinsey & Company | 1@McKinsey @McK_MktgSales #McKGrowth
New trends shaping marketing today
Consumer
power
Explosion
of digital
Fragmentation
Always on Personalization
Data, data,
data!
1
0
0
1
1
0
Personalization

McKinsey & Company | 2@McKinsey @McK_MktgSales #McKGrowth
This is the dawn of
a new golden age
of marketing
McKinsey & Company |@McKinsey @McK_MktgSales #McKGrowth 2

McKinsey & Company | 3@McKinsey @McK_MktgSales #McKGrowth
Science
StorySpeed
Simplicity Substance
The 5 S’ of the new golden age

McKinsey & Company | 4@McKinsey @McK_MktgSales #McKGrowth McKinsey & Company |@McKinsey @McK_MktgSales #McKGrowth 4
“The beauty of marketing today is
that we can really show the return.
The data allows us to demonstrate
impact in a much more transparent
way than in the past.”
Lorraine Twohill, Senior VP for Global
Marketing, Google
Science

McKinsey & Company | 5@McKinsey @McK_MktgSales #McKGrowth
Science
Better decisions to
increase impact
$200 billion opportunity

McKinsey & Company | 6@McKinsey @McK_MktgSales #McKGrowth
Science: Better decisions to increase impact
Avg. profit
for promoted
products up
288%
Retail company

McKinsey & Company | 7@McKinsey @McK_MktgSales #McKGrowth
Science: Better decisions to increase impact
International industry player
100,000
price points reset
500 SKUs
1.3 million transactions
Analyticalrendering

McKinsey & Company | 8@McKinsey @McK_MktgSales #McKGrowth
Science: Better decisions to increase impact
vs.
Art Science
Wrong debate

McKinsey & Company | 9@McKinsey @McK_MktgSales #McKGrowth
Science: Better decisions to increase impact
Art Science
Wrong answer

McKinsey & Company | 10@McKinsey @McK_MktgSales #McKGrowth
Art Science Craft
Science: Better decisions to increase impact

McKinsey & Company | 11@McKinsey @McK_MktgSales #McKGrowth McKinsey & Company |@McKinsey @McK_MktgSales #McKGrowth 11
Substance
“Look what [luxury brands] are
doing: they’re building flagship
stores that are beautiful, where
you actually like to just browse
around before you buy. Those
are emotional places.”
Ola Källenius, Board of Management
of Daimler AG

McKinsey & Company | 12@McKinsey @McK_MktgSales #McKGrowth
Substance
Moving beyond
messaging to shape
the substance of
business

McKinsey & Company | 13@McKinsey @McK_MktgSales #McKGrowth
Differentiation
Substance: Shaping substance of business
Products Services Experiences

McKinsey & Company | 14@McKinsey @McK_MktgSales #McKGrowth
Substance: Shaping substance of business
Energy company
Customer
onboarding
7 steps
2 steps

McKinsey & Company | 15@McKinsey @McK_MktgSales #McKGrowth McKinsey & Company |@McKinsey @McK_MktgSales #McKGrowth 15
Story
“It’s not [all data]! … If you fall
down on the art, if you fail on the
messaging and storytelling, all
that those tools will get you are a
lot of bad impressions.”
Lorraine Twohill, Senior VP for Global
Marketing, Google

McKinsey & Company | 16@McKinsey @McK_MktgSales #McKGrowth
Story: Better storytelling for emotional connection
What makes a good
story hasn’t changed.
HOW to tell one has.

McKinsey & Company | 18@McKinsey @McK_MktgSales #McKGrowth McKinsey & Company |@McKinsey @McK_MktgSales #McKGrowth 18
Speed
“Speed comes from decentrali-
zation and creating a local
autonomy to take local action.”
CMO, Consumer goods company

McKinsey & Company | 19@McKinsey @McK_MktgSales #McKGrowth
Speed
A culture of urgency
has placed emphasis
on speed and agility

McKinsey & Company | 20@McKinsey @McK_MktgSales #McKGrowth
Speed: A culture of urgency to keep up with consumers
From To
Batch processing
Command and control
Manual
Slow development
Continuous delivery
Agile
Automated
Real-time test & learn

McKinsey & Company | 21@McKinsey @McK_MktgSales #McKGrowth McKinsey & Company |@McKinsey @McK_MktgSales #McKGrowth 21
Simplicity
“The growing complexity is
unmanageable: in-house vs.
external partners, established
channels vs. new channels. We
need help to get through this jungle.”
CMO, Consumer goods company

McKinsey & Company | 22@McKinsey @McK_MktgSales #McKGrowth
Simplicity: Simplify to execute
Speed and agility
require relentlessly focusing
on simple

McKinsey & Company | 23@McKinsey @McK_MktgSales #McKGrowth
Complexity kills
Expanding
geographic
footprints
Product and
channel
proliferation
Digital and
technology
specializations
Hierarchies,
silos, gaps,
redundancies
Simplicity: Simplify to execute

McKinsey & Company | 25@McKinsey @McK_MktgSales #McKGrowth
The most important questions to ask
Speed
Faster than our competitors or slower?
Simplicity
Simplifying processes or overwhelming with new things?
Story
Making connections or speaking into space?
Substance
Differentiated experience or “me-too” selling?
Science
Today’s insights or yesterday’s facts?

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Spanish consumers are pessimistic about the economy. Rising prices, unemployment, and the invasion of Ukraine are top concerns, and consumers are trading down. In Spain, consumers are most concerned about rising prices, unemployment, and the invasion of Ukraine. Their views of the current and future state of the economy remain pessimistic, at a level comparable to attitudes in the early months of the COVID-19 pandemic. Spend for groceries and gasoline soared, while consumers reduced money directed to savings and spent less on non-essentials. Of the 80 percent of consumers who have assumed new shopping behaviors in the last three months in search of value for money, more than half tried private labels. Trade-down in retailers visited and brands is evident, with the key drivers of choice being prices and value for money. However, 39 percent of consumers say they plan to splurge in 2022.

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UK consumers are pessimistic about the economy. Rising prices and the invasion of Ukraine are top concerns, and consumers are trading down significantly. In the United Kingdom, consumers are most concerned about rising prices and the invasion of Ukraine. Their views of the current and future state of the economy are extremely pessimistic, worse than throughout the entire COVID-19 pandemic. Spend for groceries and gasoline soared, while consumers reduced spend in non-essential categories. Almost two-thirds of consumers have assumed new shopping behaviors in the last four to six weeks, with more than four out of ten trying private label. Trade-down in retailers visited and brands is evident, with the key drivers of choice being prices and value for money.

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McKinsey on Marketing & Sales

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McKinsey on Marketing & Sales

German consumers are pessimistic about the economy. Rising prices and the invasion of Ukraine are top concerns, and we see a significant down-trade in shopping. In Germany, consumers’ top concerns are rising prices and the invasion of Ukraine, followed by climate change and COVID-19. Pessimism about the current and future state of the economy has eased but remains at a level comparable to attitudes in the early months of the COVID-19-pandemic. As spend for groceries and gasoline soared, consumers reduced money directed to savings and spent less on non-essentials. Of the 70 percent of consumers who have assumed new shopping behaviors in the last three months, more than four out of ten tried private labels. Trade-down in stores visited and brands is clearly visible, with the key drivers of choice being prices and value for money. However, 46 percent of consumers say they plan to splurge in 2022.

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For consumers in France, inflation eclipses other sources of concern. It triggers changes in shopping behaviors as consumers seek better value for money. French consumers’ optimism regarding the economic recovery is stable at around 14 percent—a level last seen in the depths of COVID-19 lockdowns. Top sources of concern are rising prices (cited by 54 percent), followed by the invasion of Ukraine (13 percent) and climate change (10 percent) and far ahead of COVID-19 (4 percent). Nine out of ten survey respondents perceive high price inflation in the country. These trends have implications for brand and retailer loyalty: of the 73 percent of respondents saying they have tried new shopping behaviors in the last three months, 40 percent say they purchased private labels. Household products remain the category most affected by this trading-down trend.

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McKinsey on Marketing & Sales

Indian consumers’ optimism has remained high since October 2021 and has reached the highest levels across other Asian markets since COVID-19 started. Nearly three-quarters of India’s consumers are optimistic about economic recovery, and net intent to spend is growing and positive across many categories. Omnichannel usage continues across the majority of categories, and social-media influence is high, especially for Gen Z and millennials. More than 90 percent are engaging in social media and entertainment platforms. There is an upward trend for new technology, such as crypto and augmented reality/virtual reality, and consumers intend to continue digital activities as the COVID-19 crisis subsides. About 40 percent of consumers are engaging in out-of-home activities, especially among the vaccinated segment. Most consumers have tried new shopping behaviors such as new retail outlets and new brands.

McKinsey Survey: Indian consumer sentiment during the coronavirus crisis

McKinsey on Marketing & Sales

Indonesian consumers remain optimistic on the economy, expecting higher incomes and spending. Many tried and plan to keep using digital services and omnichannel methods. In Indonesia, optimism about future economic conditions increased more than 25 percent over September 2020 from an already high base, boosted by planning for the upcoming holiday season. Eight out of ten consumers say they will dine out, shop for gifts, and redecorate. Out-of-home activities are generally rising but remain far below prepandemic levels. Optimism about the economy is tempered by views of household finances; half predict finances won’t return to normal before June. The loyalty shake-up continues, with 60 percent citing value as their primary reason to try a new brand. New digital behaviors are starting to show evidence of stickiness: 60 percent say they intend to use new shopping methods when the pandemic subsides.

McKinsey: Survey: Indonesian consumer sentiment during the coronavirus crisis

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Most Korean consumers expect that normalcy will return to routines only after June 2022, yet there are signs of pre-COVID-19 routines returning. Korean customers have been less optimistic than those in other countries about the economic recovery. But optimism in Korea is much higher now than two years ago. Half of consumers indicate a desire to splurge, with intent to do so being the strongest in Gen Z and millennials. One-eighth of consumers say they have returned to out-of-home activities.

McKinsey Survey: Korean consumer sentiment during the coronavirus crisis

McKinsey on Marketing & Sales

As inflation rises, French consumer hopes for economic recovery wane, with optimism sinking back to the lows of lockdown. Optimism regarding the economic recovery has decreased to 14 percent in France—levels last seen in the depths of COVID-19 lockdown. Top sources of concern are rising prices, the invasion of Ukraine, and political uncertainty. Nine out of ten survey respondents perceive high price inflation in the country, and 60 percent expect prices to rise further over the next year. These trends have implications for loyalty: in the search for higher purchasing power, 69 percent of respondents have tried new shopping behaviors in the last four to six weeks. Household products remain the most impacted category, with 65 percent of consumers switching for cheaper options.

McKinsey European consumer sentiment survey: How current events are shaping F...

McKinsey on Marketing & Sales

Pessimism about recovery is at an all-time high in the United Kingdom. Rising prices are the top concern, with consumers significantly trading down in stores and products. UK consumers are feeling great economic uncertainty. With energy and transport costs eating away at consumer savings and non-food spend, the top reasons given by survey participants for economic anxiety are the gas supply, supply-chain shortages, and energy issues. Consumers report the highest perceived price increases in groceries and household supplies, with two-thirds becoming more conscious about energy usage. Half of consumers changed their grocery brands in the last four to six weeks, with trading down a clear trend: price and value were the strongest drivers here.

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McKinsey on Marketing & Sales

Rising prices and the Ukraine invasion are top concerns for German consumers, fueling a general slide into economic pessimism. German consumers are experiencing intense unease regarding the state of the economy and its future outlook—with public sentiment sinking lower than at any time during the COVID-19 pandemic. Survey participants felt the greatest concern about rising prices and the invasion of Ukraine. Spend on groceries and gasoline has soared, even as consumers cut spending in non-essential categories. Almost two-thirds have assumed new shopping behaviors in the last four to six weeks, with more than forty percent trying private-label brands. There’s a clear trade-down trend in stores visited and brands chosen, with prices and value for money as key drivers.

McKinsey European consumer sentiment survey: How current events are shaping G...

McKinsey on Marketing & Sales

Across the continent, the pattern holds: Europeans are anxious about the state of their countries’ economies, and worried about the future. Russia’s invasion of Ukraine and price inflation overshadow other concerns, and consumer anxieties in turn are impacting confidence in household finances and national economies, especially among vulnerable populations. Worried about spending more on food, transport and fuel, consumers report cutting back on less essential items. Most say they’ve changed their shopping behaviors in recent months, trading down to more affordable brands and retailers. With no relief clearly in sight, 2022 continues to prove a challenging year for the continental consumer.

McKinsey European consumer sentiment survey: How current events in Europe are...

McKinsey on Marketing & Sales

Spanish consumers are primarily concerned about inflation and the invasion of Ukraine, and are becoming increasingly pessimistic about the economy. Only 14 percent of Spanish consumers are optimistic about economic recovery, with concerns focused on inflation and the invasion of Ukraine. Four in ten have an increasingly negative sense of the economic outlook—mostly due to petrol and supply-chain shortages, as well as unemployment. Price-increase Perceptions of price increases are particularly high regarding groceries (at 95 percent) and other household products. In these categories, more than half of respondents have reacted to inflation by trying less costly brands. Over the last six weeks, half have tried a private-label brand, 30 percent have switched brands, and a quarter have tried out a different retailer.

McKinsey European consumer sentiment survey: How current events are shaping S...

McKinsey on Marketing & Sales

Italian consumers are increasingly pessimistic about the economy, with many aiming to reduce spending and modify consumption habits. Italian consumers are increasingly worried about the effects of rising prices, as well as the invasion of Ukraine. Of Italians surveyed, six in ten expressed a negative view of the current economy; hopes for an economic recovery are lower than they were throughout the entire COVID-19 pandemic. Consumers perceived the highest price increases in groceries and fuel, along with strong increase in spend. These sentiments have translated into reduced consumption. Changed consumer behavior is also apparent, with a shift towards discounters and private-label brands. Price, value for money and availability are the biggest drivers of these choices.

McKinsey European consumer sentiment survey: How current events are shaping I...

McKinsey on Marketing & Sales

McKinsey survey: European consumer sentiment survey: How current events are s...

McKinsey on Marketing & Sales

McKinsey survey: European consumer sentiment survey: How current events are s...

McKinsey on Marketing & Sales

McKinsey survey: European consumer sentiment survey: How current events are s...

McKinsey on Marketing & Sales

McKinsey survey: European consumer sentiment survey: How current events are s...

McKinsey on Marketing & Sales

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