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Marketing’s Next Frontier: The Curse of the ‘Unknown Unknowns’

By Raphael Kappeler - Reworth
Co-Founder and CEO


Raphael Kappeler By Raphael Kappeler | Co founder & CEO - Wed, 11/01/2023 - 10:00

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In Mexico, the e-commerce industry has surpassed MX$528 billion (US$29 billion), making it the second-largest online market in the region, according to the Mexican Online Sales Association (AMVO). Among online retailers, Mercado Libre, Amazon, and Walmart Mexico lead in terms of sales volume. Other popular online stores for Mexican consumers include Liverpool for clothing and footwear and Coppel during holiday shopping. 

In this dynamic realm of e-commerce, an extraordinary amount of consumer spending stems from unplanned, spur-of-the-moment purchases. As forward-thinking marketers, how can we adapt to these unpredictable trends that even the purchasers themselves may not foresee?

To illustrate the impact of unplanned purchases, let’s consider the coffee industry in Mexico. This massive industry is expected to generate revenue amounting to US$1.1 billion in 2023, which is no surprise considering that 85% of Mexicans drink at least one cup of coffee every day. In July, local coffee shop sales soared by an astounding 134% compared to the previous month, surpassing brands such as The Italian Coffee, Café Punta del Cielo, and Cielito Querido Café, among others. What’s surprising about this is that according to a quick survey, most consumers spend less than 50 pesos (US$2.77) on their daily coffee; however, the average ticket in local coffee shops is MX$158 (US$8.74), 44% higher than the average ticket of the previously mentioned coffee chains and three times higher than what the consumers claimed to spend. Could this be attributed to the consumer's preference for artisanal products or was it simply a spontaneous and impulsive decision?

These insights emerge from our analysis of payment data generated by card sales in Mexico. The use of such data to help not only identify market opportunities but to exploit them reflects a new and compelling marketing technique known as Payment Relationship Marketing (PRM).

In reality, even if brands are in a position to spot unexpected market opportunities, how quickly and practically are they able to mobilize marketing resources – promotions, offers, campaigns – to support them? In marketing terms, such behavior represents the enigma of the ”unknown unknown:” How can you plan for an opportunity that is apparently spontaneous and based on no conscious forethought?

Payment Relationship Marketing (PRM) leverages this data to not only identify market opportunities but also to exploit them. By analyzing transaction trends in real time, including spending, timing, frequency, product mix, and location, PRM uses artificial intelligence (AI) and machine learning to uncover patterns and correlations that may otherwise go unnoticed. The potential of PRM lies in its ability to identify ”micro” trends, particularly in an online environment characterized by impulse purchasing.

However, identifying these trends is only the first step. Marketers must have the tools and resources to act quickly and practically on these opportunities. Traditional marketing campaigns and loyalty programs may not be sufficient in a world where consumer behavior does not always adhere to predefined plans. Over 40% of Mexican consumers admit to making impulsive online purchases without any prior planning, with 13.2% of them indulging in such spontaneous buying at least once a week, highlighting the challenge of planning for the “unknown unknowns.”

This is where PRM steps up. Using the mechanism of cash-back, marketers can effectively discount their prices to leverage sales opportunities. Whether based on a particular moment, location, or customer profile, the cash-back incentive provides immediate value to the purchaser. The simplicity of cash paid directly into the purchasers' bank account, without the need for registration or sign-up, creates a frictionless experience that fosters loyalty. Marketers can adjust the value of the cashback or any other parameter based on results, making PRM a flexible and adaptive technique.

PRM is an exciting, new technique – and an entire science is being developed around the same. To whet your appetite – literally, perhaps – here’s another example: According to our data, if given an extra MX$300 (US$16)on Monday morning, almost two-thirds (62.3%) of Mexican consumers would use it to buy basic products. 

However, if gifted the same amount on a Friday night, the proportion that would be spent on essentials falls to just 39.6%. I’ll leave it to your imagination to guess what the other 61.4% of Mexicans would spend their 300 pesos on!

In conclusion, the curse of the ”unknown unknowns” in marketing can be overcome with the use of real-time data analysis and insights. By analyzing transaction trends, leveraging cash-back incentives, and adapting quickly to emerging opportunities, marketers can provision for unplanned, impulse spending in the e-commerce realm. PRM represents the next frontier in marketing, where the unknown becomes the known, and marketing strategies embrace the unpredictable nature of consumer behavior.


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Photo by:   Raphael Kappeler

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