“The shift from traditional marketing to service-led value creation”

 

Seth Hillstrom (Seth): 

Marketers….What does it mean to actually create value for your consumers? Are we really listening, or still just waiting to speak?

Today we’re joined by renowned marketer (and perpetual innovator!) Colin Kavanagh, who has been helping to lead Pernod Ricard‘s marketing efforts since 1997.

Colin, thank you so much for chatting with us today!

Colin Kavanagh (Colin):

Hi Seth, great to be with you and thank you for the invitation !

Seth:

Colin, we really are quite lucky to have you with us today! We’ve worked with and heard from many of your colleagues at eBev…but I thought before we dive into it today, maybe you could tell us a little about your role as Vice President of Global Marketing, Malibu and Kahlúa for The Absolut Company? And your paradigm as a marketing leader – what excites you, what do you think we should move away from?

Colin:

As the Global VP Marketing for Malibu and Kahlua I am responsible for the global marketing and business development of both brands. We work very closely with our Pernod Ricard colleagues in each of our key markets to make sure we build our brands effectively. Its all about strong collaboration across our network.

To answer your question on what excites me, well there is a lot to talk about ! I am really excited about the opportunities that changes in technology are bringing to marketing. I tend to be more “glass half full” on this – I see the potential upsides of these changes as they can do a lot to enhance the consumer experience – in the end its up to us to adapt and seize these opportunities.

I am a pragmatist at heart, for me marketing at its core is about being in touch with consumers and taking the time to deeply understand them, then applying the lens of good’ol business sense.

I think we sometimes get too caught up in the hype – for me the fundamentals of marketing are still as valid as they ever were, but how we market our brands is changing fast.

Let’s also not lose sight of our customers (ie: the Trade) and their needs.

I think that as business leaders we need to get much more comfortable with change and in leading in uncertainty. Status Quo is not an option ! That’s quite the challenge because in many cases we don’t know what success looks like yet, but the worst thing you can do is nothing. Better to try new things, to experiment. On Malibu & Kahlua we focus on getting a V1 out there quickly, testing and then scaling up when we know it works. A big part of my role is making sure we have the right culture that encourages risk-taking and trying new things.

Seth:

I think that’s a brilliant approach. You’re always testing, but you don’t get distracted by the shiny objects!

We recently had Markus Wulff describe the shift he’s seeing in the brand/consumer marketing dynamic as “the shift from traditional marketing to service-led value creation.” I buy it. And from my vantage point (hosting eBev and leading Beverage Marketing Association), The Absolut Company and Pernod Ricard have long embodied this shift. Would you agree with this assessment, and if so, maybe you could help us unpack it a little?

Colin:

To some extent I agree with this. The changes in technology and the pace of change are bringing some new, exciting opportunities which allow us to go beyond our traditional boundaries.

On Malibu, innovation a few years ago simply meant new product development – now this has expanded and we are more focused on developing new services and experiences for our brands.

Let me give you some examples:

On Malibu we have already executed the largest global execution of NFC enabled Connected Bottles… and we are continuing to do this and will be scaling up in the future.

With Kahlúa we are now focusing on the Future of On-Premise – we have a pilot project in partnership with Nordic Choice Hotels in Scandinavia, to take this experience to the next level…

A couple of years ago we setup a “Living Lab” incubation hub internally to help us ideate and prototype new services and experiences quickly, using the latest in technology. I think this has been a game-changer for us and it also contributed in changing the internal mindset in the company.

Seth:

To better serve your consumers is to better understand and access them. This requires accurate insights and powerful targeting opportunities. So even though digital is often a second touch point, in the world of Facebook we marketers can share our messages at a 94% on-target clip (with broader digital targeting coming in around 77%). How have insights like these influenced the way you go about reaching and serving your consumers?

Colin:

Good question and very relevant ! On both of our brands digital is integral, to the extent that we don’t really talk about it that way anymore – its built in to everything we do.

We tend to be very targeted and that’s particularly important when marketing alcoholic beverages. More recently we have worked with influencers such as The Fat Jewish and the surfer Alana Blanchard (see our Malibu Because Summer 2017 campaign !) and this has proven very effective for us in driving Fame.

Seth:

At eBev this past fall Tim Murphy talked about targeting based on occasions and behavior (in particular, the alcohol gifting behavior). Many occasions are obviously and inextricably tied to sprits, such as St. Paddy’s Day (and congrats to Pernod Ricard for cementing Jameson’s role in the festivities)…and we know that alcohol gifting is a routine, habitual, and spontaneous behavior (I promise there’s no oxymoron there. Alcohol gifters are habitual alcohol gifters, but they don’t plan their purchase often until hours before the occasion).

My question is this: Are you able to utilize insights about particular occasions and behaviors in tandem to produce even better results? And if so, what does that look like, and are you seeing a sum greater than its parts in doing so?

Colin:

At Pernod Ricard we are all “createurs de convivialite” – and each of our brands targets specific moments of conviviality. These are specific needs states and occasions and this is the backbone to our consumer-centric brand strategy.

Our brands are all about specific occasions and drinks – so this is an important part of our communications, whether it’s a Kahlua Espresso Martini or a Malibu Pina Colada… People always want to know when and how to consume our brands.

This focus on specific occasions has been a key driver of our success in a number of markets. Take Malibu for example: last fiscal year we were back to good growth with sales at +5% globally and for this first half-year we are at +7%. We have also been able to turn around some more challenging markets such as the Netherlands through this approach. so I would definitely say that the sum is greater than its parts !!!

Seth:

Wow! I would say so indeed.

The need to access consumers where they are (or where they shop) is clearly not lost on you or your team. It seems like accessing the consumer near the “last mile” and triggering conversion has been an area of hyper-focus for your team. How do you think better understanding/utilizing this environment serves your goal of serving your consumers (and of course, converting in the process)? The Malibu “Because Summer” campaign must have produced incredible learnings…

Colin:

I’m so glad that you brought this up – we tend to always talk a lot about our campaigns and new products all the time, but for us conversion at “the last three feet” is everything. We know that there is a lot of purchase decision made in-store so its vital that we double-down on this.

One of our most effective marketing tools to date has been something you probably wouldn’t expect – the Malibu Coconut cup ! A few years ago we developed these great coconut cups that are just perfect for serving Malibu drinks such as the Pina Colada – they have quite literally flown off the shelves ! This is a great way to bring a great experience to the consumer in a simple and cost-effective way.

Another tool we have is our unique brand identities – on Malibu the white bottle, Malibu logo and the palm tree logo is very iconic and distinctive. We really use this to our advantage in-store. Same for Kahlua – it has a very unique identity, the yellow label really stands out so we are using that more in our look and feel.

We are also expanding into new categories such as RTD and Beer (yes, we have Malibu Beer in certain states in the USA) and this is great as it gives us access to additional hotspots in-store, such as the fridge.

Seth:

Colin, thanks so much for being with us today. We really appreciate you taking some time to share such valuable insights, and I know we’re all excited to see what comes out of the wider roll-out of the Malibu Endless Summer connected bottles!

Colin:

Its been a real pleasure Seth and thank you for the great questions. All the best from a chilly Stockholm!

Seth Hillstrom, great post.. I find this question so interesting, as at times we employ a strategy of both… listening keenly to identify key opportunities to then join in on consumer conversations and speak to them on a personal level while those conversations are still taking place. Alternatively, this strategy can be used to measure consumer sentiment towards brands and products in efforts of evolving with the client and ensuring their experience is tailored to what will resonate most with those audiences from our discoveries bringing it back full circle.

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