Common Sense Should Become Common

Here is some brand common sense. In order to be purchased, a brand must first be considered. The original advertisements for the New York State Lottery: “You can’t win it if you’re not in it.” Well, the same goes for consideration and purchase. Common sense.

Yet, a major consulting firm McKinsey & Co. has collected data to demonstrate the importance of the consideration set. The data show nearly straight-line correlations between a brand being in a customer’s consideration set and market share, across several categories. McKinsey & Co. states that the consideration data explains 60% to 80% of the variation in sales growth from one purchase to the next. Surprise. A customer is not likely to purchase a brand they would not consider. Common sense.

According to McKinsey & Co., brands must shift focus from spending most resources on closing the sale and increasing loyalty to generating and “encouraging” initial consideration. McKinsey & Co. iterates that money spent on loyalty programs may be misplaced as “active engagement in loyalty programs” is slipping. It is McKinsey & Co.’s opinion that the slippage in loyalty program involvement is a result of changes in the way customers shop.

Here is another common sense idea. There is a simple law of marketing life. 100% of a brand’s current customers will die. Every brands needs to attract new customers to stay strong. Every brand needs to keep its customer base loyal. For enduring profitable growth, attract new customers, increase consideration, convince them to purchase, increase repeat purchases, increase loyalty.

Consideration is critical. Common sense. But it is only part of the picture when it comes to purchase and repurchases over time. Loyalty is the lifeblood of a brand. Failing to reinforce brand loyalty is like trying to fill a leaky bucket.

In order to build strong brands, move customers up the Brand Preference Ladder. It is all about increasing commitment to a brand.

Awareness: Awareness is a “yes or no” issue. A prospect is either aware of the brand or not aware of the brand. It is like a light switch: on or off. There is no in between position.

Familiarity: Among those who are aware of the brand, how familiar are they with the brand? Familiarity means a person feels they are sufficiently aware of the brand to express an opinion. Familiarity is a feeling. The familiarity scale goes from unfamiliar, somewhat familiar, very familiar, to extremely familiar.

Willing to consider: Among those who are familiar with the brand, are they willing to consider the brand? Price and convenience are often differentiators.

Short-list: A customer’s short-list of brands is the primary, personal competitive set within which the customer is most likely to make a final purchase decision. Consumer behavior research suggests that the typical size of this competitive set is three brands. Being on the short-list of considered brands prior to the purchase is a big competitive advantage.

Preference: Within the person’s short list, is the brand the first choice? How do they rank the brands in their short list? It should be every brand’s goal to be the preferred, first-choice brand.

Enthusiasm: Brands in this category are brands that the customer not only prefers but also is willing to buy even when their second choice brand costs 10% less. Among those people who say the brand is their #1 choice, would they still choose that brand if their #2 brand were priced at 10% less? These customers who say “YES, I will still choose this brand even if it is more expensive than my second choice are brand enthusiasts. A brand’s ultimate goal is to increase brand enthusiasm.

Growing brand consideration, preference and commitment is a profitable progression up the Brand Preference Ladder. Consideration is critical. It is the opening gate to purchase. Customers are not likely to purchase brands they will not consider. Demonstrating a high correlation between consideration and market share is simply a demonstration that common sense makes sense. Implying that building brand loyalty is not also important makes no sense.

Baloney! Boy, Cost, Cut, Buy

The 3G Capital approach is to buy a company and cut costs until there is nothing left to cut. To continue to earn profit, 3G Capital has to buy another company to make the initial investment look profitable. So, it should not be a surprise that 3G Capital took a sledgehammer to Kraft Heinz, closing factories and tossing out workers. As The Wall Street Journal comments, the cost-cutting is over. Kraft Heinz managed to wring out $2 billion in savings, leaving the company with the highest margins in the food business. The problem is: now what?

3G Capital is not a brand-building company. It is a cost-cutting system, viewing actions through a lens of efficiency but not marketing effectiveness. For example, 3G Capital modernized, roboticized, and automated a new Kraft factory to make processed meats: primarily baloney, but also ham, and turkey. This factory is considered to be a marvel of modern engineering. However, there is a marketing problem: Americans are cutting back eating processed meats. Just because the factory is efficient will not make up for the fact that processed meats is a dwindling category. The Wall Street Journal points out, sales of cold cuts are slipping, and along with this slippage is Oscar Mayer’s market share. It will only more efficiently provide products that consumers do not want.

This is the second bout of marketing myopia for Kraft Heinz. Last year, under the guise of brand building, investment poured into making a better Oscar Mayer wiener. Unfortunately, Americans do not eat hot dogs on a regular basis any more: it is a food for the Fourth of July and Labor Day.

The Wall Street Journal made one thing clear: even Kraft Heinz executives realize that there is nothing left to cut. Cost cutting can yield short-term profits. Now what? Not a single analyst or observer interviewed for The Wall Street Journal story believes that 3G Capital knows how to generate organic growth. For Kraft Heinz to survive, the over-arching opinion is that an acquisition is the only way to see continued growth in profit. “Buy, cost cut, buy” is the 3G Capital modus operandi. This is not about brand building. It is about financial finagling.

“No,” says, the CEO of 3G Capital, Bernardo Hees: “we know how to invest in brands.” He emphatically denies that 3G Capital knows only how to strip brands rather than support brands. One of the critical first steps in building a brand is understanding “where we are now”. If 3G Capital loved brands, the team would have seen that the food world has changed. Processed foods, especially processed meats with unpronounceable ingredients are no longer on the top of the shopping list. According to The Wall Street Journal, the manufacturing process macerates deboned meats (previously injected with flavorings and preservatives), grinds these meats into “a paste-like goo (batter), which is fed into a chilled vacuum-sealed tumbler. The tumbler massages the meat and cures it in fewer than eight hours.” It does not take a genius or a lot of market research to know that these products are no longer desired. The world has moved on, but only if you care to look at customers. 3G Capital is making one of the worst brand mistakes you can make: manufacturing what you know how to manufacture, instead of manufacturing what you know customers will want. This is investing in manufacturing efficiency. This is not investing in brand effectiveness.

The 3G Capital playbook is only about purchasing and paring. AB InBev is a great example. But so is Restaurant Brands International, owner of Burger King, Tim Horton’s and Popeye’s. Everyone is cooing about the great numbers coming out of Burger King. But, as Financial Times reports, those great numbers are based solely on discounts; even Burger King admits this. Discounting is now its central strategy. Without the discounts, Discounts attract deal loyal customers who do not care for the brand; they care for the deal. These are fickle customers who are not the loyal base needed for enduring profitable growth. Price deals debase brands. This is not brand building.

Right now, everyone is waiting for the next purchase because no one believes in the brand building acumen at 3G Capital. The statement that 3G Capital knows how to invest in brands, well, that is just a lot of baloney.

Meaningful Messaging: Using Smart Objectives To Sell Today and Tomorrow

In 1993, newly minted IBM CEO, Lou Gerstner, when asked about his vision for the company, replied that IBM was in a mess and he did not have the time now to indulge in of vague forecasts. The press reacted poorly. Descriptions of Mr. Gerstner’s vision for IBM would be helpful for quarterly guidance. The press was not asking for a futuristic, vaguely mystifying, inspirational message. They were looking for visionary guidance to better understand where IBM wants to go and how it plans to get there.

Analysts and observers want to hear a specific and meaningfully encouraging vision that serves as the corporation’s guiding star. , Short-term goals are essential. But so is the future ambition. Using SMART objectives as the basis for guidance provides a framework for delivering both. SMART Objectives mean objectives that are: Specific, Measurable, Aspirational yet achievable, Related to overall business growth, and Time-specific.

Take Ford Motor Company, for example. Ford was the US car company that did not go bankrupt during the financial crisis; Ford did not take millions of dollars from the government. It weathered the downturn using its own reserves and came out of the recession in really strong shape. The company had record earnings in both 2015 and 2016. Ford’s recent statements to Wall Street have erased this recent history.

In May 2017, Ford hired a new CEO, Jim Hackett. Since then, Mr. Hackett has made several attempts to articulate what he sees as the vision for Ford. Every time, Mr. Hackett has been criticized for making generic, uninspiring, less than positive descriptions. Mr. Hackett has said a lot without saying anything.

According to Automotive News, Wall Street is becoming impatient with the vagueness of the Ford messaging. Wall Street complains that he is not specific in his commitments. On the one hand, Mr. Hackett is honest in his comments, letting analysts know that Ford is not as competitively fit as its competitors, and that the company’s revenue and volume have not grown as hoped for: even though there was revenue growth, costs increased at the same time. On the other hand, he has not communicated Ford way forward in an encouraging, meaningful manner. As one money manager remarked, “When a CEO comes out and says it’s going to be a bad year, that’s not going to instill confidence in investors. There hasn’t been the data or the narrative to instill confidence. It’s created uncertainty around what success at Ford can be.” Mr. Hackett has failed to articulate a specific aspirational ambition.

Commentators and analysts say that General Motors CEO, Mary Barra, has done a much better job of creating a meaningful description of GM’s current goals and future goals 5-10 years down the road. At Tesla, Elon Musk continues to generate rapture with analysts and investors even though each statement he has made has not come true. An exciting vision is a powerful force. An analyst with Autotrader.com put it this way in The New York Times, “They (Tesla) haven’t delivered what they’ve promised, but does it matter? It doesn’t seem to matter to its investors and the customers who’ve put down deposits.”

Financial Times’ Lex reporters say that “The Tesla Chief Executive cannot be accused of being distracted by his promises to Wall Street. Nor has he been corrupted by conservatism.” On his analyst call – Financial Times hesitates to call it an earnings call, as Tesla has none – Mr. Musk laid out a future – near and longer-term – of promises and bets. These may seem unachievable but we cannot know. Clearly, Mr. Musk believes these are.

Tesla’s goals are 1) sustained positive quarterly operating income (Tesla has recorded only one of these); 2) 5,000-a-week Model 3’s rolling out (over a year late); 3) to make money (Tesla has recorded only 2 quarters of teeny-tiny profit); 4) to have an autonomous vehicle drive from LA to NYC (promised for 2017); and 5) improved margins for the S and X models (margins for both fell the last two quarters), Mr. Musk offers an exciting, ambitious vision with specifics. He sees a future 4-year’s out where Tesla would produce 100,000 electric trucks a year. He is completely confident this will be achievable. At the end of the call, Mr. Musk enthusiastically proclaimed that if Tesla could send a Roadster into space to orbit the asteroid belt, “I think we can solve Model 3 production.” He is a master of the appeal of SMART objectives.

Mary Barra continues to stonewall on its pledges to compensate families whose loved ones were either injured or killed driving GM cars with flawed ignition switches. Yet, Mary Barra receives positive reviews for GM’s vision of tomorrow

Mr. Hackett’s October 2017 Ford vision generated more grumbles than golly gee’s. He committed Ford to cost cuts, shifting money to the money making vehicles, moving manufacturing to China to save money – including the production of Ford Focus for North America, pivoting from gas to electric, simplifying and modernizing the company, and, making Internet connectivity a priority.

As rapacious and greedy as Wall Street investors and analysts can be, there seems to be a soft spot for the big ideas. As Oliver Wendell Holmes (a Supreme Court Justice) once said, “Every now and then, a man’s mind is stretched by a new idea or sensation, and never shrinks back to its former dimensions.”

CEOs must optimize the short-term with the long-term. To offer meaningful messaging, CEOs must rely on SMART objectives.

  • Specific: Saying that the brand is doing X but not providing details frustrates listeners.
  • Measurable: Remember, especially today, all claims are checkable.
  • Aspirational and achievable: Ensure that plans are possible dreams.
  • Related to overall business growth
  • Time-specific: for the short-term goals, Wall Street can be very impatient. For long-term goals, make the horizon just close enough so investors and analysts can see the brand there.

East Does It: The Three Dimensions of Ease

Make life easy. Keep it simple. Be convenient. These are benefits that will never go out of date. The proliferation of product and service options, and the diffusion of accelerating technologies have made decision-making more difficult than ever.

Information overload sometimes confuses rather than confirms, making us uncertain. Through the use of technology, we some times make the service experience more difficult, more complex, more frustrating.

According to a recent report in Automotive News, technologies in our vehicles are changing our perceptions about ease in relations to cars and driving. (Most Americans are familiar with J.D. Power’s surveys of customer satisfaction, product quality, and buyer behavior across a wide variety of industries.) The concept of ease is evolving. Ease is a three-dimensional concept.

Ease of choice. Make a brand decision easy to choose. We are living in an over-choiced world. It is difficult to select the best toothbrush for my needs. Hard, medium, soft bristles? Battery powered, electric powered, no power? Crest, Colgate, Braun, Store brand? In other words, we do not want manual? Oscillating, fixed, vibrating? Is it worth the time and mental effort? We do not want increases in the difficulty of decision-making. It is the role of the marketer to take the complexity out of choice. Reduce choice complexity. How many brands of olive oil do we really need?

Ease of. Make the product or service easy to use. Make it easy to learn how to use a product or service. Overly complicated products and services cause us to feel inept or inadequate, and, sometimes, cause us to feel stupid. One of the genius insights of the design of Apple products was to make them easy and intuitive to use. J.D. Power data indicate that ease of the user interface affects whether a driver chooses to actually use a specific feature. Lane-keeping systems and lane-changing warnings fall into this category. People do not want to feel stupid. If a product is too complicated to use, people will avoid it.

Again, J.D. Power survey data show that problems with DTU (difficult to use) are much more frequently occurring than quality problems. When J.D. Power started the car surveys 50 years ago, the studies were replete with mechanical malfunction issues. This is not the case today. Now, the surveys are rich with DTU problems. “Even if a feature works as designed, if it is not intuitive, consumers will ding the vehicle’s feature as having poor quality,” says retiring J.D. Power CEO, Finbarr O’Neill.

Ease of Mind. People want to feel comfortable with their decisions. Feeling satisfied not only reflects a good choice and ease of use, it also means that I can relax and feel better about my decisions.
Ease of mind raises all kinds of questions: Did I make the right choice? Am I comfortable with the decision? Am I doing the right thing for me? Am I doing the right thing for my family? Am I doing the right thing for the community? Am I doing the right thing for future generations? The rise of autonomous vehicles is altering perceptions of uneasiness when it comes to driving. Automation and artificial intelligence will make our lives easier. Will they also put our minds at ease? Does occupying an autonomous vehicle require more confidence in the vehicle or a different sort of confidence? What will it take to deliver ease of mind to a passenger who is in the driver’s seat but not actually driving?

The Three Dimensions of Ease are not some warm-and-fuzzy thoughts about convenience. Making our lives easy is a powerful product and service benefit. Amazon is a brand built on making our lives easy. They make it easy to choose and buy. They make their site easy to use. The provide ease of mind with superior service and guarantees. As our world becomes more technical, digital, and complex, brands should aim to win across the three dimensions of ease: ease of choice, ease of use, and ease of mind across the entire brand experience.

Clearly Define Your Brand Now Or Forever Hold Your Peace: The Future of Automotive

On January 15, 2018, three of the four top stories in Google News’ Technology section were about cars. Coincidently, the CEO of Fiat Chrysler Automotive (FCA), Sergio Marchionne, said, in an interview with Bloomberg, that automotive companies have to come to terms with the fact that pretty soon automotive news will no longer be about combustion engines: “Developing technologies like electrification, self-driving software, and ride-sharing will alter consumers’ car-buying decisions within six or seven years. The industry will divide into segments, with premium brands managing to hold onto their cachet while mere people-transporters struggle to cope with the onslaught from disruptors like Tesla Inc. and Google’s Waymo.” Mr. Marchionne added, “Auto companies need to quickly separate the stuff that will be swallowed by commodity from the brand stuff.”

When asked about the automotive makers that will survive, he continued, “If a portion of the industry is going to be commoditized, then the attrition rate is going to be tremendous for those that cannot distinguish by brand.” But, at FCA, it will be different. “We took a completely different strategy when we came to brand differentiation from our competitors. If you look at Jeep, RAM, and the premium brands, those are brands that will survive. But if you provide basic transportation, it is like buying a generic phone.”

This is a rather remarkable prediction as Ford unveiled the Steve McQueen Mustang BULLITT, from the iconic 1968 movie with the incredible, pre-special effects, car chase. Mr. Marchionne’s words have dramatic consequences for automotive marketing.

First, if the future of automotive is technological advancements, self-driving vehicles and ride-sharing, then handling, cornering, the turn radius, and the feel of the driving experience are moot communication points. Brands are going to have to figure out something new to say if people are going to buy or be driven in a car.

Second, articulating clear brand differentiation will need to be revisited in ways that will carry into the future. This requires a thorough review, and contemporizing of automotive brand promises. Waiting around to address this is the wrong approach. Get ahead of the parade. Brands like Tesla, Lyft, and Uber have already overturned the norms of the automotive world. All seem to be promising electric vehicles well within the coming decade. Ford is investing $11 billion in electric vehicles, and stated that the company intends to have 40 electrified vehicles by 2022. Ford CEO, Mr. Jim Hackett is planning to cut $14 billion in costs over the next five years, moving monies away from sedans and internal combustion engines to develop more trucks and electric and hybrid cars.

Third, automotive brands must also be better differentiated from sibling brands within the corporate family. The days when cars consider a unique grille and tail lights enough to distinguish a brand name are over. Aside from the aggressive grille, is a Lexus ES really that different from a Toyota Avalon?

Fourth, as Mr. Marchionne stated, technology will become commoditized. All vehicles will have electric batteries, GPS, self-parking, back up and side cameras, and all the other electronics that are currently seeping into the driving experience. Basing a brand’s promise on excellent, groundbreaking technology will not be a winning strategy. Mere technologies will not be the basis for a sustainable, differentiated brand promise. Differentiation will require real creativity to make the total experience distinctive. Nissan’s concept car, the Nissan Xmotion (pronounced as cross motion) has 7 touch screens: The Verge emag said, to enter the vehicle is like “entering a dense forest of technology.” To understand how far Nissan took the technology, The Verge writer, Andrew J. Hawkins, highlighted his favorite paragraph from the Nissan press release: “Fingerprint authentication is used to start the operation of the Xmotion concept. When the driver touches the fingerprint authentication area on the top of the console, the opening sequence starts, awakening the virtual personal assistant – which takes the shape of a Japanese koi fish.” Need we say more?

All brands are facing a challenging but creative future as technology invades all aspects of our lives from home life to browsing the Internet, to shopping, to entertainment, to driving experiences. Just as retail brands are reimagining themselves, automotive brands must revisit and reinvent themselves.

All’s Fair: Brands Must Be The Forefront Of Fairness

Institutional trust is in serious decline. Sadly, as the surveys show, people around the world no longer trust government, healthcare systems, political systems, educational entities, leaders, experts, social systems, financial communities, news media, religious institutions, and so forth. Increasingly, we trust peers of unknown expertise on rating sites and their reviews. We trust online communities, and online influencers – many of whom we never meet in person.

However, there is good news on the horizon. While we are experiencing a trust deficit, at the same time we are observing a desire for fairness. While we wring our hands over the decline in trust, there are indications that as people we are seeking fairness on a global basis.

Financial Times tells us that corporate brands are facing revolts against only having their AGMs (Annual General Meetings of shareholders) as online meetings. The original rationale for online only AGMs was to make the meeting more global as many shareholders could not always participate due to geography. Many corporations love the idea of online only meetings. Shareholders are face-to-face with the powers that be, asking questions, pressing for answers, and putting CEOs’, CFOs’, with all the other Cs’ feet to the fire in an extremely public manner. However, there is also pushback to online only meetings: many, including some large shareholders, see the lack of in-person annual meetings as unfair. Without the ability to stand up and look a CEO in the eyes, corporations can avoid public embarrassment.

The New York Times writes that Larry Fink, CEO of BlackRock, an investment firm that manages $6 trillion, is telling fund managers, private equity companies, and corporate leaders that it is not enough to make profits; it is imperative to serve a social purpose. There is too much talk and not enough action when it comes to social responsibility; enterprises must be fair and just in what they implement for the common good.

Additionally. The New York Times points out that Jana Partners (the activists that Whole Foods’ CEO John Mackey called “greedy bastards”) is now urging Apple to take a long, deep look at how its products are affecting children. We can overlook the irony of Jana Partners urging Apple to look at the long-term effects of its products on children, as any focus on health, wellness, and fairness to children is desirable.

Finally, a recent American Express Company study indicates that as Millennials age and rise in their companies, their commitments to social justice and fairness will reshape C-Suites around the world. In the US alone, currently 40% of Millennials leaders and managers see fairness as essential for a corporate leader.
They expect to be treated fairly. They expect prices to be fair for the benefits received. Is this brand a fair value? Marketers do not determine fair value: customers determine fair value. What is fair value? Every brand should know what customers perceive as fair value.

Today’s conversations about fairness are no longer merely about the fair relationship between benefits and price. The conversation is about whether or not you are behaving in a fair manner. Of course, pricing is important. People were outraged with Uber’s extreme use of dynamic pricing fluctuations. The fare was not fair.

Brands must be transparent in their behaviors toward employees, communities, customers, countries, stakeholders, and planet. Brands must deal with personal customer data in fair ways, not leveraging the information in ways that violate an individual’s privacy for the sake of brand profits. Brands must not only create the doors of career opportunities, but also open wide those doors so employees can walk through and take advantage of those opportunities. Brand must stand up for what they stand for. Commitment to social responsibility increases the perception of earning fair profits. Be fair to employees, customers, the community, the planet.

Fairness is highly personal. From our playground cries of “that’s not fair” to our current focus on fair-based behaviors towards people and planet, brands have an opportunity to build trust by focusing on fairness.

Be Relevant. Be Different, Or, Be Nothing

The retail world just provided another example of the importance of relevant differentiation. Sam’s Club is closing 10% of its 660 stores, as reported by Sarah Nassauer in The Wall Street Journal. Sam’s Club is the Walmart version of a bulk-item membership shopping experience. It is Walmart’s version of Costco.

Sam’s Club CEO, John Furner, states that the stores’ locations are the problem. The Sam’s Club locations were chosen in anticipation of larger affluent populations leading to increased store traffic. However, there is a deeper issue to consider, an issue that came to the forefront in 2015.

In August 2015, Ms. Nassauer, who reports on retail for The Wall Street Journal, revealed that Sam’s Club’s was concerned about its close association with Walmart reinforced with nearby locations. The 2015 CEO, Rosalind Brewer, said in an interview, “We want to be less of a Walmart.” The belief was that the close association with Walmart was an impediment to attracting more affluent membership club shoppers who are able to pay for a membership, and have the money and space to bulk up on products ranging from paper towels to plasma screen TVs. The Walmart shopper and the Costco shopper are different segments. But, Sam’s Club was unable to shake off the image of Walmart.

According to Ms. Nassauer, Sam Walton developed Sam’s Club (1983) as “a place for small business to stock up on discounted bulk items, not a Walmart clone that offers everyday deals.” However, as time passed, wherever Walmart placed a store, Sam’s Club was next door. In 2015, 200 Sam’s Club stores shared parking lots with Walmart.

Location matters. Costco places its stores in urban areas and along the nation’s coasts. Its Brookfield, CT location draws customers from wealthy northern Fairfield County, CT, as well as from parts of eastern Connecticut. It also has a store in Norwalk, CT that reaches towns such as Greenwich, CT. Costco was an early seller of organic foods, and by 2015 had over 200 organic items available.

Leadership stability has been an issue at Sam’s Club as well. Nine executives have run Sam’s Club over the past 22 years: that is one CEO every 2 – 2 1/2 years. It seems that many executives see the Sam’s Club job as a stepping-stone to a higher level in the Walmart organization.

But, it is the power of the Walmart brand essence that has affected the ability of Sam’s Club to establish itself as a brand for affluent shoppers. Even the Sam’s Club stores located in affluent areas are not attracting enough of those customers to make the store viable. Walmart’s brand essence is all about selling more for less, as its website states. By selling more for less, Walmart is able to make a difference in people’s lives. Sam’s Club lives in the Walmart brand embrace and has not been able to sufficiently differentiate its brand in a relevant manner from Walmart.

Tests of high-end Sam’s club stores have delivered mixed results. Test stores offer “individual prepared meals, pricey furniture, apparel and food, next to bulk Coca Cola. The aim is to try to attract shoppers who might also shop at Whole Foods Market.” In order to succeed, Sam’s Club is seeking new suppliers, as its current vendor roster is not able to supply these types of products.

E upscale

Aside from not being able to successfully differentiate the Sam’s Club brand from its parent in a relevant manner, it is far easier to extend an upscale brand downward, than it is to take a lower scale brand and move the image upscale. Giorgio Armani created Armani X as its less expensive, less couture brand. It would have been difficult to take an Armani X brand and make it couture. When Toyota brought Lexus into the US, it kept the relationship with Toyota distant. An entire new dealership network was created.

A current example of an effort to make an affordable brand go upscale is Hyundai. The South Korean brand has decided to take its new Genesis luxury vehicle out of general Hyundai dealerships, and create a separate dealer network. Hyundai executives believe that early Genesis sales were hurt by the highly affordable image of the Hyundai brand, and its early low quality perceptions. The plan is for Genesis vehicles to be completely phased out of Hyundai dealerships.

Brands can be repositioned and reimaged and upgraded to attract a more affluent customer. But, this takes substantial resources that few can afford. For example, P&G turned Oil of Olay, a drugstore staple competing with Pond’s Cold Cream and Nivea, into a more expensive beauty and skin care brand. It differentiated the brand on the basis of science and ingredients.

On its website, the Sam’s Club mission is articulated as “At Sam’s Club, we’re committed to saving our members money on the items they buy most and surprising members with the unexpected find.” The store says it is dedicated to offering exceptional wholesale club values. The website also states: “Sam’s Club is on a mission for Savings Made Simple. Since 1983, we’ve worked to provide our members quality products at incredible values.” This is not enough to differentiate from Walmart. Walmart can make a very similar claim. And, in visiting the Sam’s Club website there is more than remarkable similarity to the Walmart website: the only difference appears to be the brand name and some of the items.

For all the talk about location, product selection, ever-changing leadership, and the economy, the truth seems to be that Sam’s Club never really differentiated its brand from Walmart. Sam’s Club never had a chance to build its brand into a Costco challenger.

I Cant Sleep at Night, But Just The Same

CAN’T SLEEP AT NIGHT, BUT JUST THE SAME, I NEVER WEEP AT NIGHT, I CALL YOUR NAME CAN WHAT YOU CALL YOUR BRAND CHANGE YOUR BRAND?

Special thanks to The Mamas & Papa’s for the lyric: it leads us t o a prominent, pervasive element of marketing. Brand naming is big business. Brand name creators specialize in finding just the right moniker for your brand. They always provide all sorts of rationalizations as to why the selected brand name is so crucially important. Some people say that the brand name is the most important, decision for effective brand management. When both The Wall Street Journal and The New York Times report on brand naming on the same day, it is either a slow news day or brand naming is suddenly top-of-mind.

Brand names are important. But what the brand stands for is most important. For decades, Americans celebrated occasions special or not, by taking pictures using Kodak film. Kodak moments were emotional glue, captured on celluloid. Kodak’s prize color film became the title to a Simon and Garfunkle song, Kodachrome. Kodak became an iconic American brand: but that brand was a made-up name. Nobody discussed the hidden or special meaning of Kodak. There were no fancy name developers sourcing documents for the perfect name. It was a simple, easy to pronounce, 5-letter, made-up word that could fit on a small box.

Some brand names happen by accident, like Google, which was apparently a spelling error. Some brand names happen because it is a name of the child of the boss, like Mercedes, or a pet (Snickers, named after a horse). Some brand names happen because it is the nickname of a child, like Tootsie Roll. And, there are the family names, these work too: Mars (Mars Bar), Ford Motor Company, W.L. Gore (Gore-Tex), Hearst (newspapers), Wrigley (gum), Dyson (vacuums, hairdryers, etc.), Kellogg’s (cereals), Chanel (fashion, fragrance).

We know, and, hopefully, love these brands. We know and, hopefully, love them because of the relevant, differentiated and trustworthy experience they each deliver. The brand’s promise and essence make the name meaningful, not the other way around. How we communicate the name creates interest in the brand. Delivering what we promise builds brand credibility and loyalty.
Brand naming is serious, and seriously expensive, business. It requires resources and creativity. A name affects the logo and the slogan. But, don’t get carried away. According to many in the naming business, a perfect brand name that conveys everything about the brand and the user is a necessity. Reducing a brand message to a single word is simplistic.

One brand namer interviewed in The New York Times said, “You try to create a language and a name that taps into the psychology and sells the product.” Another said about automotive naming, “ It’s thinking how the brand should be positioned in the marketplace, identify the car’s essence.” And yet another name consultant indicated that when his company develops names, it seeks “sound symbolism and letter structure”. He added, “The brand name is a vessel that carries ideas into the marketplace.”

Mercedes. Google. Amazon. Disney. Apple. L’Oreal. McDonald’s. These are among the top most powerful brands. They became strong because they were made strong. These names were not born out of trying to capture the key brand message in one word. Nor were they created for considerations of sound symbolism or as a vessel structure to carry a brand idea.

Brand names are sometimes changed. Kentucky Fried Chicken moved to KFC to put distance from the word “Fried”. Minnesota Mining and Minerals shortened its name to 3M. Most people do not know what ESPN originally stood for. Nor do viewers care. Sometimes a brand will need to change a name after a disaster, such as ValueJet, which became AirTran after a crash.

Something different is happening in retail. The Wall Street Journal tells us that real estate developers have decided that one way to survive the changes wrought by online shopping is to ditch the word “mall” on their properties. Mall is now a malignancy on the retail landscape. Just in case you are not tuned in to this, “mall” is so 1970. A property re-brander stated, “The mall needed to de-mall.”

Sometimes names do need to change to adapt to changes in the marketplace. So, instead of “mall”, multiple venues retailers are switching to names like The Shoppes, The Promenade, Crossing, or Quarter. Mall is now a negative, retail apocalypse word, as are its cousins, Galleria and Pavilion, which are also being banished from the shopping lexicon. Brand names now need to convey “upscale, multi-purpose, leisure-time consumer destination”.

Mall brand name changes are happening because “Retail, especially in the context of mixed-use projects, is as much about place, experience, entertainment, wellness, and community as it is about shopping, and the word ‘mall’ doesn’t embody those qualities.” However, the Mall of America, which is a place, an experience, has entertainment and shopping is not buying into the fall of the mall mentality. Others are also not making the switch, as it would “undo years of brand recognition and brand value for little return.” And, as one customer said, “When I call my friend Christine, I say let’s go to the mall” regardless of what it is now called.

The promise and delivery of relevant and differentiated expectations is critical. This is the number one priority.

Permissible Pleasure

Established food brands, set in their ways, are having suffering sales difficulties. Food is an area where paradoxical turbulence is having extraordinary impact. We want healthful food and indulgent food; we want diet and delight. This is a massive opportunity for a permissible pleasure.

According to Bloomberg.com, “We want to eat healthier but are also drawn to indulgence.” Check the frozen desserts category. Upstart brands offer fewer calories that are also indulgent. These paradoxical brands are wiping out the profits of the familiar, established, freezer case standards. When Ben & Jerry’s, the stalwart, do-good, creator of Cherry Garcia and other Baby Boomer classics is being “creamed” by Halo Top and Yasso, you know the world has changed.

According to The Wall Street Journal, January is the season for eating salads. We want to stick to our New Year’s weight loss/healthy eating resolutions. On the other hand, as “greens” restaurants (Chopt, fresh&co, Sweetgreen, Just Salad) sprout all over our cities, places that sell indulgent cupcakes and other desserts (Magnolia Bakery) are holding their own. However, The Wall Street Journal found a customer who admitted that Magnolia Bakery’s Key Lime Pie could fit into a week’s eating by having it as a lunch meal. Dairy Foods magazine, a magazine asked, “How does a dairy processor address the public’s enlightened attitude about nutrition while still appealing to its inclination toward indulgence?”

In addressing the paradox promise of a permissible pleasure the absence of “bad ingredients” is often more motivating than the inclusion of “good for you” ingredients. Absence of “bad ingredients” is what many of the new frozen dairy dessert brands are pursuing. Dairy Foods calls it “the premium paradox” of frozen desserts, when someone might select the high fat, high sugar, and high caloric option rather than the low calorie, no sugar, and low fat option, which has an ingredient list of “bad” unpronounceable additives. Take the bad out. Remove the bad ingredients. I will eat the delicious, high fat, high sugar and high calorie dessert as long as it is all natural.

Leverage the paradoxical desires for luscious and lite. Consumers want food brands to optimize both indulgence and wellness. Consumers want the joy of indulgence while being allowable. This is happening right now: Halo Top offers delicious, low calorie ice cream. In 2017, its sales were US $300 million. Halo Top’s promises a healthy ice cream that tastes like ice cream. Because of its low calorie count and delicious flavors – a serving has between 70 and 90 calories – Halo Top took away “the shame spiral” of eating an entire pint in one sitting. A whole pint of Halo Top is between 240 calories to 360 calories. Halo Top offers some non-dairy, vegan flavors made with coconut milk.

Lasso, which makes frozen Greek yogurt bars is now in the low calorie frozen Greek yogurt pints business with selections such as Caramel Pretzel Mania, Rolling in the Dough, Coffee Brownie Break, and Party Animal: all have anywhere from 100 to 150 calories per single serving. A serving of Ben & Jerry’s starts at 270 calories.
Brands such as Dreyer’s, Edy’s, Breyer’s and Ben & Jerry’s, are struggling. Activist investors are urging the big brands to be more digital. These activist investors are pushing these brands to reallocate financial resources. These activists miss the point. The struggles social media communications, and technology. The social is not financial engineering. The problems stem from not recognizing and successfully addressing changing customer desires.

Paradox promise opportunities are growth opportunities. Optimizing the contradictory sides of the paradox into a relevant, differentiated, trustworthy solution is more than just an opportunity for food brands: it is an imperative.

Source Branded Portfolios Bring Brands Together

From Marriott to Amazon to Nestlé to Google to Apple to Unilever to LG to Neutrogena to Source-Branded Portfolios are increasing in importance. With a shared common, source of credibility, individual brands can focus on developing and strengthening their specialness. In a highly competitive, highly fractionated, fast-paced environment, resources are better often better spent behind Source-Branded Portfolios than behind a disparate portfolio of unaffiliated brands.

A Source-Brand invests each individual brand with its authority. This allows the individual brands to focus on their relevant differentiation, appealing to particular customer needs for particular situations. A Source-Branded Portfolio enhances the reputation of individual brands. Source-Branding increases marketing productivity encouraging cross-selling and enhancing the efficiency of the individual brand communications.

Disney has a strong Corporate Brand that imbues each of its brands with its heritage of being a magical place for creating happiness. Disney Cruises, Disney Hotels and Resorts, Disney stores are all embraced by the Disney Corporate Brand’s purpose.

Brands do not exist in a vacuum: A Source-Brand represents an authentic heritage of expertise and credibility, contributing common character, values, purpose, and principles to the brands in the portfolio. The Source-Brand also provides a source of trust and confidence across the portfolio. A strong Source-Brand reduces customer-perceived risk.

A Corporate Branded Portfolio increases the opportunities for cross-purchase among the brands within the portfolio. As cross-purchasing within a portfolio increases, so does profitability. Recent research (Kumar and Reinartz, 2016) indicates increased profitability from cross-purchases from a common Source-Brand, in this case a Corporate Brand. People using more brands within a Corporate Branded Portfolio are more loyal than those who limit purchases to just one brand. For example, someone purchasing six (individual) brands one time each is more loyal to the portfolio than someone using a single (individual) brand six times. Using more than one brand in the Corporate Branded Portfolio: 1) increases revenue contribution for the corporation; 2) increases the duration of the relationship with the branded portfolio; and, 3) increases engagement with the Corporate Brand. This multiple-brand behavior increases the importance of the Corporate Brand’s loyalty program, as the program provides trustworthy access to the entire Corporate Branded Portfolio, encouraging easier, more confident, personalized, less risky decision-making.

Given the number of Corporate Brand stakeholders – customers, franchisees, employees, shareholders, the financial community, media, local community, opinion leaders, suppliers, online influencers, bloggers, vloggers, and celebrity personalities – it is more important than ever before to build a consistent, powerful Corporate Brand.

A brand is a promise of a relevant, differentiated experience. However, today there is increased skepticism in society. In more and more situations around the world, credibility is under attack. Trust in institutions… education, medicine, business, religion, politics, marketing… is in decline. Building trust for individual brands is expensive and takes time. Inheriting a strong, authentic, authoritative source with a trustworthy reputation is a competitive advantage.

In many cases the Corporate brand is the Source Brand. This is especially true in Business-to-Business relationships, the trusted authority of a Corporate Brand influences customer preference. The Corporate Brand is a value creation advantage, generating customer value by facilitating productive, profitable relationships, locally and around the globe. The interdependent relationships of a Corporate Brands and its individual products, services and brands are value creating. In Business-to-Business situations, a strong Corporate Brand is a hedge against uncertainty. Even if one of the brands in the Corporate Branded Portfolio is new or less known, the Corporate Brand can deliver the standards and integrity that help customers feel confident.

Marriott shares its corporate source credibility with many of its hotels providing the Marriott imprimatur to Springfield suites, Protea, Courtyard, AC Hotels, Towneplace Suites, Residence Inn, Fairfield Inn, Marriott Vacation Club, JW Marriott, and Delta hotels. Each of these brands focuses on building its own individual relevance and differentiation while each hotel also derives expertise and authority from Marriott. Virgin provides the energy, excitement, dependability, and irreverent humor to Virgin Atlantic, Virgin Mobile, Virgin Earth, and other brands. Unilever’s “U” on all its brands reminds customers of its mission to make sustainable living commonplace. Every purchase is a way to participate in this corporate mission.

As never before, people care about the corporation behind the product or service promise. They care about the source of the promise. Why should a customer trust the claim? On what authority is this claim based? Moving from an assemblage of individual, disconnected brands to a coherent collection of brands sharing a common source of credibility increases the strength of the individual brand promises. A portfolio of relevant and differentiated individual brands supported by a strong source-brand leads to increased customer loyalty and sustainable profitable growth.