The Red Velvet Cake Rule of Brand Extensions

One of my favorite desserts is red velvet cake. I cannot give a particular reason, but along with cheesecake and pecan pie it is one dessert that if it is available I am likely to partake. However, two recent experiences with red velvet cake have left an unexpected impression, one that reminded me of a danger with brand extensions.

First, during a visit to a Sonic restaurant I saw a sign for a Red Velvet Cake Sonic Blast. The combination of red velvet cake with ice cream was a thought I could not shake without trying one. Unfortunately, between the product’s look, texture, and taste, my excitement was wiped out quickly. Second, on a visit to a local doughnut shop, the server suggested a red velvet cake doughnut. I was delighted! Why hadn’t I thought to look for this before? Well, after eating the doughnut I realized why it had not been brought to my attention before now: a red velvet cake doughnut does not compare very favorably to the core product. In both instances, the conclusion I reached was that I have the urge to try these products out of my system and can move on.

What do my experiences with red velvet cake have to do with brand extensions? They are reminders that a product has limits on how far it can be extended from the core product. A brand develops associations and reputation for how it delivers value. Introducing new products under the same brand creates expectations among consumers that the new brands will deliver value in a similar manner. An article by marketing expert Al Ries shares an example of the perils of brand extension. He uses unsuccessful brand extensions of Little Caesars in the 1990s of delivery and expanded menus to make a point that extensions can take a brand’s focus away from what it does best. In the case of Little Caesars, its core strength was offering carry-out pizza at a low price.

The fallout from overextending a brand is that consumers may become less confident in the brand’s capability to deliver value. Business experts have cautioned against overextending for years. Whether it is called “stick to your knitting” or Jim Collins’ call for a company to focus on the one thing at which it can be great, managing brand extensions is crucial to keeping the core brand’s meaning and value proposition intact.

As for my disappointing experiences with red velvet cake extensions, I realized that they had a surprising effect on me: I feel less enthused about having red velvet cake when an opportunity presents itself. I am likely to opt for one of my other favorite desserts. A brand that dilutes its equity by extending to products that are not as strong as the core product risks a similar fate. It can create a double whammy of negative perceptions of the extension as well as unfavorable associations with the core brand. So much for growing a brand!

Is The Green Consumer Fading?

Green consumerism and sustainability are practices that many observers believe are not the latest fad. The U.S. recession, a more truly global economy, and a highly connected world have been contributors to the spread of Green. However, results of a recent Harris Poll provide evidence that attitudes toward environmentally responsible consumption appear to have lost momentum in becoming a priority for Americans. Among the findings that point to a fade in Green attitudes:

• 36% of those surveyed said they were concerned about the planet we are leaving behind for future generations compared with 43% in 2009.
• 36% said they personally care about the current and future state of the environment, down from 34% last year.
• 29% said they are environmentally conscious, down 1% from 2099.

Fewer adults holding Green attitudes contradicts the notion that the “me” generation of the indulgent consumer is evolving into a “we” generation that weighs the impact of consumption decisions on future generations. At the same time, it would be premature to signal an end of the Green consumer. Several economic indicators point to the effects of the recession easing. It is possible that some consumers are reverting back to previous attitudes and behaviors as their personal situations improve. We can look at reactions to gasoline prices and observe similar patterns. When gas prices have risen to their highest levels, more consumers cut back on driving, more interest exists for fuel efficient vehicles, and electric and hybrid vehicles are in vogue. As prices recede, attitudes and behavior return for the most part.

Momentum for the Green movement has slowed, but not disappeared. In the same survey, more adults labeled themselves as “a conservationist” (20%, up 3 points) “green” (18%, up 5 points), and “environmentalist” (16%, up 3 points). Results of the survey suggest that a segment exists of adults committed to promoting environmentally friendly consumption. The challenge is to spread the adoption of this mindset. Evidence exists that younger consumers are more likely to hold green attitudes. The question is whether we can bide our time and allow Green consumerism to gradually take root, or should green education initiatives become a higher priority for businesses, advocacy groups, and governments?

Marketing Charts – “Fewer Americans Go Green”

Do You Need Marketing Partners?

As the new year begins, one of the most common resolutions people make is to lose weight. And, it s might be a good time for businesses to consider whether they need to shed weight, too. That is, weight in the form of marketing partners. The parallel to weight loss came to mind as recent events unfolded involving American Airlines. First, American ended its partnership with online travel service Orbitz, no longer allowing Orbitz to list American’s flight schedules or sell tickets. In response, Expedia, one of Orbitz’s competitors, pulled the plug on its partnership with American for what Expedia viewed as a “anti-consumer” and “anti-choice” decision by American.

The end of the American-Orbitz and American-Expedia partnerships invite evaluation of how marketing partners add value to a business. Three considerations come to mind:

1. Do partners enhance or detract from the brand experience? American Airlines appears to be interested in having consumers engage in a direct relationship with American, not travel websites. But, if consumers value the convenience of shopping and buying from partners, denying them the option may do more harm than good.

2. Can your company deliver the value your partners bring to the relationship? Shedding marketing partners has financial implications in terms of reducing marketing expense via no revenue sharing, but can your business take on additional customers that were served by partners? Customers may have come to your brand because of the partner, and if you are no longer associated with the partner, will customers still be attracted to you… or was your partner the attraction all along?

3. Will lost revenue from a partnership be offset by cost savings or acquisition of new customers? Despite statements by American Airlines executives about strengthening brand relationships with customers, the move away from Orbitz is driven by financial considerations. The concept of building more direct connections between customer and brand is great, but if visions of dollar signs overshadow creating brand relevance, then the decision to divorce a partner may be a misguided one.

Business relationships are like personal relationships – even the strongest partnerships hit rough times and experience conflict. And, it is not uncommon for a business relationship to end for many of the same reasons that mark the demise of personal friendships: changing priorities, unmet needs, or a different way of looking at things. A marketing partner is not a permanent appendage but rather a strategic partner that should add value not only to your customers, but to your business.

As for American Airlines, this blogger has flown the airline occasionally… thanks to Orbitz. I wonder how many customers like me will no longer fly American because it has ended its relationship with Orbitz.

Keeping It Real in Advertising Creative

When it comes to selecting a message source to deliver an advertising message, there are compelling reasons to consider using animated characters instead of real people. An animated spokesperson will not be difficult to deal with in contract negotiations, will not get arrested or do anything to embarrass a brand, and it will not turn off audiences with annoying behaviors or mannerisms. These traits of animated spokespersons, coupled with their increased presence in ads, seem to make the decision to use animation instead of live action an easy one to make.

But, before you replace people with characters, check out a recent Nielsen study of the impact of animation on consumer response to ads. A comparison of animated versus live action executions found that brand recall was 22% higher for ads using live action. Further comparisons across demographic groups found that the difference in brand recall for live action ads was higher for women (+27%) than for men (+17%) and that consumers aged 35-49 had higher recall of live action ads (+24%) than 13-35 year-olds (+11%). While overall results suggest the impact of live action ads is greater, one exception was that animation execution had 28% higher brand recall for ads for food ingredients and seasoning.

Results of the Nielsen study beg the question “why?” The answer may not be all that complicated. Consumers connect with brands with which they perceive similarity and thus can be influenced by evidence that a brand is “like me.” Which creative execution can get that point across more effectively? Using real people, of course. Granted, we are not always going to identify with characters in ads (there are many characters that we do not want to identify with!). However, for ads using a problem-solution scenario or that attempt to resonate with consumers on an emotional level, having real people as the message source seems to get through to consumers more effectively than animated characters.

Center for Media Research – “Animation or Actors”

Brand Passion: Quality over Quantity

Social media not only gives consumers a voice, but it also gives marketers a channel to listen to what customers and others have to say about their brands. And, methodologies have been developed to analyze social media conversations that can give insight into consumer sentiment toward brands. One example of monitoring online buzz is Netbase’s Brand Passion Index, which measures the volume of conversations and the favorability of consumers’ sentiment.

The most recent installment of the Brand Passion Index examined social media conversations about e-readers. The results are interesting given that the category is in its infancy, but in some ways the findings are hardly new. Apple iPad dominated the chatter about e-readers, coming up in more than 90% of conversations examined. Despite heavy volume of mentions, the iPad drew mixed feelings about its functionality and performance as an e-reader. In contrast, Amazon Kindle was mentioned in far fewer conversations but the affinity expressed for the brand reflected passion for the brand. Of all conversations about Kindle, 87% had positive comments about the brand. Among the favorable sentiments for Kindle were its singular functionality, performance, and ease of use.

Results of the Brand Passion Index provides a lay of the land as to consumers’ beliefs and attitudes toward e-reader brands, but a more fundamental tenet of branding surfaces, too. Why do Kindle users like the brand? It is not because of hype or glitz; they love the simplicity of the product. It has one function: an e-reader. The single focus on an exceptional reading experience is not a weakness compared to the multi-function iPad but an advantage. Kindle represents a simple brand promise and delivers in the eyes of a vast majority of Kindle users.

Simplicity is not a liability for a brand. When a strong and relevant point of difference is possessed, consumers are likely to see the value and, as in the case of Kindle, sing the praises of the brand’s value to others. In the case of e-readers, quality of brand capability trumps quantity of capabilities. Focus on the quality of brand benefits delivered; that is what customers want and that is what they enthusiastically share with others.

Marketing Daily – “Index: IPads Generate Chatter, Kindles Love”

It’s OK to Say “I’m Sorry” but …

Customer service failures are inevitable. Even the best service providers will not come through for their customers sometimes, whether it is the fault of an employee, a product defect, or some external source. While minimizing errors and failures is a high priority, it is equally important to have clearly defined plans about how to recover. The question of how, when, or even if to say “I’m sorry” is raised by Neil Berman, CEO of email marketing company Delivra. Berman asks if companies are sometimes too apologetic, sending out apology emails for minor transgressions or even sending emails to all customers when an error affected only a few of them.

If an apology is warranted, Berman suggests the following guidelines:
• Be brief and to the point
• Take responsibility; do not make excuses or attribute the error to someone else
• Appearance of an apology email should be similar in appearance to other communications (e.g., use of logo, color scheme, and layout of email)

Berman’s suggestion that some marketers may be over-apologetic served as a pause for reflection on this issue. How important is a proactive apology in service recovery? Is it possible for an apology to fan the flames of customer discontent rather than correct a mistake? My take on this issue is that an apology, particularly if it is a sincere expression and not a scripted response, is a necessary first step in service recovery. However, the words of an apology are secondary to the actions taken to soothe an unhappy customer. An apology with no corrective action or worse yet, another service failure, serves no purpose.

The best rule to follow is AAA service recovery: Acknowledge, Apologize, Act. Begin by acknowledging an error or mistake occurred in a matter of fact way. Then, take responsibility and apologize for any inconvenience or harm experienced by the customer. Finally and most importantly, explain to the customer actions that can be taken (or have been taken already) to correct the problem.

Service failure can set the stage for a heroic recovery that instills customer confidence in your firm. Embrace that possibility by having a plan when it is time to say “I’m sorry.”

Email Insider – “Always Having to Say You’re Sorry: Our Love Affair with Apology Emails”

Making a Case for Brand Positioning in Higher Education

Brand positioning is the strategy that stokes my fire for marketing more than any other. It is a powerful means of differentiating a brand from competitors and articulates brand meaning to consumers. My intensity on positioning is also fueled by dismay at the numerous brands that do not seem to appreciate the impact of positioning or simply have no clue how to develop a positioning strategy.

My industry, higher education, is not exempt from this dim view of the practice of brand positioning. Many branding campaigns either revolve around the institution itself (e.g., programs, buildings, history) or feature a “diverse” group of students engaged in mock interactions, presumably doing some learning. In other words, most higher education branding efforts are lousy! There are exceptions, with one of those being a current campaign at Purdue University.

Purdue’s current branding campaign, dubbed “Makers All,” sets out to differentiate Purdue’s programs in areas such as math, science, and technology, experiential learning, and international culture. The aim of the campaign is to communicate how students are impacted through their studies at Purdue. It is all about the customer and what the product does for them. “Makers All” is a refreshing change from the seemingly predictable tone of many Higher Ed marketing campaigns.

A brand’s position is based on a point of difference that is: 1) real and 2) relevant. Purdue’s “Makers All” campaign meets those criteria. What is most compelling about Purdue’s brand positioning is its connection to stakeholders. Students, prospective students, alumni, and employers all can appreciate the value the brand delivers.

Marketing Daily – “Purdue Differentiates Self in New Effort”

Holding on to the Past: The Good and the Bad

My 10-year-old son recently discovered the joy of watching “The Andy Griffith Show.” As I watched an episode with my son, I received far more pleasure watching his reactions than I did from the show. One of the reasons for my response is the good feeling I got that my son was being entertained by a show that had done the same for me when I was his age. As a marketer, it reinforced the power that nostalgia can have as a connection point with consumers. Nostalgia can remind us of younger days, simpler times, or a place that we never experienced but longed to understand. I think of the retro-architectural designs of many new professional baseball stadiums today that give a nod to the physical appearance of baseball parks a century ago. Building a bridge to the past with a product or experience today can be a persuasive emotional hook to attract customers.

Beware, though, as the past can be a dangerous place to look for marketing ideas. At about the same time I was reflecting on my son’s attraction to classic TV, I read an article by Pat LaPointe titled “SOV is DOA.” He cautions against use of a measure of marketing effectiveness known as Share of Voice (SOV). This measure compares a brand’s measured advertising spending to the entire category’s ad spend. The assumption has been that a brand’s SOV should mirror its market share. For example, if a brand has an 8% market share, it should have at least an 8% share of voice. The logic of the SOV/market share relationship is understandable, but does that mean we should be concerned with our SOV? How does it translate to building and nurturing customer relationships?

The title of Pat LaPointe’s article says it all: SOV is DOA. While LaPointe addresses a specific measure of marketing effectiveness, the takeaway from his piece is a challenge to question the applicability and relevance of the measures we use to assess performance. Just because SOV has been used for years and is widely recognized and understood, that does not mean it is a key indicator of marketing impact today. Customers change, the external environment changes, strategic priorities change, so should we not anticipate the need to change how we measure marketing productivity?

How to Lose Friends and Alienate People

In case you do not fully appreciate the concept of transparency and its impact on businesses today, look no further than Cooks Source magazine. Until recently, Cooks Source was a relatively obscure regional publication in western New England. That is until its editor, Judith Griggs, was caught in a massive firestorm of controversy surrounding her response to a writer whose work had been plagiarized by the magazine. Cooks Source lifted an article posted by Monica Gaudio on a website about apple pies. It appeared in the magazine’s October 2010 issue. Plagiarism is one issue; insensitivity and arrogance as a response to plagiarism apparently is not a good idea.

Gaudio’s inquiry to Cooks Source met with a response from Judith Griggs that has been widely disseminated across the Web (if you have not read the response, click here). In a nutshell, Griggs blew off Gaudio and suggested she should be grateful Cooks Source had published her work. She went so far as to criticize Gaudio’s work, saying it was much better after Cooks Source had edited it. It seems that Judith Griggs did not think about the possibility her reply sent to the inbox of Monica Gaudio was actually being sent to the inbox of the entire Internet. Critics have been merciless in assailing Cooks Source and Judith Griggs in blogs and on Facebook. After several days of bashing and a failed, lame attempt at an apology, the Cooks Source website now consists of a single page with a bit more heartfelt apology.

The lesson taught by Judith Griggs is a reminder that transparency rules today. If a business appropriates intellectual property from another source, it cannot go undetected forever. And, when a business is caught red-handed, whether it is stealing others’ work, mistreating employees, or misleading customers, the sooner it comes clean and vows to make changes the more effective damage control will likely be.

Perhaps the most galling aspect of Judith Griggs’ mea culpa is that Cooks Source and its stakeholders are victims, damaged by the groundswell of criticism arising from this incident. It is as if accepting responsibility is secondary to the “inconveniences” felt by Cooks Source as a result of its poor decision. Social media is powerful, no match for a manager that allows sarcasm to flow through his or her fingers and onto the Internet.

Winning with Social Coupons

Consumers flocked to coupon offers in the past two years as the recession put a dent in our buying power. But, coupons really are not for us; they are ultimately for the gain of marketers that offer them. This small but significant point has been lost on many businesses that have experimented with social couponing services like Groupon. Many businesses have gotten burned because the revenue hit taken and expenses incurred to offer deep discounts to attract customers is not always recouped.

A recent study from Rice University found that nearly one-third of businesses running an offer through Groupon say that lost money on their promotion. More than 40% of businesses surveyed said they would not run an offer on Groupon again. These figures are alarming for the future of social couponing. The medium holds great promise because information about coupon offers can be transmitted through permission marketing and word-of-mouth, channels that are much more cost efficient than traditional channels used to deliver coupons.

Rather than shy away from social coupons because of a bad experience or because of hearing about bad experiences other businesses have had, marketers should take the following steps to manage a social coupon campaign:
1. Do the Math – The expenses associated with a coupon offer can be calculated on a per unit basis when evaluating an opportunity. Revenue sharing with a service like Groupon, cost of goods sold or given away, and any additional labor costs to handle increased demand must be considered when making a decision to participate in social couponing. Realistically, Return on Investment should be based on incremental profit, not revenues. What is the additional profit a promotion brings in once all expenses are deducted? Social coupon offers can be capped; set a maximum number of offers to sell to manage profitability of the promotion.

2. Prepare Employees – One of the problems businesses have had with demand generated by a Groupon offer is that employees can become overmatched in meeting the influx of customers. And, in the case of service businesses, many employees have found that Groupon customers are not always the best tippers, basing tips on the deeply discounted price rather than regular price. Companies should take steps to increase service coverage, train employees on handling service encounters with new customers attracted by a coupon , and monitoring employee satisfaction during peak business periods.

3.Think Long-Term – A coupon can get customers in the door, but other factors will determine if they return. A great customer experience, which is highly related to #2, can demonstrate the value offered and persuade customers to return without the incentive of a coupon. If employees can be persuaded to view these customers more like a new friend than a nuisance, the initial service encounter can set the stage for repeat customer visits. Also, businesses should seize the opportunity of a visit by first-time customers to invite them to expand the relationship by opting in for permission-based marketing in the form of email or by friending a brand in social media.

Social coupons may fall under the category of “spend money to make money,” but when properly executed and managed they should not lose money and hopefully set the stage for developing repeat customers.

Promo – “Groupon Social Coupons Unprofitable for One-Third of Marketers: Study”