Mondelez sees its long-term brand-building efforts pay off for equity

As part of the WARC Marketer’s Toolkit 2023, Qaiser Bachani, Global Head of Digital COE and Europe Consumer Experience Lead at Mondelez, spoke to WARC’s Anna Hamill about the rise of e-commerce, brand equity, and emerging media opportunities.

Qaiser Bachani, Global Head of Digital COE and Europe Consumer Experience Lead, Mondelez

As you've come out of the pandemic period into a challenging economic environment, what changes have you seen in consumer behaviour?

Some of the behaviours that we saw in the pandemic are remaining with consumers moving forward. One of the trends that we are seeing is the entire journey towards digital commerce. I think that piece is staying with the consumers. The nature of that transaction or the nature of that engagement may differ during the pandemic versus post pandemic, but the overall behaviour is still there, which is why we are making sure that e-commerce remains one of our strategic pillars for the future.

Has that stayed at roughly the same split since the pandemic in terms of e-commerce activity now that traditional retail has normalised again?

Of course, after being in the lockdown for nearly two years, people are rushing back to physical stores. And yes, we do see a bit of the e-commerce momentum slowing down. We anticipate that higher levels of e-commerce are still going to stay, but the nature of the relationship may change. E-commerce traffic may go down a bit, but with the value that the consumer saw during the pandemic, I think they will stick with this platform in the future.

If you look at some of the offline retailers during the pandemic, they were trying to beef up their online presence as well. It's not like the year after the pandemic, they’re stopping the journey. They're still making sure that they continue whatever the benefit they could draw from the pandemic, they are trying to become more sophisticated as far as digital commerce is concerned… I think pandemic kick-started the entire piece and now we're going to see how it's going to evolve as offline retailers also get a bit more serious about this space.

Are you making any structural or investment changes to how you pursue some of those new trends that you're seeing?

Not in a major way. It’s an evolution. We are trying to make sure that from a structural perspective – whether you're a marketing and sales, whether you are in media or digital or any other part of the organisation – you should have a better understanding of the consumers and also understanding of the of these new spaces, and then how you leverage them more moving forward.

From an investment perspective, it’s really been an evolution. There has been a trend for many years now of favouring online versus offline media and that trend will continue. I think it was accelerated during the COVID times as people flocked to all the online platforms… Post pandemic, the key thing is how we maintain that and how we make sure to continue to drive the right level of ROI for those engagements.

The European market accounted for about 40% of Mondelez’s total revenue in 2021. How are you thinking about growing your brands in Europe in the context of such a difficult economic climate there?

If I look at Europe vs globally, we are extremely fortunate that our portfolio of brands or categories is very well balanced which helps us a lot because we have a huge chunk of business in the region. We have a very robust and growing bakery and biscuit business as well.

Even in these tough times, we have such iconic brands and consumers love those brands. There's so much trust in the portfolio. We do see a huge amount of loyalty as well that is helping us even in this difficult situation. But with such huge equity,  huge legacy and iconic brands, it’s  helping us continue to build businesses, which is obviously a huge blessing.

So strong brands are a really important part of getting through challenging times.

Absolutely. In our case, we’re proving again and again that when you have a strong brand and a consistent brand – in terms of communications and what you're offering to the consumer – that pays off in these difficult times. Even during the pandemic, what we saw was that while there was uncertainty, consumers went to more familiar brands. They did not go to unfamiliar brands or private labels just to save money. They found it's better to stick with the brands that they know and that they have been staying with for many years.

In these inflationary times, where you are fighting for every other penny or dollar that a consumer spends, consumers will always prefer brands that have strong equity. They might be a small dip or small growth, but the preference will always be to go for the known brand and brands that have been consistent in the past.

In your experience, how has that brand equity played into pricing elasticity and competition versus perhaps cheaper private label products?

There's no denying that private labels have started playing a very important role, especially in these crunch times. But at the same time we also have seen that, in the majority of the cases, brands with strong equity also do very well.

So far what we have seen is that the price elasticity of some of our big brands – or the brands that have been there in the market for a long time – hasn't been huge. Even with a bit of a price increase, consumers understand. Maybe they will not buy two bars of chocolate but they will still buy one bar of chocolate and they will go for the brand which is much more familiar, which is understandable given the current state they're going through right now. That is helping us to make sure that we continue to provide that kind of pride and experience to our consumers.

Commodity prices have been on the rise and will continue to be for the next year or so…The war in Ukraine has definitely impacted the supply chain for us and for many of our competitors as well. But again, the advantage of being a company that has been in the business for a long time and has iconic brands is that suppliers and vendors would like to work with you more than anybody else. That also helps our organisation.

Because we continue to invest behind our brands, even in these tough times, it is paying off for us. We haven't cut our investments, in fact, we are planning to raise our investments. Of course, the question would be in terms of what the right mix will look like from a portfolio perspective, but we are not going to cut on our brand building activities. That is the reason we are still doing well and we don't want to lose that momentum. This shall pass, and we want to ensure we remain consistent and provide the same level of product experience.

How have you gone about creating a consistent and differentiated customer experience across all of the touch points in which you operate?

Before the pandemic and through the pandemic, we have been focusing a lot of our efforts and focus into communication with our consumers. That’s been a big agenda item for us. We started with ‘personalization at scale’ and now we have evolved into that into an ‘empathy at scale’ proposition. The entire idea is that any opportunity that we get to connect our brands to the consumer, it remains extremely relevant and to the point. We have been making sure that all our work on the media side, particularly in digital, always has that lens on it.

We don't like to buy too many impressions or too many clicks unnecessarily. We try to buy more relevance and attention to our media touchpoints. Our focus is on serving the consumer mostly on the digital media side of it instead of offline. Of course, in some countries, where offline media is still relatively efficient to reach a mass audience, that still remains. But a majority of the relevancy work is happening on the digital side, be it the Metas of the world or the Googles of the world or even retail media for that matter.  That has been the large focus of the past couple of years and will continue in the future. Similarly, we are making a huge bet on connected TV and doing some great work not only in North America but also in Europe as well.

You're also thinking about these emerging channels as opportunities – connected TV, retail media, etc. What opportunities do you see specifically to grow your brands?

There are many opportunities. We always try to make sure that whether it's a new touch point or whether it's an existing touch point, the important thing is always to make sure that you have a North Star that you are going after. You have to make sure that that's been identified upfront, so that you know what you need to do to make sure that you reach it. For us, from a purely media perspective, return on investment is a very big metric that we look at.

We have multiple partnerships in place with all the big digital players such as Google, TikTok, etc, and then we try to work with them very closely because they they know their platform better. What we try to bring on the table is what we know about the consumers and how they act in our categories. When you bring that kind of information and then you have experts from the platforms and your agency partners working together, that's where the magic happens in the partnership. We have never missed our ROI target. We work with them very closely and they become part of our extended teams.

We know that ROI is a combination of efficiency and effectiveness. It’s about making sure that whatever experience you're trying to create is absolutely spot on, and also has been bought and optimised at the right cost level so that it brings that ROI that you're looking for. That's how we tend to approach all these conversations with our partners.

When it comes to segmentation and targeting, how are you evolving your strategy over time?

There's a lot of work that happens in the brands and agencies to continue to make sure that we are focusing on the right need states, and that we are segmenting our portfolio in the right manner so that we can have the right focus on targeting in all the touch points. That's an evolving process.

On the chocolate side, we are very, very clear within our portfolio which product or which SKU focuses on which state. And similarly, with segmentation of consumers, whether you're talking about mass market or premium market. That’s also segmentation that we tend to use for our portfolio. The entire idea is not to end up overlapping a lot of things because then not only it creates confusion to consumers, but it also creates a lot of confusion or a lack of focus in the organisation. That is an ongoing exercise that we do.

What emerging interest groups or communities do you see as the most important opportunities for your brands?

You always need to identify your growth consumers. In some of those work that we do, we tend to work perhaps more on a technical basis. So if there are home cooks or people who are interested in making different desserts using a recipe available on Instagram or Tiktok, we try to tap into that as well to make sure that we are also tapping into ‘in the moment’ discussions and conversations.

There's a lot of work that happens to make sure that we identify the right growth audiences. So for example, for gum brands, the growth audience is Gen Z… For us, the focus is how we make gum cool again for Gen Z. Within that, there might be different passion points or sub-segments that we might go after. So, depending on which need state you want to focus on, you then make sure that everything that you do from a marketing perspective and digital perspective is in sync.