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1 Slide 2 2 Consumer Relationship Marketing, 2004 Slide 3 3 CRM is a database-enabled marketing tactic that creates a direct relationship between the brand and the consumer. What is CRM? SYNONYMS One-to-one, Direct-to-consumer, Personal marketing Slide 4 4 ACQUISITION Attract permission-marketing sign-ups Intersect with the target where they live For packaged goods clients, DM and IVR are difficult to pay out: Web is most efficient CRM Strategies RETENTION Keep consumers excited about using your brand Reinforce ongoing product benefits and new programs Launch new products to an interested constituency Encourage continuity and stocking Slide 5 5 Forrester CPG Conference Slide 6 6 CRM Acquisition and Retention Model Slide 7 7 1965 Number of 60 second TV spots to reach 80% of 18-49 US audience 3 2002 Number of 60 second TV spots to reach 80% of 18-49 US audience 117 "In 1965, 80 percent of 18- to 49-year-olds in the U.S. could be reached with three 60-second TV spots. In 2002, it required 117 prime-time commercials to produce the same result," Jim Stengel P&G Global marketing officer, 2004 Mass Marketing Under Siege Slide 8 8 Technologies Slide 9 9 Evolution from a single-to-many communication model (network TV) to a many-to-many communication model (Web and other digital platforms). Hundreds of millions of consumers on a global basis are communicating with each other using technologies that didnt exist 10 years ago. Real-time Gaming IMVideo Addressable TV MMS BloggingMP3s Communication is Evolving Slide 10 10 Slide 11 11 Stats: 20002001200220032004 Explosive Growth in Blogging Slide 12 12 Slide 13 13 Slide 14 14 Slide 15 15 Consumers Slide 16 16 Im not anyones sticky eyeball Slide 17 17 Only 14% of people believe information passed to them by government and advertising. 90% of people believe information passed to them by friends and family. 80% of all consumer decisions are influenced by word-of mouth marketing. (Dichter) 89% of consumers now recommend products or services they like to others. (Henley Centre) Word-of-mouth is 9X as effective as ADVERTISING in converting unfavorable or neutral pre-dispositions into positive attitudes. (Day) Word-of-mouth is 4X as effective as personal selling in influencing consumers to switch brands. (Lazarfeld) The consumer's new role: "from isolated to connected, from unaware to informed, from passive to active." "The Future of Competition: Co-Creating Unique Value with Customers," authors C.K. Prahalad and Venkat Ramaswamy The Consumer in Control Slide 18 18 In an information-glutted society: People are trusting the broadcasters less, and they are trusting re- broadcasters more. Personal recommendations and network reputation is becoming more important (eg: eBay) Push technology such as Google News Alerts and RSS newsreaders will become even more important as information overload increases. The rapid emergence of online newsbots, blogs, and personalized news feeds have all contributed to the development of the Web as a massive, centralized, efficient database for distributing and collecting news. Community Communication Expanding Slide 19 19 CPG Response Slide 20 20 Nestles budgets are 60:40 in favour of above the line and it is hard to convince the operating units that there should be no line. TV is still the majority of our spend, which, frankly, is a frustration. Frank Cella, CMO, Nestle, 2002 In 2000, Kimberly Clark, shifted spending to a 50:50 split between TV and relationship marketing on Huggies. TraditionalToday How Are Marketers Reacting? Slide 21 21 CPGs now understand: Its no longer marketing *to* a consumer: You must market *with* a consumer The New Packaged Goods Perspective Slide 22 22 Brand Focus Consumer Focus Slide 23 23 CPGs are beginning to measure their success by the total share of cupboard for a household or consumer, on a corporate basis, balanced for ROI. These consumer relationships are beginning to be considered corporate assets. The key issue: Identify high value (high consumption) households, and significantly impact sales within those households. Consumer Measures Slide 24 24 CPG The New CPG S CPG companies now focusing on services in addition to products How can a CPG deliver greater value to its consumer outside of basic product benefits? How can a CPG become more entrenched with a consumer on an emotional level? Slide 25 25 Procter & Gamble Home Made Simple P&G Golden Household project targeted at 30% of US HH with 50% P&G consumption Key metric is share of consumers shopping basket vs. brand share Kraft Kitchens #1 CPG destination in December (Nielsen Net) #10 in the online home and shopping category (Nielsen Net) Others Include Home Basics (Unilever) Parent Stages (Kimberly Clark) Very Best Baby (Nestle) CPG Portals Growing Rapidly Slide 26 26 Viral WOM Communities P&G Tremor Trendsetters > Early Adopters > Teen Connectors 300,000 Teen Connectors in program Now approaching other CPGs Informative Viral marketing programs with: Lego Mercedes P&G Pfizer HP Slide 27 27 Database Growth Iams has aggregated 40MM US pet names (Donnelly) and 3MM in Japan P&G aggregating 385MM names in Europe Extensive Internet Programs Popular because low cost of re-contact and high target reach 12% of P&G customers connect with company online (Forrester) P&G centralises European database to build CRM LONDON - Consumer goods giant Procter & Gamble is to centralise its consumer database across 16 markets in Europe as part of a strategy to improve its relationships with customers. It will house details of 385m consumers in Western Europe across Belgium, the Netherlands, UK, Ireland, France, Germany, Austria, Switzerland, Spain, Portugal, Italy, Greece, Norway, Sweden, Finland and Denmark. Massive Databases Acquisition by Harvesting Online Publishers Slide 28 28 Publishers Slide 29 29 Being disintermediated by CPGs, who are harvesting their readership Being disintermediated by readers, who are turning to each other for information Implications for Online Publishers Slide 30 30 CRM Acquisition CPA-based Psychographically targeted Focus on heavy users: Better data Partnership programs that reward heavy brand users Slide 31 31 Viral WOM Create your own viral networks: Develop a CPA-based access model for marketers Segment and differentiate your customer group based on demonstrated interests Let your readers contribute content to the network Create psychographic targeting pods Slide 32 32InterestingNET Combines blogging and social networking Leads to social networking with a purpose: You meet people you share interests with Extends the community, and extends the discussion Enables true psychographic product and message targeting Slide 33 33 Slide 34 34 Slide 35 35 Slide 36 36 Slide 37 37 1.The global communication model is changing from broadcast to re- broadcast. 2.This change is being driven by new consumer-to-consumer media tools that didnt exist a decade ago. 3.Consumers are evolving: Theyre more in control and theyre expanding their relationship networks. 4.CPGs are responding to these changes by becoming content providers and creating their own viral networks. 5.Online publishers are being harvested by the CPGs, and need to respond by creating greater affinity with their readers. Summary Slide 38 -30-

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