News & Views

Up At Night / Paolo Mercado

by Contagious Team

China’s explosively expanding media landscape certainly has the potential to cause marketers sleepless nights. Chinese customers lead the world in the uptake of digital media, according to KPMG research, and Nestlé China’s head of marketing, Paolo Mercado, says even digital insiders are surprised at how fast the landscape is changing.

Mercado’s background in social psychology and love of observation – often in the form of ‘commuter safaris’ – helps him to comprehend this quick pace of change. This understanding is vital in a country where Nestlé sells 35 million products every day: Asia, along with Africa and Oceania, is responsible for the company’s fastest growth. Emily Hare speaks to Mercado about creating brands that fit into people’s lives, creative talent and survival of the fittest in China’s digital environment.

The interview below is an extract from the latest issue of Contagious. Subscribers can read the full interview here. To speak to Contagious' Singapore office about our work in the region, contact Roger Mulchandani (roger@contagious.com).

As a marketer, what keeps you up at night?

What keeps me up are the exciting oppor tunities in China’s rapidly evolving marketing landscape. While change can be seen as a threat, I am more interested in opportunities. Take, for example, mobile commerce or content marketing. These are game-changers for marketers. But I don’t stay up at night worrying about them. I stay up wondering how I can best take advantage of them to become a more effective marketer.

What one piece of advice would you give to marketers in China?

China changes fast. To keep up with the change, you have to get two things right: first, be brilliant at the basics. The fundamentals are product quality that meets government standards and consumer taste, plus distribution density, competitive pricing and sufficient media support.

Once you have the basics, then a strong innovation strategy is key. Chinese tastes are changing fast, so innovation must understand and anticipate needs and deliver solutions for these needs better and faster than the competition.



What would you identify as the single biggest challenge or opportunity for the marketing industry as a whole?

The war for creative talent will be the biggest challenge for marketers, because at the end of the day marketing is about the solutions that we create to help people and for which they will pay us. And if we think that creativity is something that must be outsourced and not an in-house capability, then, wow, that will be tough.

I believe that in-house creativity must become essential for any marketing organisation, especially in areas of innovation, design and some aspects of digital communication. It is concerning how most ‘old-school’ companies keep manufacturing in-house while outsourcing anything related to creativity. On the other hand, companies like Apple do the opposite: creativity is in-house – from innovation to design – while manufacturing is outsourced.



What are Nestlé’s key business opportunities in China?

Ecommerce is a major one – it sounds easy but it’s not, especially for food. It’s easier for fashion, electronics and cosmetics because the cost of product makes delivery costs minimal. But when you’re selling packaged food and beverages, you have to carefully watch whether what you are selling is actually worth the cost of door-to-door distribution.

Ecommerce is a significant opportunity but it challenges the way we do business, from supply chain to value proposition. For me that’s the game-changer. China is already the number one ecommerce market in the world. That’s a significant driver for us.