Experiments can help you to grow in difficult times

Companies around the globe are having difficulty keeping up with the new norms imposed on us by the pandemic. Hong Kong’s lockdowns have forced businesses to rethink how they approach capturing attention from their target consumer segments.

We invited Terence Lam (general manager of Mentholatum), one of Asia‘s most well-known FMCG brands, to join us for a fireside conversation with Leonie Valentine (Google Hong Kong’s managing direct of sales and operations), to discuss the company’s strategy to move forward in an uncertain economic environment.

Leonie – Many businesses are making major restructuring changes to improve their bottom lines. What strategy would you recommend for Mentholatum,

Terence: With most categories experiencing a steady decline in their consumption, marketers face the difficult choice of either drastically changing their marketing strategies to increase sales or drastically reducing marketing expenses to preserve bottom line.

Mentholatum was not easy. However, I believe we can overcome this. As always, our focus was on our business goals of increasing penetration and market share for brands.

We decided to speed up our digital experiments when we were trying to improve marketing efficiency.

During the lockdown there was a sharp rise in digital content consumption as well as the way they consumed it. We stayed close to each other and continued to evolve our digital marketing strategy. To ensure that we can generate good revenue even in difficult times, we had to optimize our money.

Leonie, It’s amazing that you stayed true to your digital marketing strategy even though most businesses would abandon it as a cost-saving measure. Why did you continue to bank on digital marketing and how can you optimize it?

Terence: First, I believe strongly in brand building, no matter what the circumstances. Digital marketing is a crucial element of today’s brand building efforts.

We didn’t stop marketing online. Instead, we altered the way that we interact with our audience.

We were ready to try new things. Every single thing was put to the test, and we optimized, optimized and optimized again and again.

To find the best approach to customer acquisition, sales conversion, and exceeding our target ROI, we tested various marketing content, target segments and reach models, media conversions and other factors.

Everything was digital so it was easy to quantify success and measure our efforts using data. A combination of qualitative consumer research and trend watching allowed us to maintain a growth mindset in a difficult situation.

Leonie: Digital marketing also allows you to get to know your audience. You would say that customer segmentation is an important tool for Mentholatum, given Hong Kong’s high level of digital literacy.

Terence: Yes. We could only obtain user data through direct sales or market surveys. Consumer segmentation was therefore limited to income, age, gender and maybe income. Digital opened up new possibilities to learn more about our customers. Segmentation leads to more effective and efficient media spending.

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Digital switching opens up new possibilities.

Segmentation can be a difficult task. Segmentation can be a complex process that requires many experiments to identify the target segments. We have also had our fair share failures. All the experiments paid off for Mentholatum in the end, as we learned valuable lessons when segmenting customers more effectively.

It was much easier to target customers with relevant messages once we segmented them.

Leonie: Customer segmentation can only be a small part of digital marketing. What strategy did you use to reach your customers during the COVID-19 period, now that you have identified your customers?

Terence: Mentholatum relied on a combination of intuition, current trends, data and data to make it work. There is no one-size fits all solution. The best way to learn from past campaigns is by using the lessons learned. Digital marketing is not static. We must accept the fact that we won’t have the “best-in class model” or perfect answer. Marketers should instead be open to learning and pushing for better solutions by using smart hypotheses, faster experiments, and a positive mindset.

Many people immediately associate A/B testing with experiments when I mention the term. There are many combinations that can be used to create winning combinations.

Truth is, there are endless combinations for experimentation.

We combined industry insights with the experiments in the case of Mentholatum. Our consumer perceptions of our beauty and health products revealed some interesting insights. To be able to present shrewd and current in the beauty industry, it is necessary to stay on top of the latest trends and ingredients. We would be putting ourselves at risk if we tried the same thing for our healthcare products. It would damage our credibility as a trustworthy brand in healthcare product line lines, where consistency reflects safety for consumers.

Leonie: This really highlights the importance to know your customers. Mentholatum has a strong customer base and information to help it navigate the pandemic.

Terence: Unfortunately, I don’t have any idea of the future. The pandemic could last longer than we expected, but who knows? The most important thing to grow your business during a pandemic is to have a growth mindset. This is not the old-fashioned way of throwing ideas at the wind and hoping it goes viral.

It should be methodical. Establish a culture that encourages innovation. This includes testing new hypotheses, new ways of thinking, exploring new ideas, and so on.

People are increasingly using their smartphones as entertainment and distractions in a locked environment. We have the opportunity to fill this gap by creating content that is relevant to consumers’ lives right now.

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This allowed us to test and explore new ideas specifically for local customers.

Local consumers were the only source for data collection, as there were no tourists in the area. This enabled us to focus our communication efforts.

We realized that consumers are desperate for entertainment and fun at home, so we decided to let our guard down. 50 Megumi featured our spokesperson, Chinese-American actor Michael Wong and a local comedian Derek Wong. This hilarious episode was a welcome addition to the Hong Kong community. Although we may not have been brave enough to try comedy before, it is a part of our growth mindset. This risk paid off as the video performed far better than expected, and the business responded positively.

This is a sign of the uniqueness and importance of the current situation. It is possible that some of the old ways of working may no longer be relevant.

The potential lies in our ability to think digitally and create in a growth mindset. We can make small changes over time that focus on efficiency and exploration of new ideas to help move the needle.

Our instinct is to reduce marketing costs and preserve resources in times of crisis and chaos, to save money and protect our bottom line. What if this is not an ordinary time, and the new normal is here for at least a while?

The question is: How can we accept what’s happening faster, make the crisis a brand building opportunity and increase consumer penetration during this time?

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