McKinsey & Company on Profiting From Proliferation

At Mplanet 2006, McKinsey’s Tom French and David Court gave back-to-back presentations on the idea of "profiting from proliferation."  McKinsey has rallied around the theme and has written consistently on the theme in the McKinsey Quarterly.

In a nutshell, proliferation has changed the marketing game as consumers have a multitude of media options, product variants, and interaction channels to choose from.  Currently, most companies try to get ahead of the game by contributing to proliferation, striving for more GRPs/TRPs, page views, and rolling out product line extensions (e.g. 31 flavors of toothpaste).  It won’t work.

Instead, marketers need to step back and make strategic investments where proliferation creates opportunity.  For example, the most obvious space today would be social computing.  McKinsey suggests looking at media from a "quality" perspective to determine the true cost of connecting with customers.  In one masked client example, they found that the true cost to reach 1,000 unique target consumers was:

  • Print: 90 – 100
  • Brand web site: 100 – 150
  • TV: 250 – 350
  • End of aisle store display: 510 – 550
  • Customer relationship mgmt:  700 – 750
  • In store demos: 930 – 980
  • Internet ad: 1,000 – 1,200
  • Bonus packs (addt product for free): 4,000 – 4,500
  • Coupons in store: 10,000 – 12,000

This approach is what I cover in the third part of Reinventing the Marketing Organization:  shifting funds from media to technology in order to build out the customer relationship infrastructure.