Category: Brand Management

Understanding the New Consumer

The recession has had a profound impact on consumer behavior. Many studies conducted in recent months have found consumers have become more frugal, price conscious, and less brand loyal. These shifts spell trouble for marketers that are accustomed to buyer behavior following the peaks and valleys of the economy. This recession may be different; it appears that many consumers have decided to change their spending ways.

The most recent study on this issue from Deloitte titled “The New American Pantry” suggests that many consumers enjoy the challenge of saving money by using coupons, shopping for bargains, and participating in retailers’ loyalty programs. In fact, 81% of the respondents said these shopping techniques were fun! Consumers feel that they are more savvy as a result of the modified buying behavior induced by the recession, with 79% of respondents indicating they feel smarter about the way they shop.

Perhaps the most sobering finding arising from this study for brand marketers is that many consumers have regrets about their old shopping habits. The Deloitte report describes consumers’ sentiments about their pre-recession spending using words such as “remorse,” “embarrassment,” and “wasteful.” These feelings should serve as a call to brand marketers for a renewed focus on how they add value for consumers. It may not be enough to be a prestigious brand, and the perceived quality advantage national brands have enjoyed over private labels has been erased to an extent. Experience and relationship may overshadow awareness and image as marketing priorities. The key for brand marketers is to remain competitive in an environment in which brand relevance will matter more than brand image.

Marketing Daily – “Deloitte Study: Consumers Love Spending Less”

To Xfinity and Beyond: Comcast’s Branding Mistake

Brands are among the most important assets a business owns. They project an identity; they communicate meaning; they serve as the connection point in the relationship between buyers and sellers. Thus, brand name strategy is more than an important marketing decision; it has repercussions throughout a company and into the marketplace. Why do I begin with a reminder about the importance of brand names? I am at a loss to understand the rationale behind Comcast’s decision to re-brand its communication and entertainment services Xfinity.

Author and marketing consultant Al Ries recently wrote a column in which he questions the wisdom of Comcast’s strategy. I do not always agree with Ries because his views often seem too simplistic and based on not much more than a “that won’t work” justification. In this case, I could not agree more with Ries’ assessment that Comcast not only adopted a bad brand name, it is following an unnecessary path. The main flaw in Comcast’s strategy is that it is marketing a brand, not a category. In Ries’ view, a firm’s priority should be to market with an objective of product category dominance. Ries uses McDonald’s, Chick-fil-A, and DirectTV as examples of brands that have honed their message so that they are known for a specific product category. The Xfinity brand offers little in the way of communicating such category strength.

Critics of Al Ries criticize him for being anti-line extension, and he has certainly opined against brand extensions over the years. However, in this case, Ries has correctly called out Comcast for a branding decision that does not seem to have legs underneath it. It will be an expensive process to re-brand, and Comcast is putting a great deal of faith in consumers that they will recognize, understand, and care about the Xfinity brand.

Ad Age – “Comcast Needs a New Strategy, Not a New Brand”

How Do You Inspire Customers? Let Us Count the Ways

Inspired customers- it almost sounds too good to be true. When this status is achieved with customers, they not only buy your products, but they will tell anyone who is willing to listen about their experiences with your brand. And, they often are willing to pay higher prices for your brand because they are sold on the value delivered. How can we possibly determine how an inspiring company looks, and exactly which companies do consumers feel are inspiring to them?

One way to answer these questions is to look to Inspiration Blvd, a brand consultancy that conducted a survey of more than 1,200 adults to find America’s most inspiring companies. The survey touched on key indicators such as product innovation, growth, reliability, and charitable efforts. Below are the 10 most inspiring companies and a brief description of why they scored high.

1. Microsoft – Maybe a surprise at #1; received high marks for its charity work through the Bill and Melinda Gates Foundation

2. Google – Treats employees well; perceived as innovative as well as a purveyor of free information

3. Apple – An innovative company with a knack for rolling out successful new products

4. Ford – An inspiration for what it did not do… accept a government bailout

5. Walmart – Helps consumers by selling products at low prices; viewed as an important employer in many communities

6. McDonald’s – Charitable efforts of Ronald McDonald House cited; another company that has delivered value through low prices during the recession

7. General Electric – Receives high marks for innovation; perceived to have high level of concern for environment and health issues

8. Johnson & Johnson – Although a big company, it is perceived as caring about health and well-being of people all over the world

9. Chick-Fil-A – Practices that include closing stores on Sundays and giving back to local communities are admired

10. Target – Well known for giving 5% of pre-tax profits to local charities and causes

What does this top 10 list tell us about being an inspiring company? First, a company in virtually an industry or category can be viewed as inspiring by customers. Second, there is no single formula or recipe for being inspiring. The companies in this list were admired for different reasons, even if certain themes did emerge such as charity support and innovation. How a company can develop a reputation of being inspiring will depend on the resources it has available to commit and the point of difference it wishes to create.

Competitive activity does not matter much when it comes to the relationship between consumer and brand. A review of the top 10 list finds at least three sets of head-to-head competitors (Microsoft-Apple, Walmart-Target, and McDonald’s-Chick-Fil-A). This evidence suggests that being perceived as an inspiring company is not like a brand positioning strategy that we assume cannot be mimicked by competitors. Inspiration is in the eye of the beholder; it is up to a business to follow through on its mission so convincingly that customers feel inspired by their performance. Go forth and inspire!

Reclaiming Customer Loyalty

One of the most significant effects of the recession (which may be over according to economists but many households are not convinced) has been consumers’ propensity to trade down to lower priced brands. In good economic times, many marketers strived to deliver value through enhanced product features or symbolic benefits of their brands. The strategy was to deliver value that customers would be willing to pay price premiums to attain. When the economy worsened, consumers tended to become more conservative in their buying behavior, cutting back where they could and buying lower priced alternatives to meet their needs.

The behaviors described above are more than gut feelings about what consumers have been doing. A recent study by comScore found that consumers indeed traded down to lower priced brands during the recession. The study tracked consumer behavior in terms of buying the brand they wanted most for a variety of consumer packaged goods categories and housewares. All categories saw a decline in the percentage of consumers who had bought the brands they wanted most. For lower priced products that may have few perceived differences between brands, the effects of the recession on trading down were not as great. For example, 36% of consumers reported they bought the brand of paper towels they wanted most in 2010, only 1 point lower than 2008. But, for other products that have greater perceived differences between alternatives, more consumers decided to forgo the brand they wanted most for lower priced brands. For toothpaste, purchase of preferred brand dropped 10 points from 2008-2010 (67% to 57%), shampoo dropped 13 points (65% to 52%), and jeans dropped 15 points (54% to 39%). More information on the comScore study can be obtained by clicking here.

A great deal of uncertainty exists about whether the shift in consumer behavior during the recession is temporary or reflects a permanent shift toward value being defined more by low price than product benefits. Many experts believe the trading down behavior may be a realignment of consumers’ priorities. If that is the case, marketers must redefine their unique selling proposition. Is price the only point of difference that will matter to consumers? Probably not, but what brand traits will attract customers and more importantly, drive brand loyalty?

A return to branding basics seems to be in order. Trust is the foundation of relationships between buyers and sellers; it is no different than a personal relationship. Conducting business in a way that shows concern for customers, care for the community, and commitment to the well being of stakeholder groups are ways to develop and solidify trust. For example, social responsibility appears to be more than a fad; it is a shift in mindset among many people that businesses should be good stewards of the resources it uses and encourage consumers to do the same. Going forward, brand loyalty is more likely to be secured by demonstrating genuine concern for customers than dazzling them with product features or an aspirational image.

The Branding Power of Thought Leadership

A great article written this week by Len Stein touts thought leadership as the next frontier in public relations (read the article). I could not agree more with the views Stein puts forth in the article. Traditionally, companies have made news releases a key component of their PR strategy. These bits of news and facts are mass distributed to media outlets and posted on company web sites in the hopes that someone will find information in a release newsworthy and give it coverage. News releases are typically “we are great” messages that are one-way conversations between a company and whoever they think would be interested in learning about how great they are.

Yes, news releases can be an inexpensive way to create exposure. Yes, news releases are perceived as more credible than advertising because the source of the message is viewed as the news media, not the company whose release led to the coverage. But, everyone does them- for profits, non-profits, institutions, organizations, everyone is trying to get exposure. The result is that news releases do not carry the punch that we would like to believe they possess.

In contrast, thought leadership offers more for audiences. It is about informing and educating a target market that would value receiving information. Recipients can put to use information received or are otherwise better off for having been exposed to messages from thought leaders. Another key benefit is positioning as a thought leader not only strengthens brand credibility, it can help humanize the brand. Thought leaders are people, not entities. In order to forge a leadership position, people have to make it happen. Whether it is through blogging, podcasting, books, or other form of disseminating information, it is accomplished by associating a name and face with the information being shared. News releases are very impersonal by comparison.

Becoming a thought leader is not done with the objective of increasing sales or market share, but those results can be by-products of establishing a position of high credibility in an industry. It comes down to what do you have to offer to your target audience that adds value. “I am great” does not work in developing thought leadership; rather it is more like “how can I help you become great?”

Lessons Learned from NFL Draft: Transform Events into Brands

Your business may hold events throughout the course of a year. Some events are for customers intended to generate sales, other events are for employees used to build morale, and some events are for the community or general public that serve as opportunities to interact with your brand. Holding events may be nothing new for you, but what about the idea of branding your events and marketing each one like you market your company or products? If you are skeptical about the payoff for transforming events into brands, look to the National Football League for inspiration.

The NFL held its 75th entry draft this week, and it has changed a great deal since the inaugural draft in 1936. The NFL Draft has gone from being an internal procedural event used by teams to stock their rosters to a multi-day, check that multi-week, experience that keeps football-hungry fans engaged with the NFL during the offseason. The draft itself is now a 3-day event, with TV coverage by ESPN and the NFL Network from the first pick to the 255th, and final pick. Audience ratings for the first night of the draft in which 1st round selections were made were about 6.5% of all TV households in the U.S. And, engagement of NFL fans with the draft took place for several weeks leading up to the draft. Consumption of information about players involved in the NFL Draft through traditional media and digital media kept fans talking about football ever since the end of the NFL season in early February.

Granted, not every brand can stoke the passion and interest of the NFL. However, if you are holding events already, why not explore how they can be branded to create more interest and engagement? For example, if you have a “company picnic,” replace the descriptive, uninspiring title with a branded name and logo. Make the event memorable to the target audience, and give them opportunities to interact with your event brands before and after the event. Social media provide many options for engaging people around your event brands long after the event is held.

Brands are important because they hold and convey meaning. In the case of the NFL Draft, it is about new beginnings and what might be for football fans as they follow the selections made by their favorite teams. Transform your events from one-off activities to an ongoing connection point with your brand.

A Branding Story as Told by Pop-Tarts

I will confess that I have a weakness, one that will likely not lead to my demise, but a weakness, nonetheless. I really like Pop-Tarts, whether it is the real deal from Kellogg’s or a wannabe store brand. Pop-Tarts are an inexpensive, tasty, and convenient breakfast I can grab between a workout (had to squeeze that in) and starting my workday. I realize that a 45-year-old man is probably not the profile of a typical Pop-Tarts consumer, but I am all too happy to be an outlier.

A recent shopping experience for Pop-Tarts reinforced the impact price can have on perceptions of a brand. As I was packing food to take to the office, I realized I was out of Pop-Tarts. No problem, as the snack bar in my building on campus carries single-serve packages of Pop-Tarts. However, I was shocked to learn that the price for a package of my breakfast vice was $1.49. A quick comparison: an 8-pack of Pop-Tarts retails for about $2.29 at the supermarket, and a convenience store near campus sells the same single-serve package sold at the snack bar for 99 cents.

I questioned myself as to whether I let this be an issue because I was acting like a little boy pitching a fit because his Pop-Tarts cost too much. No, I do not think that is the case. It seems to me that pricing a product 50% higher than a convenience store is a wee bit too high. A bigger issue is looming: the perception that the foodservice vendor is taking advantage of students (and professors) because it has a somewhat captive audience has negatively affected my view of the foodservice company across the board. Now, buying a snack or meal on campus is not even a last resort. I simply refuse to do it because I would be supporting a brand whose pricing certainly does not provide value to me!

The point of my Pop-Tarts story is to remember that all of your marketing decisions communicate, not just your communications program. In this case, a selling price that is significantly higher than other options sends a negative message about the seller. It could just as easily be a product with an instruction manual that is difficult to understand or a store with inconsistent or inconvenient store hours. They all have the same effect: damage to brand equity by way of hurting brand associations that comprise brand image.

Protecting Brands in a Down Economy

A weak economy has forced marketers to evaluate the pricing structure of their products. Consumers are being more cautious with their spending, and value priced offerings have become more commonplace as businesses strive to meet consumers’ needs and remain competitive. It is important to note that there is a difference between offering value priced products and lowering prices on products. In an article in 1-to-1 Weekly, John Gaffney points to examples of how companies have responded to the economic downturn by offering new products. For example, Quizno’s created a value line with its Torpedo sandwiches. This line provided an alternative to the core sub sandwich line, which remained essentially unchanged.

What are the implications for brand management? Customer value does not have to be price-based. Offering price-based value, like Quizno’s Torpedo subs, is one way to win customers and market share. The ideal is to avoid damaging brand equity of core brands by discounting price. It opens flood gates that are very difficult to close. Protect brands in bad economic times so that they are poised to succeed when good times return!

1-to-1 Weekly – “Innovation Beats Pricing in New Economy”

When Great Advertising Does Not Equate to Great Marketing

Crispin Porter + Bogusky is one of the hottest ad agencies around. One brand that has benefited noticeably from the creative influence of CP+B is Burger King. The brand was in shambles when CP+B became its agency five years ago. At the time, CP+B was BK’s fifth ad agency in four years, not a way to create continuity of brand meaning! Since becoming BK’s agency of record, CP+B has received accolades for work such as Subservient Chicken, The King character, and Whopper Freakout.

What is the one thing that CP+B has not done for BK? Gain market share. According to figures in an Advertising Age article, during the period 2003-2008 McDonald’s has seen its market share grow almost 3% to 46.8% while BK slipped 1.6 points to 14.2%. These numbers are a painful reminder that marketing is much more than advertising. McDonald’s has outperformed BK in targeting value conscious consumers. Also, McDonald’s has invested heavily in remodeling stores and adding coffee bars to compete with Starbucks and Dunkin’ Donuts. McDonald’s has elevated the experience of visiting many of its locations. BK frequently comes under criticism for lackluster service and less than clean restaurants.

Building a great brand entails managing all customer touch points. Advertising is certainly one of those touch points, and the BK/CP+B partnership has made great strides in this area. BK has much work to do to make the overall experience of visiting a BK better. If that occurs, BK’s relevance among quick service restaurant patrons will rise and result in BK being a more viable competitor to McDonald’s.

Ad Age – “What Crispin’s Lauded BK Work Doesn’t Do” Gain Ground on MCD’s”

Expand Your Brand by Expanding Its Purpose

Selling opportunities for products are limited by the purposes or uses of them. Managing products in the maturity stage of the product life cycle usually includes a prescription to develop additional uses for the product. While this prescription is logical, pulling off a campaign to convince customers they should expand their view of your product’s capabilities is easier said than done.

An example of a brand seeking to expand the scope of its product is Sharpie. Its markers are ubiquitous in offices, but being an office supply item limits Sharpie’s business potential. Sharpie looks to break out of the office supply box through its “Sharpie Uncapped” campaign. The campaign uses traditional media advertising and a web site (www.sharpieuncapped.com). The site connects visitors to Sharpie’s social media presence on Twitter, Flickr, Facebook, and YouTube. The effort is a way for Sharpie to strengthen relationships with consumers and differentiate the brand. If successful, more people will not need markers, they will want Sharpies. And, Sharpies will have more relevance in their daily lives.

Will the Sharpie Uncapped campaign work? At first glance, it does seem to be a stretch that the company could convince consumers that its markers are more than just markers. Sharpie’s social media tactics could be potentially effective for making the brand more personable and less like an object (even though that’s what it is, I know). If Sharpie can shift consumers’ views of the brand from a commodity-like office staple to a “cool tool” to use at home, school, and anywhere else, it will have succeeded in expanding the brand’s role. The result will be a more relevant, stronger brand.

Marketing Daily – “Sharpie’s Out to Prove It’s More than a School Supply”