UPS And The Omen For Marketing

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UPS ditched its CMO. And, UPS eliminated the CMO role completely. While it is true that that marketing does not solve every organizational problem, it is also true that the CMO role, when executed properly, is a necessity. 

This rejection of the CMO and the role is not a surprise. But, it is a bad omen for marketing.

In November 2023, The Wall Street Journal reported on a McKinsey & Company (global consulting) study showing that the divide between the CMO and the CEO was a growing rift. The study indicated that CEOs and their C-Suites did not fully understand what the CMO does and how CMO strategies and activities contribute to high quality revenue growth. 

The Wall Street Journal also quoted a Forrester (market research) study indicating specific areas of this Andreas Fault line of CEO-CMO misunderstanding. For example, 97% of CEOs believe their brand-businesses satisfy customer needs while only 75% of CMOs see the brand-business satisfying customer needs. Ninety-percent (90%) of CEOs believe their brand-business strategies are customer-driven while only 58% of CMOs believe this is true.

Unfortunately, for years, marketers have been largely responsible for the lack of commitment afforded to the CMO role by the C-Suite. This debasement of the CMO role continues to be a tragedy for brand-businesses. For example, three years ago, in a Deloitte CMO survey, data indicated that CMOs are not fulfilling responsibilities that go beyond brand recognition, brand value and specific tactics. In that 2018 study, 34% of the 200 responding CMOs said their role in their organization was ‘storyteller’ while only 20% said their role was identifying and mapping new routes to client revenue. In other words, CMOs focus first on being the Mother Goose of marketing rather than focusing on the brand-business results as the first priority.  If the CMO cannot demonstrate how marketing strategies and activities contribute to high quality revenue growth, then it is no wonder the C-Suite is disgruntled.

Three years later, in Deloitte’s 2021 CMO survey, CMOs said their focus is on short-term value. The study reported that CMOs still had no solid idea if what they were doing had any long-term value. This is unacceptable. If something is worth doing then it is worth measuring. Further, brand-business management is an ongoing process. 

Brand-business building and trustworthiness take time. Short-term is important. If there is no short-term, there is no long-term.  But, for enduring profitable growth of the enterprise, there needs to be a long-term. 

Marketing needs a transformation.

First, let’s get the definition of marketing correct. In its article on UPS’ elimination of the CMO role, a Forbes.com author states that marketing is “to sell or bring to market.” How about we use Dr. Phil Kotler’s definition: “marketing is profitably satisfying customer needs.” If you use the Forbes.com definition, you see part of the problem: no mention of profitability. There is no use selling or bringing to market anything if it is not profitable. The C-Suite wants to know that there is value to what a function does on behalf of the brand-business. If there is no profit, then the work is a hobby.

Furthermore, selling is a manufacturer’s function. Value is a customer’s creation. Value is determined by the customer. A customer pays for the brand-business product or service. This creates brand-business value. There is no brand-business value unless there is customer value. And, customer value depends on what a customer receives (benefits and rewards) relative to what the customer pays (money, time, effort) multiplied by trust.

Second, the fractionalization of marketing is a death-wish for the marketing profession. Marketers have allowed marketing to be sliced, diced, spliced, strangled and mangled by specialists competing with each other for limited corporate resources. The CMO’s role is often reduced to managing this competition and attempting to force co-operation. 

By allowing this to happen, marketers are marginalizing marketing and trivializing the role of the CMO, turning this crucial position into coordinator, mediator and arbitrator. Whether your brand-business is BTB or BTC, the CMO becomes the chief referee.

The Wall Street Journal points to the proliferation of “marketing-adjacent” titles and responsibilities as confusing. By fractionating the functions, CEOs perceive the CMO to be less capable of “overseeing” the wide array of responsibilities that CMOs now face.

Having said this, the C-Suite is partly to blame. The reluctance to trust the CMO has led to CEOs bringing in other players to ensure that there are trusted actors who can make things happen profitably. Also, CEOs profess to understand the role of marketing.

Storytelling, advertising, digital channels and devices all need attention, of course. But, effective marketing is not merely about message and media management. It is about brand-business management. Marketing is fundamentally about attracting and retaining customers for enduring profitable growth. Marketing is about managing the business.  Managing the business is bigger than managing messages and media. As Peter Drucker, the most respected management guru ever, once said, “The purpose of business is to create a customer.” Without customers paying for a product or service, there is no brand-business value.

Third, brand-business leaders must stop separating brand and business. How you run your brand is how you run your business and vice versa. Brand management is business management and vice versa.

The C-Suite must no longer distinguish between the business plan and the brand plan. There is only one plan: it is the brand-business plan. The purpose of brand management is the enduring profitable growth of the business. The purpose of the business plan is the enduring profitable growth of the brand. The three functional responsibilities for building enduring profitable growth are Finance, Operations and Marketing. That is, financial discipline, operational excellence and leadership marketing.  This is not a horse race. There is no Win, Place, Show. A functioning, valuable brand-business needs all three of these strategies – financial discipline, operational excellence, leadership marketing – implemented.

The authors of the brand-business plan are the CMO, the COO and the CFO. The owner of the plan is the CEO. But, the CMO has an incredible role to play. The CMO brings a distinctive perspective. The CMO is responsible for:

  • Helping define the growth strategy.
  • Achieving organizational alignment behind a common brand- business purpose and direction.
  • Helping define the Brand-Business priorities.
  • Developing and implementing a Balanced Brand-Business Scorecard. And, 
  • Leading customer-driven innovation through providing insights into customer needs and problems while helping to define the focus for development of innovative insight-driven products and services.
  • Developing the price-value strategy…
  • Internal and external brand-business communications.

Marketing is all about how to profitably manage customer-driven, top-line growth. This is the goal of the brand-business plan. 

The elimination of the CMO role at UPS was inevitable. Marketing as we know it will continue to decline unless marketers move to transform marketing and reform the CMO role from a marketing communications role to a brand-business leadership role.

Shame on marketing when often the first question for a new CMO is, “What will the new advertising be? Will there be a new slogan? Will there be a new advertising agency?” “What is what digital do we like best?” 

The CMO must be responsible for building and managing the Brand-Business plan. 

  • The CMO is the voice of the customer, whether a BTB customer or a consumer.
  • The CMO should know more about the customer than anyone else in the organization.  The CMO is the customer advocate.
  • The CMO must lead the effort to drive true customer-insight focused innovation.
  • The CMO must focus on both the short-term and long-term. The COO, who now rules at UPS, by virtue of the function, focuses on the short-term. Managing and growing a brand is an ongoing function. The CMO must learn how to manage both of these contradictory pathways.

UPS has work to do in many areas. Clearly, marketing is only one of these. 

UPS has placed the brand-business under the aegis of the COO. The COO has a short-term focus. Here is a marketing observation: when the brand-business is placed under the control of a function with a primary focus on the short-term, the brand-business gets the short stick. Brand-businesses are promises of what the brand-business will do for the customer. This is a future-focused operation.

To avert more UPS situations, marketing must reassert its role as the leader in guiding the development of customer-driven growth strategies that lead to brand-business value creation and enduring profitable growth. Digital transformation is necessary. But, what you are communicating and why and its impact on enduring profitable growth are critical.

The future of marketing will depend on leaders who understand marketing’s role as driving a brand-based, customer-focused business that attracts and retains customers resulting in sustainable, profitable growth. Marketing is more than a multi-channeled, multi-device communications role; it is a brand-business management role. 

There may be no going back for UPS. But, for marketing and the CMO, there is a lot of hopeful opportunity for a transformation.

Applebee’s And The Loss Of Neighborhood

Applebee’s And The Loss Of Neighborhood

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Local continues to be a driver for customers. Grocery stores like Publix and Whole Foods label items that are locally produced. Farmers’ markets are a draw for shoppers wanting produce that have not accrued a lot of air mileage. Craft fairs and art shows emphasize local creativity and talent.

One of the strongest drivers of localism is the neighborhood. Neighborhoods are ecosystems of individuals belonging to unique communities. Seattle, WA, is a perfect example of how a big city thrives from its diverse neighborhoods such as Fremont, Green Lake, Ballard, Capitol Hill, Wallingford, Queen Anne, Belltown, Phinney Ridge, University District, Ravenna. You are where you live.

We tend to think of neighborhoods as places. But, actually, neighborhoods are more about the people than the place. It has always been this way. The word neighborhood comes from two Old English words: Neah meaning near in time, place, relationship and Gebur meaning dweller. Neighborhood is all about those who dwell near to you. Neighborhood is about a casual, social relationship where you control how much interaction you wish to have with like-minded others.

Neighborhoods provide friends and acquaintances. There is human contact. Neighbors think about themselves as living in their own universe but appreciate communicating with friends who are nearby. Neighborhoods are people who see themselves as unique but want a sense of belonging. I want to be different just like all of my neighbors.

One of the most extraordinary things about neighborhoods is the places where people gather. Along with institutions such as churches, synagogues, libraries, schools, ball fields, skating rinks and recreation facilities, there are neighborhood restaurants.

The Wall Street Journal recently wrote about the power of neighborhood restaurants. The sub-title of the article explained that the neighborhood restaurant “… offers residents a sense of comfort and belonging – and visitors a warm welcoming into the historic communities they serve.”

The article states that in the US, there is a new proliferation of neighborhood eateries across the nation that “serve the needs of their neighbors with a generous dash of nostalgia baked in.” With the neighborhood restaurant, there is a preservation of the local culture wrapped up in both dining and socializing.  

You may not know this, but Applebee’s began this way. And, for years, it was a neighborhood restaurant. It was your neighborhood bar and grill. No oven. Applebee’s served good food and community with familiar, friendly service at affordable prices. As a patron, you felt comfortable and relaxed. You felt welcomed. You felt as if you were part of a family. You joined in friendly conversation. You left with a smile and warmth. Applebee’s was a neighborhood restaurant.

And for years, Applebee’s advertising reminded audiences that Applebee’s was a neighborhood place for good food and drink generating local conviviality. Even as Applebee’s segued into food-item-plus-price communications, the brand-business still gave lip service to its provenance by closing with a line about eating good in the neighborhood. However, sadly, communications shifted to a restaurant in the neighborhood, not a neighborhood restaurant.

There is a difference between being a restaurant in the neighborhood and being a neighborhood restaurant. Of course, affordable food is important. But, neighborhood is an attitude, not a location; neighborhood is a mindset not a venue; neighborhood is people not a price point. Neighborhood is human contact. Neighborhood denizens feel special and unique belonging to the neighborhood; neighborhood confers identity. 

At the same time, neighborhood generates camaraderie and conversation and belonging. Food and beverage are conduits for generating the neighborhood camaraderie. Telling customers it is all about the food is wrong. It is all about the neighborliness that allows people to engage.

Being local, being a neighborhood restaurant has such power. It is difficult to believe that Applebee’s would ditch this incredible provenance for a price-product message, as if they were selling a commodity. Customers want to know and feel the demonstration of neighborhood. Customers probably do not gain this neighborhood understanding from the current advertising.

Anyway, Applebee’s focus these days is on food-item-for-a-price: aka deals. The eating-good-in-the-neighborhood reference is currently not even in the ad copy, at least not in the all-you-can-eat for $14.99 ads. Right now, the implication is Applebee’s is a place with deals. Nothing about the neighborhood vibe. 

Further, marketing data show that consistent emphases on deals rather Communicating “deals-all-the-time” sends a signal. Price can signal quality or lack of quality perceptions.

A recent issue of the trade bible, Restaurant News, contained a bespoke survey on people’s favorite restaurants. Applebee’s was not on any of the lists. Those restaurants on the list, regardless of tier, focused on delivering service unique to the brand-business’ brand promise. The language is very similar to what Applebee’s used to stand for in customers’ minds.

Applebee’s used to be your neighbor. Applebee’s was your neighbor. This meant that Applebee’s servers made friends at every table. “I’m your neighbor” meant that Applebee’s designed food and beverage that would bring people together. “I’m your neighbor” meant that Applebee’s was a home base for conversation, entertainment and engagement. “I’m your neighbor” meant that Applebee’s prices were perceived to be best value because these prices allowed neighbors to visit regularly. And, the prices allowed for groups of families, friends and neighbors to share conversations, generating conviviality. “I’m your neighbor” meant that Applebee’s was connected to communities and connected to neighbor-to-neighbor. Applebee’s was social media. 

In a world where we spend time disconnected from actual community; where it takes effort to join with others in the neighborhood, Applebee’s should be a neighborhood restaurant again. Applebee’s brand-business had an evergreen, appealing and still relevant, even more so, brand-business promise. Its provenance was so engaging and encouraging. Brand-businesses would do anything to have such a powerful provenance. Let’s hope that Applebee’s truly returns to its core.

Wayfair and Burger King Forget That Its People Come First

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Marketing has some important evergreen principles. One principle is this: just because a brand-business is customer-focused does not mean that customers come first. Customers come second. Customer-focused employees come first.

Regardless of your industry, employees are the frontline when it comes to customer relationships. Internal brand-business pride is an essential success factor affecting brand-business outcomes.

Here is another brand-business truth: you cannot reinvent or reinforce your brand-business experience if your people are not proud and inspired to be part of that brand-business experience.

If you want your employees to love your brand-business, you have to love your employees. If you want your employees to be passionate about and proud to deliver a superior brand-business experience, you have to show employees that you are passionate and proud about what they do for the brand-business experience and who they are as dedicated employees.

Foundational marketing truths.

Too bad that it seems as if a few brand-business leaders have forgotten what it takes to lead. Currently, there are some unfortunate brand-business situations where employees are apparently not feeling the love.

The CEO of Wayfair, the online furniture and accessories brand-business, has seemingly trampled on these brand-business truths in a cringe-worthy manner. Wayfair’s exemplary list of core values seems to have just taken a gut-punch.

Wayfair institutionalized this element into its every day operations and internal marketing:
Galvanizing Team members to Create and Deliver the Promise and Desired Customer Experience

For galvanizing Wayfair team members, there are three key aligning elements:

  1. Great People
  2. Great Ideas
  3. Great Ambition

According to Wayfair, these three elements anchor the Wayfair people principles which must deliver against these priorities:

  • Relentless Customer Focus
  • Deliver Results With Agility
  • Use Good Judgement
  • Build the Best Team
  • Collaborate Effectively
  • Respect Others
  • Be an Owner
  • Innovate & Improve

Sounds so good. Sounds so customer-focused-employee beneficial. And, yet, the force behind these words has been diminished by the brand-business’ behavior. About a month ago, Wayfair CEO, Niraj Shah, publicly chastised employees and told them “… to work harder.” He said, “Working long hours, being responsive, blending work and life, is not anything to shy away from. There is not a lot of history of laziness being rewarded.”

Not exactly inspirational. Who knows whether this was necessary to say. Certainly not publicly. But, in todays’ world, nothing is secret. So now we are all aware of the CEO’s sentiments.

Unfortunately, there was little time for this “work harder” edict to settle in, because just a bit later, Wayfair CEO Shah said that Wayfair will to lay off 13% of these potentially “harder working” employees (about 1650 people). This mass firing is because the brand-business must cut costs to boost financial results. Profit has sagged for almost 2 years.

Apparently, too many people were hired due to COVID-19. That “expansion” is not working in today’s marketplace. Wayfair has already undergone 3 rounds of layoffs since 2020. One might think that it is not the number of employees that is holding back the brand-business but something inherently wrong in the overall cost structure strategy.

Wayfair is just one of many brand-businesses that went “overboard” to deal with locked-down customers who spent money on home furnishings. Many brand-businesses are trimming employee ranks that grew due to Covid-19. And, many brand-businesses are letting go of redundant employees. So, it is not the layoffs per se. It is the seeming hypocrisy of CEO Shah’s announcement coming on the heels of the “you must work harder” dictum that rankles.

Mr. Shah’s reorganization or “strategic recalibration” (hyperbole for “you are fired”) announcement was a letter to the organization. The letter indicated that the brand-business had “veered away from its core principles.” Reading the above core principles, one might say that leadership has veered away from Wayfair’s core principles. Galvanizing people around the idea of working better to improve the brand-business and then reneging on that purpose seems to be veering away from the core principles.

At a meeting to discuss the layoffs, according to The Wall Street Journal, many employees questioned the tone and timing of the “work harder” memo. Employee were told that it would be everyone’s fault if Wayfair went into bankruptcy by the co-chairman of the Board who is also a co-founder of the brand-business. “If bankruptcy is inevitable then shame on all of us for not working harder.”

Google News and other business news outlets appear to be keeping this story alive. The more Wayfair is seen as treating employees poorly, the worse it becomes for the external image and trustworthiness of the brand-business.

Wayfair wants “faster-decision-making and committed small teams.” For this strategy to work, Wayfair must be more adept at handling the “internal friction” that it has created due to the mixed messages. Making employees feel as if the entire burden of success is one their shoulders is poor brand-business management.

To be fair, Wayfair is not alone when it comes to dampening trust among employees.

A recent opinion piece on Bloomberg.com describes the behavior to which Burger King crew members must adhere. The writer describes Burger King’s behavior as putting “the burden of turning around company culture on already taxed workers.” The writer references Burger King’s new policy that all employees must offer customers a carboard crown and tell customers “You rule.”

The writer indicates that Burger King “should focus on improving work conditions that might create authentically content (even happy) workers who are motivated to give diners genuinely good service.” Apparently, crew members are faced with offering cardboard crowns and “You Rule” compliments regardless of the customer. Burger King will send monitors to restaurants to ensure the policy is followed.

Crew members and customers are finding the irreverence is “undignified and unworthy of respect.” The article describes these supposed brand-business enhancing behaviors as “cheesy, feel-good antics.” Burger King believes the extra time needed to offer the crown and the “You rule” compliment will nurture customer satisfaction. The “extra two minutes generates engagement” with the brand-business. According to Business World, Burger King sees the priority as “patron feedback over order speed.” The underlying idea is to make the staff appear to be more friendly. McDonald’s tried this with its initiative around seven steps to a friendly smile. The upshot was that you cannot teach people to be friendly: you just need to hire friendly people.

Even though the Burger King jingle has become an ear-worm (you know, the ubiquitous “Whopper, Whopper, Whopper, Whopper….”), Burger King has “struggled” in its brand revitalization strategy called “Reclaim the Flame”. Two of Burger King’s biggest operators filed for bankruptcy. And, even an infusion of cash into the system has not completely helped the brand-business’s leaders right the ship.

Part of putting customer-focused employees first is making the brand-business a good place to work; a place where an employee can gain skills for a lifetime. This is bigger than income. It is also a career path where employees are valued. People need to know that the organization cares about them and their work. People need to feel valued.

Part of the problem probably rests with Burger King’s owner, Brazilian 3G Capital, that enforced zero-based budgeting. This system did not support brand-businesses such as its Kraft Heinz brand-businesses. Brand-business focused actions were considered costs to be avoided. Encouraging employees was probably seen as part of these costs.

The Bloomberg.com writer suggests that employers must recognize that there is both functional labor and emotional labor. Both Wayfair and Burger King seem to have forgotten that employees have to work both internally with each other and externally with customers. There are the functional tasks and the emotional/social deliverables. Creating situations that workers deem embarrassing and upsetting is not putting customer-focused employees first. You cannot create a “positive aura” if your people do not feel positive.

Inconsistency and demoralization erode internal trust. Lack of internal trust affects external communications with customers. Customer-focused employees are the frontline of every brand-business. Build employee pride.

Customer-focused employees play a powerful role in shaping brand-business perceptions. Proud employees’ communications and advocacy of the brand-business enhance internal and external perceptions. Data show that employee pride translates into higher job satisfaction. Higher job satisfaction contributes to customer brand-business satisfaction. Customer brand-business satisfaction generates brand-business value leading to enduring profitable growth.

Stitch Fix And The Perils of Subscription Personalization

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Based on the business press, you might believe that subscription services are booming. And, for many subscription services, there is an upward trend. Netflix is doing well. Amazon Prime is doing well.

But, according to The Wall Street Journal, subscription clothing brand-business, Stitch Fix is having difficulties. Modern Retail points out that Stitch Fix’ 2023 revenue declined
21 percent Y-O-Y. And, Stitch Fix’s active clients declined 13 percent.

There are multiple problems at Stitch Fix. Many of these problems required cost-cutting including the elimination of full-time stylists. Those are the people who “curate” a customer’s box of items. Some of the problems are due to changed behaviors after Covid. Some of the problems are due to the fashion labels Stitch Fix offers. Some of the problems relate to direct-to-consumer marketing by many of the labels that Stitch Fix’s offers.

But, there is another problem area that goes unmentioned: the perils of personalization. Has technology changed the definition of personalization affecting our expectations?

At its core, Stitch Fix committed to providing customers with highly personalized clothing selected by a personal stylist. Everyone can have their own personal shopper regardless of financial status.

Thinking about personalization at Stitch Fix raises interesting questions: Is it easier to deliver personalization in exercise classes (Peloton), entertainment (Netflix), access to special services unavailable otherwise or without the premium cost (Amazon) and razors (Harry) than clothing? Are the problems at Stitch Fix based on the mandate to satisfy each individual customer’s wants and needs? Can true personalization be delivered by algorithm? Or does true personalization require emotional intuitiveness?

Personalization is different from customization. Customization is transactional. Customization is all about the features and functions. Personalization is experiential. Experiential relates to an occurrence or event making an impression and generating feelings. Technology continues to fuel the delivery of ever more data-based personalized experiences. But, these data-based “experiences” are not based on feelings. These data do not address “How do you feel when you use the service?” Nor do these data address “How do our offerings make you feel?” These data are based on past behavior.

The rise of personalization is having an outsized impact on what we expect from brand-businesses. We expect individualized – personalized – experiences, designed only with “me” specifically in mind. The rise of personalization has changed our understanding of just what personalization should be for each one us as individuals. Personalization is now a necessary part of our buying behaviors.

To illustrate the pervasiveness of personalization, a recent request on Nexis for articles and studies on personalization for the past month turned up 4617 hits. The Wall Street Journal added a special section on AI with an article on how AI can find you the perfect movies, TV shows and books. All the recommendations to the AI are based on past behaviors.

Furthermore, the art of personalization has now morphed into hyper-personalization. Think of this as “personalization on steroids” as one online article reports. Hyper-personalization works to “shape” the customer’s journey with the brand-business.

Hyper-personalization reflects the enormous amount of data available to brand-businesses. But, the data still only reflect behavior, preferences and historic information.

Marriott says that its search engine is undergoing a rebuild. The Marriott rebuild goal is to be hyper-personal providing guests with highly “relevant, seamless and tailored experiences” while generating inspiration, according to Deloitte, the global services group. However, the rebuild consists of more “behavioral data, AI and new search paradigms.” The goal is to create “more rewarding digital experiences.” Yet, inspiration requires emotions and the enhanced search engine will still deal with behaviors.

Marriott is correct in augmenting its search engine. People perceive brand-businesses delivering personalized experiences to be valuable brand-businesses. This is because these personalized brand-business experiences reinforce positive feelings of self, status, respect and uniqueness. Personalization, when it works, can increase brand-business loyalty.

Many subscription other services are built on personalization. Reams of data based on past selections along with algorithms, help subscription services like Spotify, address changing customer needs, wants and problems. Having said this, Spotify is still a “non-profit” brand-business.

Here is another interesting element of personalization that may have a negative effect on Stitch Fix. A recent online analysis indicates that there is a big difference between personal subscriptions for physical offerings and personal subscriptions for digital offerings. Apparently, it is less challenging to recommend and offer movies to customers than it is to recommend and offer clothing. The article points out that physical offerings require more internal logistics and effort. And, depending on the deliverable, that precise physical product must, in most cases, be personalized to one, single person multiple times a month.

Clothing is a very important way in which we can express ourselves and, perhaps, receive external recognition fueling internal recognition. Unlike a movie, TV series, special promotions or dog food, clothing must deliver an individual’s individualized self-perception time and again.

Each time Stitch Fix puts a box of clothing together for a customer, that curated box must satisfy that specific customer’s wants and needs. The curated box must only contain items that the specific customer will desire. Multiply this curation millions of times and the perils of personalization come into focus. At some point, in order to deliver relevantly differentiated experience, the specific customer’s feelings about self and external perceptions come into play.

Stitch Fix’s clothing selections must be perfect for the individual and the individual’s occasions. All the algorithms in the world are still working on matching an item of clothing with an individual’s psyche. Can algorithms based on past purchase behaviors and profiles address these questions? There is no reference to feelings and emotional and social rewards in the 4617 articles on personalization.

One physical personalized deliverable that is doing well is Farmer’s Dog. In this case, the challenge is not really the intended user but the owner of the intended user. Dogs tend to be less fussy when it comes to eating. A friend’s dog once ate an entire bag of Greenies, the dog breath freshener, prompting a stomach pump. Another friend’s dog ate a leather moccasin. Dogs will stand by your feet while you are making a salad, begging for fresh vegetables; waiting for you to drop a cherry tomato or cucumber slice. Fresh food is delicious. Farmer’s Dog delivers fresh food for your dog. The Farmer’s Dog promises to sell freshly prepared, human-grade food. The food is so high-grade and “human-like” that pet owners could eat this food. (As a note, Mars used to make people working on its pet food brand-businesses Pedigree and Whiskas eat the food.)

Yes, you fill out a questionnaire that alerts Farmer’s Dog to the idiosyncrasies of your dog including age, health, etc. A box of your dog’s food arrives with the dog’s name on each package. And, human owners are thrilled when their dog finishes the bowl of fresh food. It may not be that each package of food is individually prepared for every puppy or every overweight dog. But, the impression is that personalization has occurred. Owners love their dog’s reactions.

One could say that Farmer’s Dog benefits from the fact that about 54% of US households have at least one dog. This translates to about 63 million people with dogs. Not all of these dogs eat fresh food even though Farmer’s Dog hopes to alter the fresh food dynamic.

On the other hand, all people wear clothing. It is more difficult to satisfy individuals on an individual basis than puppies.

When someone opens a box from Stitch Fix including a dress, leisure wear or ensemble, there is an expectation of a “Wow” experience of satisfaction and delight that the brand-business knows me. Knowing “me” is complex. And, if I open a box with a dress, leisure wear or ensemble of items, and these items do not match my personal expectations and self-perceptions, I think that the brand-business has not figured out who I am and what I will like. That disappointment can affect future usage and, potentially, brand-business loyalty. Algorithms will need to understand and predict how you feel, not just how, when, where and what you will buy. Stitch Fix can address how a customer feels and what emotions these feelings trigger, the brand-businesses will continue to struggle. Behavior data can only take you so far.

As one analyst told The Wall Street Journal that companies like Stitch Fix, “… need to drive more value to the consumer.” Right now, the new CEO at Stitch Fix is shaking up the organization to focus on ‘’transformation” of the brand-business. why and knowing emotions are what make personalization so marvelous. Right now, Stitch Fix operates on personalization while “expectations of personalization” are far ahead of where Stitch Fix operates. The next generation of AI should tell us how the customer feels and why customers are behaving in specific ways. This will make personalization truly personal and very valuable. Until then, brand-businesses such as Stitch Fix may continue to struggle.

Abercrombie & Fitch And Vans Brand-Business Turnarounds Focus On The Core

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A theme of recent business press writing is brand-business turnarounds. For example, Barron’s, the financial newspaper, points to the successful turnaround at clothing retailer Abercrombie & Fitch. The Wall Street Journal reports on the underway turnaround at VF’s Vans, the sneaker brand-business.

Brand-business turnaround strategies are not the same as conventional growth strategies. A conventional growth strategy is not appropriate for a brand in urgent need of a turnaround. A growth strategy is very different than a survival and revival strategy. A conventional growth strategy is for a brand that is on a sustainable upswing. Growth is a longer term outlook.

A conventional growth strategy is for going forward, full speed ahead. It is designed to accelerate quality revenue growth.


The principle components of a conventional growth plan are to:

  • Broaden the brand appeal to build a bigger customer base.
  • Focus on changing people’s attitudes to change their behavior – you have time to spend on slowly changing the way people think in order to make them use the brand.
    Expand and extend the franchise:
    1. Increase availability
    2. Expand to new geographies
    3. More customers (new customers, new segments of people)
    4. More occasions (new occasions)
    5. Extend the brand offers – new products that appeal to new customers and/or satisfy new occasions

Implementing a conventional growth strategy for a brand that is in need of a turnaround will only accelerate brand decline.

A turnaround plan is a business approach for a business that is going in the wrong direction at an accelerating pace. According to Barron’s, Abercrombie & Fitch has successfully navigated a turnaround. Vans is in the turnaround process. Both brand-businesses employed turnaround strategies.

A turnaround plan – survival and revival – is a short-term strategy. The brand-business is at a tipping point: if there is no short-term achievement, there will be no long-term. The turnaround approach has specific actions designed to achieve the specific short-term objectives. The turnaround plan has a specific timeline.

Abercrombie & Fitch was in trouble. Its CEO told reporters, “The brand health was declining tremendously. The business was double-digit down. It was going to be a true opportunity to brand build and bring it back. I just felt they were two iconic brands that deserved to live again.”

The first step in a brand-business turnaround is to stop the bleeding. But, there are two types of bleeding that must be stopped. One is financial. The other is the bleeding of the customer base.

Financially, to stop the bleeding, the goal is to restore positive cash flow, usually by reducing capital expenditures. Abercrombie & Fitch was lucky. The brand-business was able to close stores, open smaller stores and lower its inventories. Aiding the financial situation, Abercrombie & Fitch took advantage of reduced inflation. Wall Street and analysts are pleased with the way in which the brand-business has stopped the financial bleeding.

Vans is stopping the financial bleeding, too. Vans is planning to cut $300 million in costs primarily by eliminating 500 jobs globally. Vans plans to focus on plowing some of the savings back into innovation.

To stop the bleeding of the customer base, a brand-business must:

  • Stop the decline in average frequency
  • Focus on reinforcing the brand with the core customers
  • Focus on increasing frequency and loyalty, not on brand expansion
  • Build on brand strengths
  • Defend the core enduring brand truths
  • Focus on immediate behavior change
  • Shore up the existing business now instead of making a risky bets on the future

Abercrombie & Fitch recognized that its brand-business needed to evolve. The teen-based, hyper-cool, shirtless male chest imagery, “beachy” vibe was not working out. Teens are notoriously fashion fickle. As one letter to Barron’s stated, the younger demographic tends to be more “unpredictable” when it comes fashion. Focusing on a more “mature audience” that is also more “affluent” makes sense.

(it appears as if Gucci is adopting this more mature, more affluent targeting, leaving the “baroque, jewel-toned colors” that enticed younger customers. As written in The Wall Street Journal, Gucci has lost status and sales and is undergoing a “transformation.” To address its place relative to its luxury competitors, Gucci, “… while it continues to court younger buyers with ornate pieces, the brand is also trying to better reach other clients who want to buy clothes or accessories that are more timeless.”)

Abercrombie & Fitch did not abandon its core customer base: the brand-business evolved to meet that core customer base where it lives, that is, with more savvy adult clothing. As the teen audience aged, they aged out of Abercrombie & Fitch. To satisfy the needs of its now-older customer, Abercrombie & Fitch’s CEO told Barron’s, “We’ve evolved the purpose and promise of each of our brands.” But, just because the target audience is now slightly older – 20 to 40 years old, Abercrombie & Fitch is still seeking to be “cool.” Abercrombie & Fitch’s CEO indicates that the goal is to have a “more inclusive and modern identity.” This seems to be working.

Knowing the core customer is critical. According to online reporting, Abercrombie & Fitch’s former audience is looking for “affordable, quality and stylish” apparel. For women, dresses have been extremely successful, not just for the customer but for the image of the brand-business.

Abercrombie & Fitch’s women’s sales have grown almost 40% in the last three years globally and almost 60% in the US.

Abercrombie & Fitch is not shooting itself in the foot, however: the younger teen crowd is being “funneled” to Hollister, the company’s “teen-centric” brand. Younger audiences are too young to remember the what previously defined the Abercrombie & Fitch brand-business image. And, today’s teens seem to be accepting of where Abercrombie & Fitch has taken the brand-business. Importantly, Abercrombie & Fitch has now created a portfolio that allows younger teen buyers to seamlessly segue to the Abercrombie & Fitch brand-business as they age.

Vans has a similar problem. It has lost its “outsider mindset” that defined the skater brand-business’ target audience – and the internal culture of the organization. The cult-like Vans became more mainstream. The brand-business lost its mojo. Innovation came to a halt. Vans became comfortable riding on its previous momentum. Vans lived off of its successful, five “classic” styles. Furthermore, those five shoe styles are still made for skaters. Non-skater customers want a difference shoe feel. The Wall Street Journal reports that Vans fell into complacency. The past success of the skater shoe created a sense of risk aversion.

Organizational alignment between the VF center and Vans created bottlenecks and loss of resources and relevance. VF created a centralized organization. Instead of following the rule that the center provides leadership, the regions provide management, VF brought all meaningful responsibility and accountability into the center.

Under its new CEO, VF is changing the way in which the organization works. A goal is to re-instill internal excitement and commitment to the brand-business. At the same time, there is a focus on relevancy via innovation and renovation. Some of these innovations and renovations show up in Vans’ collaborations.

For example, Vans has produced a second shoe with pro skater Rowan Zorilla. The Rowan 2 has “… underfoot improvements and an upper with an appearance that’s more distinctly its own,” according to Footwear News online. The shoe has “ImpactWaffle tech” and other improvements that offer more whole-foot protection. Other innovations use Van’s “SickStick rubber for better protection and board feel and bringing an element of sustainability.”

Vans has also produced a shoe with BMX biker Parker Heath. Parker Heath is also an artist. The new shoe features Mr. Heath’s designs. Online Sourcing Journal reporting indicates that this new BMX shoe “… is part of a BMX-specific slip-on collection designed by BMX rider Dennis Enarson.” For example, the shoe has a waffle bottom “… designed to give BMX riders a better pedal grip.”

In a turnaround situation, the first goal is not to change the minds of the general population. It is first about stopping the bleeding of the customer base. Both Abercrombie & Fitch and Vans know this about a turnaround: the main core business must be protected and cultivated. But, this focus may need to alter to reflect relevant attitude and behavior changes. Devote all of our energies to the core. It is the core that will finance the turnaround profitability and provide the platform for the future. Focus on current customer retention and increasing current customer frequency. Core customers already know what is great about the brand-business.

Max Needs A Brand-Business Architecture Policy

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One overlooked area in brand-business learning is the necessity for creating and implementing a brand-business architecture policy. Why is a brand-business architecture policy necessary? 

A brand-business architecture policy defines how the brand-businesses in your portfolio relate to each other. A brand-business architecture policy is an identity approach needed to define the roles of brand-businesses in the branded portfolio. Without a brand-business architecture policy, you risk creating redundancy or generating lack of customer interest.  Lack of a brand-business architecture policy can lead to competition within the portfolio. Rather than compete with actual competition, brand-businesses compete with each other. This is death-wish marketing.

Lack of a brand-business architecture policy appears to be evident in the comments recently reported in The Wall Street Journal. These comments described the streaming name change from HBO Max to Max. These comments can be interpreted to show how fraught a lack of a brand-business architecture policy can be for a portfolio.

Every brand-business has policies from legal to design to ethics to pricing. Some brand-businesses also have a policy on brand-business architecture: Is the brand-business a Hallmark brand, a solo brand-business, an extended brand, an endorsed brand-business or another identity?

There are the five basic brand architecture approaches:

  1. Hallmark brand-businesses use the corporate name with generic product/service labels, such as Lexus (NXHybrid, IS500, LSConvertible, etc.). A Hallmark stands for familiarity, quality, leadership and trust. 
  2. A Solo brand-business is when one product design has one relevant differentiated benefit. P&G promoted solo brands for decades without alerting customers to the corporate parent. Ivory, Crest and Tide became household staples. Mars did the same thing with Snickers, M&M’s, Starburst, Milky Way and Three Musketeers. 
  3. Extended brand-businesses have a relevant, differentiated benefit over multiple product designs. Brand extensions strengthen the conviction of the brand promise and increases customer share. Arm & Hammer has baking soda, toothpaste, deodorant/antiperspirant, laundry detergent, carpet/room deodorizers, liquid hand soap and cat litter. Today’s Tide has powder, liquid, Tide with bleach, Tide Pod, and many other extensions.
  4. Family branding has two types of approaches: Master and Endorsement. 

With a Master branding approach, there is a parent brand-business standing for origin, quality, leadership, trustworthiness and area of excellence of the brand-business family and an offspring brand-business(es) that stands for relevant differentiation of individual brand-business promises. Sometimes there is a three-level approach with parent, offspring indicating relevance and another level of brands that deliver differentiation. 

General Motors does three-level master brand architecture: for example, GM (parent), Buick (relevance), Enclave, Encore and Envision differentiated Buicks).  Kimberly-Clark created a Kleenex family: Kleenex, Huggies, Pull-Ups, Pull-Ups plus Training Pants. As for two levels of brands, Kraft Velveeta, Kraft Mac & Cheese and Kraft Philadelphia brand cream cheese are examples. 

Endorsement brand allows prominence for the product or service brand-business’ relevant differentiation. The parent brand acts as an endorser of authority, leadership, quality and area of excellence. Endorsement branding is used frequently in the hotel industry. For example, Hilton uses endorsement branding with Spark by Hilton, Tru by Hilton, and so forth.

Family branding is very flexible. Both Hilton and Marriott have families of brands. At both Hilton and Marriott,  there is a mixture of Master branding and Endorsement branding.  

Whichever Family brand approach is selected, one key element is that – just like every family – each offspring (brand-business) must share in the values of the parent (brand-business). 

5. Combination branding. Combination branding also has two versions: component and co-brand.

With component branding, there is a brand within a brand. This means a host brand gains an added benefit from the inclusion of another brand. An example is Pop-Tarts with Apple Jacks – Frosted Apple Cinnamon Apple Jacks® Pop-Tarts. Or Merrill Moab boots with GORE-TEX – Merrill Moab Speed Mid GORE-TEX Hiking boot. Or McDonald’s McFlurry with Oreos.

Co-branding means there is one brand with another brand. An example is Amazon Prime Rewards Visa Signature Credit Card. Or, Taco Bell Doritos Locos Tacos. Or KFC Beyond Meat nuggets. With co-branding, both brands share the identification as the source of the brand-business promise.

In The Wall Street Journal article, the CMO of Warner Bros. Discovery’s (an example of a co-brand-business) direct-to-consumer business (aka streaming), gave a rationale for the deletion of the brand-business HBO from the HBO Max streaming service name. It would have been easy to let us know that Max is the parent brand-business of which HBO is an offspring with its own relevant differentiation. It would have been nice to know what Max promises and what HBO promises and what the offspring HBO shares with its parent. But, instead, the reasoning appeared to become opaque. Customers want transparent, not opaque.

In response to the interviewer’s question, “So HBO lives on underneath the Max name as a brand?” the CMO said we should think about the name change as a mosaic. He said, “The analogy I like to use is that of a mosaic. A mosaic has many tiles that – put together – have this bigger image. The new mosaic is under Max. Under that, one of the big tiles is HBO, but it’s not the only tile. We had to make room for Warner Bros theatrical, the Discovery shows, news and sports.”

OK. This could have been a clear Master brand-business approach to the portfolio. 

Here are the problems with this description from a brand-business-building perspective.

First, what does Max stand for in the eyes of the customer? Right now, there does not appear to be any articulation of what is Max? If Max is to be the parent brand, Max must be perceived as delivering origin, quality, leadership, trustworthiness and area of excellence of the brand-business. 

Second, what are the relevant differentiating benefits of HBO, Discovery and Warner Bros theatrical? They are “tiles.” But each tile in a mosaic has a shape and color. What do the individual brand-businesses deliver to the customer? How do all of these “tiles” help support the Max brand-business promise? The CMO tells us that marketing is all about making promises. What are these promises in the Warner Bros Discovery portfolio that make this portfolio relevantly differentiated?

Third, what is the role of Max relative to Warner Bros Discovery? Is Max the origin, quality, leadership, trustworthiness and area of excellence of the brand-business signifier? Or is the provenance Warner Bros Discovery?

These are important questions. These important questions need thoughtful and competitive answers. The queries about dropping the HBO name and making HBO an offspring brand are real and need proper answers. Customers recognize the HBO provenance in quality content. Max is what? Warner Bros has a provenance under which HBO could live comfortably. But, with either form of family branding, the parent brand-business must provide the authority that allows for trust. Which mosaic or parent provides this authority at Max?

Streaming services have been less interested in brand-business leadership because their focus is on new subscribers. The name of the brand-business is probably less important than the content-per-dollar attracting the numbers of viewers. But, if The Wall Street Journal data are correct, and viewers are cutting back on streaming services, then the authority of the brand-business will really matter as will the promises of the brand-businesses.

The current Max approach needs the clarification of the parent brand’s provenance and the relevant differentiation of the offspring. Additionally, there must be some relationship between the offspring brand-businesses and the Max parent brand-business. The offspring must share some of the values of the parent.

Having a parent brand that generates authority that is transferred to its offspring ensures customers know the trustworthiness of the offspring brand-business promises. This helps build bonds leading to brand-business loyalty. Loyal customers are less price sensitive and more willing to stick with their brand-businesses even, within reason, when prices rise. 

Until Warner Bros Discovery makes brand-business architecture a policy, Max may languish. Knowing that Residence Inn is backed by the authority, quality and trustworthiness of Marriott provides value for customers. Warner Bros Discovery needs to examine its portfolio and create a brand-business architecture policy that is clear, simple and makes sense to the customer. 

Seven Survival (Re)Solutions Brand-Businesses

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There were brand-businesses that did not survive in 2023. Bed, Bath & Beyond, Rite Aid, SmileDirectClub, Lordstown Motors to name a few. There are several reasons for the demise of these brand-businesses. However, there are evergreen principles for building and maintaining powerful brand-businesses. Here are seven solutions for surviving in a changing world. Many of today’s successful brand-businesses implemented these strategies in the past years.

  • Know Your Market

Sounds simple. But, many brand-businesses do not define their market properly. A market is a specific group of people who share a specific want (need, problem) in a common context. Product categories, channels and price categories are not market segments. There is no such thing as a granola bar market. There is a market for portable, quick, energy-dense easy-to-eat nutrition. There is no such thing as an upper upscale market even though hotel and auto brand-businesses use this nomenclature.

Know your customers as if they were your best friends; your closest relatives. Know as much as possible about your market in order to understand just how your brand-business will satisfy in a relevant differentiated manner.

Claire’s, the “fun fashion destination for jewelry, cosmetics, accessories and ear piercing” is a fabulous example of a brand-business that knows its customers. Claire’s market is tweens, teens and young women who are “…fearless, authentic and wildly creative in the ways they show up, and our brand is a platform that creates space for them to express all sides of themselves.” 

  • Use Needs-Based Occasion-Driven market segmentation.

How does a brand-business learn about its market? Conduct needs-based occasion-driven market segmentation. Needs-based occasion-driven market segmentation creates a customer-driven map of the category divided into a) what are the needs? b) who has the needs? and c) in what occasion do these needs exist? Who x why x context.

Segmentation identifies a brand-business’ customers providing competitive advantage. Segmentation provides a strategic focus that is essential for effective marketing. Segmentation provides direction for identifying market priorities driving the brand-business strategies.

AB InBev, maker of one out of four beers sold worldwide, uses market segmentation to its advantage. AB InBev stated that insights from its needs-based occasion-driven segmentation have already changed the marketing for its brands. AB InBev recognizes that satisfying customer needs and problems while understanding the specific occasions in which these occur is the key differentiator between marketing and selling. Selling is convincing customers to buy what you know how to make. Marketing is about profitably providing what specific customers need or might need or might solve their problems in specific occasions. Superior understanding of customer needs and occasions provides the basis for outstanding competitive advantage.

  • Satisfy contradictory needs.

We continue to learn that people do not like to compromise. Customers do not want either/or solutions. Customers expect brand-businesses to optimize conflicting needs. Single-minded solutions are not as powerful or appealing. Brand-businesses are promises of complex, multi-dimensional, multi-faceted, relevantly differentiated experiences. Brand-businesses should focus on delivering the benefits of contrary needs. The best trade-off is no trade-off. A trade-off means losing something of value.

Barnes & Noble is a rejuvenated brand-business. One of its critical strategies has been the optimization of two contradictory needs: the maximization of an independent, local bookstore experience with the depth and breadth of a mass marketing bookstore.

  • Create a Brand-Value Strategy.

Brand-businesses must create a brand-value strategy. This is not a calendar. A calendar prioritizes tactics. Tactics are how you implement a strategy. A brand-value strategy is a plan. It is a plan to create trustworthy brand-business value.

A brand-business value strategy affects R&D, not just marketing. Brand-businesses must engineer value into products and services. 

One goal of a brand-business-value strategy is “amazing value.” Amazing value is not offering a lot for the money. This is brand-business-value tonnage.  Amazing quality is a great brand-business at a great price. A great brand-business with a price that will entice. Staggering value is unique, high quality at a price that amazes the customer.

Whole Foods’ 365 brand-business is a stellar example of implementation of a brand-business value strategy. Whole Foods 365 changed customer perceptions by remaking 365 into an affordable  high quality brand choice across multiple categories. 

  • Respect and reflect the brand-business’ provenance.

A brand-business’s provenance – whether historical or newly formed – acts as a constant. The brand-business’s provenance is a force for understanding and appreciating a brand-business’s past while helping to engage in the present. A brand-business’ provenance lays a relevantly, differentiated trustworthy foundation for the future. 

A brand-business’s provenance is its consistent and motivating theme. A brand-business’s provenance is not about preserving a past; it is about preserving the best of the past for the present and future.

The power of a brand-business’ provenance is significant, especially in an uncertain world.

When times are uncertain, customers seek trusted sources. This drives the need for provenance. A brand-business is more than a trademark; it is a trust mark. A trusted brand -business influences customer consideration and preference while increasing willingness to invest by all stakeholders. It is a hedge against uncertainty. 

Elizabeth Arden is using its provenance in beauty to reignite and reintroduce its brand to younger generations. Elizabeth Arden’s global General Manager stated “We drill down on the history of the brand, and it manifests itself in the creative. We have this rich legacy, but I would argue there’s a lot of modernity in who we are and what we do, and we’re very focused on science.”

  • Have a relevantly, differentiated brand-business promise.

A brand-business promise describes its expected relevant, differentiated, trustworthy experience. A brand-business promise is something that a brand-business continuously strives to achieve. A brand-business promise is a future-focused description as it states what the brand will do for its customers. Regardless of industry or category, a brand-business must have a brand promise. Otherwise, it is a commodity.

Art Basel is focusing on becoming a powerful global brand. Art Basel has articulated elements of a distinct, compelling brand-business promise. Extrapolating from discussion in the press, Art Basel sees this: For people who desire community engagement and are excited by our changing cultural world; Who seek a broader cultural perspective or who want to share their art to intrigue others; Creative, festive, innovative Art Basel offers people an opportunity to engage with local creators, learn what is happening culturally, participate in events, and purchase art. Art Basel will do this because it offers trophy-level art, varied cultural experiences and community level engagement.

Brand-business building is not just about advertising. Brand-business building is not just about message management or device management or digital management. Brand-business building is about promising to profitably deliver an expected relevant, differentiated, trustworthy experience to a specific audience. 

  • Adapt to the changing world.

Disregard for the changing world is marketing mismanagement. Disregard for the changing world is mismanagement in how a brand-business treats its customers. People change. Behaviors and attitudes change. Staying the same in a changing world signals to customers that the brand-business no longer cares about who they are and how they feel.

With changing perceptions and medical innovations, the world of weight loss is rapidly altering. In order to remain a powerful brand-business in an altered landscape, Weight Watchers International has reimagined its purpose.

Instead of relying on its points system, its workshops and weigh-ins, WWI is now offering access with advice to the science of weight-loss drugs. Previously, WWI described drugs as the easy way out. WWI’s approach focused on will power and changed behaviors. No longer. WWI has admitted publicly that it made mistakes. WWI is now ready to change how it delivers weight-loss to customers.

Losing touch with a changing world is a disaster for brand-businesses. Losing touch with customers and their changing wants and problems will mean the brand-business is not up to speed. Not innovating or renovating means a brand-business is not thinking about the present or thinking about the possibilities for tomorrow.

Brand-businesses should resolve to use these seven strategic solutions in 2024. There is no indication that 2024 will be a less challenging environment than 2023. Instead of always seeking the latest blue-sea idea, it is important to focus on and implement evergreen strategies that have been proven over time to help generate enduring profitable growth.

The Hotel Industry Should Take a PageFrom BA’s Legendary World’s Favourite Airline Campaign

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Let’s talk about “Brand Essence.” 

Brand Essence derives from a brand-business’ Brand Promise. To be relevantly differentiated, every brand-business must have a Brand Promise. Brand Promise defines the relevant, differentiating, trustworthy expected brand experience the brand-business will deliver time after time. Brand Promise describes what a brand is intended to stand for in the mind of a specific group of customers.

The Brand Essence is essentially a short-hand, compelling way in which to communicate the Brand Promise Internally. For example, Forever Young was the Brand Essence for McDonald’s Brand Promise. But, it also served as a rallying cry for employees around the world.

Brand Essence must capture the motivating intent of the Brand Promise and the true core of the brand-business. 

Sadly, as a phrase, Brand Essence is developing a bad reputation. Brand Essence is marred by many marketers’ mismanagement of their brand-businesses’ relevant differentiation. There is also the issue with marketing itself: a function that has devolved from a profession into a trade. Marketing has, unfortunately, become the trade of managing and executing marketing communications.

One of the worst industries for Brand Essence mismanagement is the hotel industry. As noted in The Wall Street Journal recently, there are “Zillions of Hotel Brands Now.” And, as noted, the growth of these brands are really designed to keep owners (who franchise the hotels) happy. Happier franchisees, happier – more profitable – brand-business owners.

Hotel brand-business owners, such as Hilton, Marriott, Hyatt and IHG, all defend the numerous brands as satisfying guest needs. The hotel executives support the explosion of hotel brands by saying that each one has its own Brand Essence.  But, a closer look at the brand-businesses provides little, if any, significant relevant differentiation.

The Wall Street Journal highlights a new entry from Hilton called Spark. As we pointed out earlier this year, Spark is a new hotel brand in Hilton’s Elevated Essentials group of hospitality offerings. The Elevated Essentials category comprises Hilton Garden Inn, Hampton by Hilton, Tru by Hilton and Spark by Hilton. The overarching description of the Elevated Essentials group is “Signature amenities and services in all the places you want to be.” This is a description based on features, not on benefits, emotional or social rewards.

Hilton executives interviewed for Wall Street Journal reporting rave about Spark by Hilton. But, as one professor in hospitality stated, the more fractionated the hotel brand-businesses become, the more guests face a “confusing sea of sameness.”

For example, here is a snapshot of the brands in Hilton’s Elevated Essentials portfolio:

Spark by Hilton

Spark by Hilton: “Practically inspired. Simply delightful. A budget-friendly stay offering the best of everything you need, done just the way you want.”

Spark by Hilton’s elements are: thoughtful simplicity, reliable service, unexpected touches and consistent quality.

Hilton Garden Inn 

Hilton Garden Inn: “Offering upscale accommodations and unexpected amenities to open up the brighter side of travel and out the best in you.”

“Our goal is to make your stay better and brighter. If something isn’t just the way you like it, simply let any hotel team member know, and we’ll make it right. Guaranteed.”

Hampton by Hilton 

Hampton by Hilton: “Always delivering an exceptional experience you deserve with thoughtful service, free hot breakfast and a warm, friendly smile. Every time.”

Every Hampton Inn and Hampton Inn & Suites is committed to the 100% Hampton Guarantee providing an exceptional guest experience and consistent, high-quality accommodations and amenities.”

Tru by Hilton 

Tru by Hilton: “With free pancake breakfast, a playful lobby packed with games and cozy nooks, and fun-sized rooms, you’ll get true comfort and more value.”

“At Tru, we’re rethinking hotel design to deal in trade-ups, not trade-offs. That means more space to spark creativity, more opportunities for connection and thoughtfully redesigned guest rooms that concentrate on comfort. Add in a must-see lobby and you’ve found your favorite cost-conscious hotel.”

What are the relevant differentiation of these brand-businesses? No wonder, people think Brand Essence is a marketing throw-away term. 

Brand Essence is so much more important than the hotel industry appears to understand. Here is a true story about how Brand Essence actually works to guide all thought and action on behalf of a brand-business:

In the late 1980s, after its privatization by the Thatcher administration, British Airways (BA) reinvented the trans-Atlantic flying brand experience. Under the stewardship of Sir Colin Marshall and a first rate marketing group, BA made some big decisions about how it wanted passengers to feel about the BA total brand experience throughout the entire customer journey. 

BA created a Brand Promise and Brand Essence for each service class. BA decided to focus on highly profitable business travelers who travel frequently back-and-forth over the Atlantic Ocean. 

BA recognized the limitations of what can be delivered in-flight after people are fed and settled in for the trip. And, eastbound flights to the UK tend to be overnight flights, so most people try to sleep. 

With this reality, BA turned to the on-ground experience, particularly the branded BA lounges. The idea: Start your journey by experiencing BA’s hospitality before you even step into the plane; differentiate the classes of service by lounges providing different levels of catering. End your journey refreshed and ready to go to work by showering, having clothes pressed and proper breakfast.

A 1993 BA booklet available in BA lounges, titled –Step into a new world, It’s the Way we make business travellers feel that makes us the world’s favourite – defined the new business class, first class and Concorde class services. The Brand Essence and Brand Promise for each service class are extrapolated from the brochure:

• Club World (Business) 

Brand Essence: Time to think. Time to relax. 

Brand Promise: Why? Because you need time to prepare yourself for business. 

We offer you a new world of service and comfort in Club World—in the air and on the ground. 

• First Class
Brand Essence: Space to sleep. Space to unwind. 

Brand Promise: Why? Important decisions affecting your company’s future? Sleep on them. 

Our First Class service is now truly in a class of its own. We give you space to take time out from your hectic business life. We give you time to reflect before you act. 

• Concorde 

Brand Essence: Speed—the conquest of time. 

Brand Promise: Why? Concorde recognizes the value of your time. 

Concorde creates more time for you. Depart London 10:30am arrive New York 9:20am. 

Brand-businesses are promises of relevant and differentiated experiences. The total brand experience (functional, emotional, and social relative to its costs – price, time and effort) defines the relevant distinctiveness of the brand. A Brand Essence is how to easily, persuasively and powerfully communicate this relevant differentiation.

Having brand-businesses that are undifferentiated are neither consumer-focused nor brand-business healthy. As one Marriott loyal user told The Wall Street Journal, “his recent stay was a perhaps SpringHill Suites or a Residence Inn,” he was not certain.

Egregious Brand Promise and Brand Essence overlap or genericization is detrimental to the health of the brand-business portfolio. This type of marketing mismanagement can lead to customers perceiving brand-businesses as commodities with no relevant differentiation, putting enduring profitable growth at risk.

Place is the Face of the Brand: Macy’s, Nordstrom, Zara, H&M Search For The Perfect Space

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In 2017, pre-pandemic, Starbucks founder and Chairman, Howard Schultz, said that the way forward for brand-businesses is making your branded space an “experiential destination.” The Starbucks CEO, Kevin Johnson said, “To survive, merchants need to create unique and immersive in-store experiences.”

Today, after several years of lock-downs, people are shopping outside of their homes. People desire something other than the four walls at which they were staring for three years. Providing a spatial and sensory shopper environment is now an incredibly strong driver among retail brand-business owners.

It is all about Place. 

Employees, product, service, price and promotion all have an effect on the successful delivery of the brand-business experience. And, so does place. In fact, when it comes to delivering a relevant, differentiated total brand experience, place is becoming increasingly critical. 

Place is the face of your brand. 

Place is multidimensional. Depending on the brand-business, place can be a website, a restaurant, an office, the waiting room, the hotel room, the customer’s office, a tablet, a mobile phone, a showroom, shelf space, buses, vans and trucks.  It can be a drop-down menu, an app on a mobile phone, or a watch. Place can be a virtual chat room, an online community or an airline club. Place can be the customer’s home place, as it is for products such as invisible dog fencing. Or, as it used to be for Avon door-to-door beauty products or Tupperware parties.

No matter where or what place is best for your brand-business, that place must attract and not detract from the brand-business. The brand-business interface must be kept in good repair and kept up-to-date with the forces that shape the world. “Nothing happens until it happens at retail” wherever that occurs. Retail is the moment of truth. Place is the most powerful, most intimate, most credible brand-business message. 

This is why, designing place is becoming a more experimental and experiential brand-business essential.

The focus on the total brand experience as a physically and emotionally “immersive” destination is not a new concept. But, it is a concept that has new traction as we navigate a virtual, digital, post-pandemic environment. 

In 1998, B. Joseph Pine and James H. Gilmore wrote a pivotal, highly influential article for Harvard Business Review titled, “Welcome to the Experience Economy.” The authors stated that experiences are distinctly different from products and services. Increasingly, brand-businesses are “explicitly designing and promoting” engaging experiences, and charging for these experiences. An experience happens when a brand-business “… uses services as the stage and goods as props… creating a memorable event.”

Retail establishments are making huge investments in changing the physical spaces where customers interact and, hopefully, bond, with their brand-businesses. Department stores, such as Macy’s and Nordstrom, are betting on smaller spaces. Fast fashion establishments, such as Zara and H&M, are betting on larger establishments. In both instances, the desire is to create a more powerful, more compelling, more affinity-creating brand-business experience.

Last year, Macy’s decided that smaller stores, based closer to where its customers’ live, is a more attractive and compelling – as well as profitable – format. According to The Wall Street Journal, Macy’s decision to create smaller format stores with fewer items and more digital services reflects a customer base that is increasingly suburban and prone to more frequent grocery shopping and in-store pick-up of pre-ordered items.

Macy’s smaller format stores take into account many pandemic-changed attitudes and behaviors, such as digital purchasing, purchasing without touching or trying-on and fewer human contacts. Macy’s smaller stores offer a more frequently updated product array of both staples and “trendy” items. Macy’s smaller stores also serve as pick-up and return venues that allow returns from online shopping or purchases made at other stores.

Macy’s also discovered that its smaller stores benefit employees, also, as these smaller stores are easier “to stock and staff.” Data show that small size formats “…allow for elevated customer service.”

Nordstrom has also opted for smaller-format stores that offer a multitude of non-shopping services. Aside from offering pick-up and return services, Nordstrom’s smaller stores provide clothing alterations and salon-type offerings such as “stylist appointments.” In this way, Nordstrom’s can more visually emphasize its core benefit of personalized service.

On the flip side, are fast fashion brand-businesses such as Zara and H&M. Zara and H&M are betting on a larger space offering all sorts of features such as beauty salons, repair, coffee shops (like Starbucks inside of Barnes & Noble) and digital offerings including the ability to virtually explore the store. Data show that these larger formats tend to increase the duration of the shopping trip.

Research on duration of shopping and duration of shopping implications for brand-businesses indicates that length of visit has an initial higher purchase ticket, but over time, length of visit leads to a smaller purchase ticket. The research posits that, perhaps, we are just too quickly and easily bored. After a while, the new is mundane. To be fair, the research does indicate the brand-business’ experience can become stickier even when the customer is purchasing less. Affinity may grow while purchases are smaller.

By offering a world of side services, Zara and H&M hope to make their places destinations, in the way that the original Nike stores were destinations. 

Zara’s executives believe the larger, roomier stores are more personal because these spaces eliminate the sense of “crowd.” And, the larger spaces can house small boutiques that feature “individual” collections – just the way department stores operate or used to operate.

H&M’s executives believe the larger format allows customers to become “inspired” and engaged with the H&M total brand experience.

As department stores become smaller and fast fashion stores become larger, it seems as if the two forms of retail are just exchanging formats looking for a new dimensional way of delivering brand-business’ expression. Department stores are downsizing while fast fashion stores are upsizing. Place is increasingly becoming a very fluid concept.

In a Plan to Win, after articulating the brand-business’ Purpose and Promise, the next step is to describe the 5 Action P’s: People, Product, Place, Price and Promotion. Then, state the way in which the brand-business will manage Performance. The Five Action Ps of the Plan to Win define what the brand-business will do for its customers. In other words, the 5 Action P’s define the total brand experience the brand-business wants to deliver. The Five Action Ps are the brand-business’ essential, common, must-do-now list. 

Regardless of offerings, Place, as an action P, is undergoing massive restructuring in a world where anyplace or any-space, can be a brand-business Place. 

Many brands create spaces that become destinations where the customer can be immersed in the core essence of the brand-business experience. REI in Seattle opened in 1996 with its REI Rock Climbing Pinnacle, a 5’9” wall (the third largest indoor rock climbing structure in the world, apparently). Before it closed due to safety threats and thefts, Portland, Oregon’s Nike Town was a great Nike experience. Dave & Buster’s and Chuck E. Cheese are restaurants that are entertainment destinations with food.

Hopefully, the emphasis on place does not happen at the expense of people, product (service) price and promotion. Hopefully, purpose and promise are not negatively affected. And, hopefully, performance measurement shows improved performance. All the 8 P’s are essential for generating more customers who frequent the brand-business more often, who are more loyal and more profitable. Each P must reinforce each other P.

Department stores and fast fashion stores may be experimenting with each other’s’ layouts, where size seems to matter. But, the reality is that whatever changes are made, whatever size matters, Place must still represent the face of the brand-business’ core promise. Becoming a destination only works if the place creates a space where the customer can develop affinity, love and trust with the brand-business.

The Apology Heard Around The World: Weight Watchers International Seeks Relevance In A Changing World

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CEOs have become adept at saying “Sorry.” Most of the time the apologies are because some untoward or unexpected event went occurred, such as an E. coli outbreak or rats in the store.

It is unusual for a CEO to say that the focus of the brand-business is no longer viable and therefore needs to be transformed. It is unusual for a CEO to say, “We got it wrong in the past. We will do better. I’m sorry.” 

But, this is precisely what the CEO of WWI (Weight Watchers International) did on November 27, 2023 in a CNN interview, at the height of seasonal holiday feasts. Faced with the changing understanding of obesity and the success (and frenzy) of the benefits of diabetes drugs for significant weight loss, WWI just admitted that obesity is a chronic condition. Dieting with WWI’s points program may not work for many people. Yes, peer support is critical. But, WWI programs are not the optimal approach for many people. We at WWI were wrong. We have changed to fit with you. WWI’s CEO said, “We contributed to shame when our program did not work for our participants. We were wrong when we said, ‘It’s a choice.’” 

In other words, Sima Sistani, CEO of WWI, told us that the world changed; attitudes changed; science changed; people’s behaviors changed. WWI disregarded the changing world. Now, WWI is facing the facts.

Disregard for the changing world is marketing mismanagement. Disregard for the changing world is marketing mismanagement not just in terms of how the brand-business is run. Disregard for the changing world is mismanagement in how we treat our customers. We lost touch with our customers’ beliefs, perceptions and opinions. We lost relevance in important, personal ways. We know that people and the medical community talk about obesity differently these days.

Ms. Sistani has been vocal about the responsibility WWI has to its members. And, how WWI will be part of the changing landscape of weight loss realities. In a recent Las Vegas conference, Ms. Sistani told the audience, 

“… I think that we have to be the first to admit where were wrong so that we can be part of the change.” Acknowledging that there were years’ worth of members for whom the Weight Watchers program did not work, Ms. Sistani said, “Anybody who took that as a moral failing, we want to change that and say, ‘No, no, it wasn’t you.’” “This (losing weight) is not about willpower alone. What we are now saying is we know better and it’s on us to do better so that we can help people feel positive and destigmatize this conversation around obesity.”

Sure, this apology is not just altruistic. There is money to be made and brand-business reputation to be burnished. Investors were elated with the news. Wall Street has seen WWI as close to moribund due to a shrinking customer base. Putting the joyful hopefulness of the financial implications aside for a moment, the frank, publicized admission that the WWI points-diet with weigh-ins, exercise and peer group support is not the answer for many with weight conditions is a really big deal. 

Why? Well…

In the 1960’s, did you ever hear of a tobacco executive saying cigarettes were dangerous? In 1965, did any automotive executive say that cars might have safety issues, particularly the GM Chevrolet Corvair? No. No one said, “I’m sorry that our products can be unsafe.” It was the government that stepped in to protect smokers and drivers. The results for tobacco were the placement of a warning label on packages and in print advertising (with tar and nicotine numbers) plus the elimination of TV advertising. For cars, the results were the US Department of Transportation and The National Highway Traffic Safety Administration.

In her CNN interview, Ms. Sistani was clear that WWI’s new understanding of weight loss does not mean abandoning the role of peer support, a core ingredient of WWI. After all, as Ms. Sistani points out, WWI is the “original social network.” Ms. Sistani clearly loves the brand-business. She is not about to take a wrecking ball to a rather profitable, iconic and beloved piece of Americana. She is a believer in the core principle that WWI is about helping people with weight management, which includes the idea of weight health. WWI will continue to be true and genuine in maintaining its provenance.

Yet, as part of her plan, the shift to digital from in-person, drugs over meetings and workshops is a massive change of focus. According to CNN, this change is a huge risk.

Ms. Sistani is mildly critical of the previous WWI pivot to wellness. From her perspective, the wellness proposition was pure marketing. There was no actual product. WWI did not manage to live up to the wellness concept with meaningful actions. The wellness proposition was WWI attaching the brand-business to a broad generic concept. Who can be against physical and mental wellness?

Noom, a recent (2016), digital, food-tracking, subscription weight-loss app, focused on behavioral factors and psychological wellness, started offering access to weight-loss medications earlier this year. Noom is expanding this access to its employer benefits program. As Noom’s medical directors said, “We have biology meeting psychology to treat obesity as a chronic medical condition.”

To bring WWI up-to-speed with the new, swiftly-forming science of obesity, WWI bought a Telehealth platform called Sequence. Sequence connects people with doctors who are able to prescribe the new drugs such as Ozempic, Wegovy and Mounjaro. WWI will provide the “lifestyle component.” WWI’s role is ensuring members have , “… the right behavior change and lifestyle intervention that is happening alongside the medications because that’s how you get the great outcomes. The medications, they help you with satiety, but then once you have stopped the hunger, the noise, the brain fog, what we’re trying to do is use that moment to help people adhere to the lifestyle changes that actually help them live healthy habits for the rest of their lives. So that’s the Sequence.” WWI intends to provide a tailored program for GLP-1 users and for those who may prefer the GLP-1 behavior support.

Goldman Sachs analysts see the Sequence purchase along with the focus on drugs as the pathway out of WWI’s brand-business doldrums. Ms. Sistani believes that the rotation away from its past approach to weight loss is keeping WWI distant from bankruptcy which is what happened to Jenny Craig.

Ms. Sistani sees an opportunity to reimagine the care support and peer-to-peer intervention management as a relevant differentiator. WWI is training its people in the new science of obesity along with nutrition.

WWI also wants to be on the forefront of the initiative to convince Medicare to change its view about these drugs which are currently seen in the same light as cosmetic surgery and hair loss meds.

Losing touch with a changing world is a disaster for brand-businesses. Losing touch with customers and their changing wants and problems will mean the brand-business is not up to speed. Not innovating or renovating means a brand-business is not thinking about the present or thinking about the possibilities for tomorrow. Going back to basics by looking backward and trying to reproduce the past will not work tomorrow. Continuing to do what you know how to do means the brand-business is not evolving with the changing times. 

The inherent risks of abandoning many of a brand-business’ core elements can be rough on some existing customers. Already, there is grumbling, sorrow and “betrayal” among some die-hard WWI members. The abrupt move away to a digital program focused on drugs is considered a quick fix – an easy way out – with little human contact. Of course, Ms. Sistani does not want to alienate core customers. Ms. Sistani would like to bring core customers around to the new approach by emphasizing WWI’s core promise of helping with weight health and weight management. She wants members to recognize that the science has changed.

Currently, GM and Ford sell few sedans focusing on trucks and SUVs. And, both companies focus on EVs rather than gasoline vehicles People still miss Oldsmobile. But, who wanted their grandfather’s automobile?. People may miss the Ford Crown Vic, but it was axed in 2012 and Ford has never looked back. These are corporate risks that CEOs believed had to happen for their organizations to stay viable and profitable.

Ms. Sistani says that WWI’s new approach is not a gamble; not a wild bet; not a Hail Mary pass. WWI is making an informed judgment; a highly informed leap of faith that this direction is future of weight management. Sitting around doing the same thing and hoping for the same results is a formula for failure.

Although Ms. Sistani cannot be certain of WWI’s potential outcome from the shift, she is confident that what WWI was doing in the past was not the way forward to enduring profitable growth.