The End of An Era: The Dodge Challenger And Dodge Charger Are Now Muscled Out

In July 1965, Bob Dylan went electric at the Newport Folk Festival, abandoning the acoustic guitar for the rock genre that was sweeping through the counterculture. It was a defining moment for music and for a changing society.

The segue to electric vehicles has been at a slower pace; more of an evolution than a revolution. Up until now, drivers have had the option for electric vehicles. Since 2006, there was Tesla. General Motors (2016 Bolt) and Nissan (2010 Leaf) were available. These days, eyeing Tesla with envy, all of the other domestic and international automotive manufacturers have jumped on board with laser-like focus on being the first choice electric vehicle. But, the transition for drivers will not be overnight.

As far as electric vehicles go, there has not been that instant recognition moment that the world has changed… until now. Sadly, or not, the checkered flag has come down on brands that epitomized the gas-guzzling, hyper-powered American automotive dream.

This week was the end of the brand promise of the American-made pursuit of horsepower and performance. This week was the end of powerful gas-powered performance-oriented muscle cars that express the drag-racing, car chasing quarter-mile crushing spirit of the street.

This week was the end of The Dodge Challenger and The Dodge Charger. Good-bye, Dukes of Hazzard (1969 Dodge Charger). Adios, Fast and Furious (1969 Dodge Charger). Never again, Vanishing Point (1970 Dodge Challenger R/T 440 Magnum). Car chases will never be the same.

Car enthusiasts received the news that those American-made, 2-door sports coupes with V-8 engines designed for high performance driving, rear wheel drive, street performing vehicles were giving up life for the electric car. Muscle cars are now officially muscled out.

Stellantis, owner of Dodge, announced that the Dodge Challenger and the Dodge Charger will be excised from the Dodge line-up. Both the Charger and Challenger will be discontinued at the end of 2023. According to The Wall Street Journal, Dodge is hoping that its loyal muscle car buyers “will embrace a new kind of muscle: one that runs exclusively on battery power.”

This new “muscle car” will be an all-electric concept vehicle designed to embrace the memory of the gas-powered Dodge Challenger and Dodge Charger.  The new EV is expected to go on sale in 2024. It will be the Dodge’s first fully electric model.

Dodge hopes that calling the EV concept car the Charger Daytona SRT, “after the vehicle that first broke 200 miles an hour on a NASCAR track in 1970,” will lessen the pain of the loss. To make the transition even more natural, Dodge also created a synthetic “exhaust tone” designed to reproduce the “thunderous roar of its gas-engine muscle cars.” 

It will be interesting to observe whether a synthetic exhaust tone will jump-start sales. The Dodge Charger and the Dodge Challenger are beyond iconic brands in the lore of American automotive. 

The Dodge Charger’s first year was 1966. The car was an attempt to manufacture an upscale, upsized, affordable, highly-styled rear-wheel pony vehicle. A pony car defined a vehicle model that was performance-oriented, compact but with a long hood, either a coupe or a convertible at a reasonable price point.

The Dodge Challenger’s first year was 1970. It is considered to be Dodge’s late response to Ford’s Mustang. The long-gone, but gorgeous Pontiac Firebird and the Mercury Cougar were also in the competitive set.

Muscle cars were hot. But, during the 1970’s, their sales declined as new amendments on emissions from the Clean Air Act had an impact; there was a fuel crisis and insurance costs rose.

However, car enthusiasts kept the flame alive. The Dodge Charger and the Dodge Challenger were vehicles originally manufactured by Chrysler, a brand that underwent a series of mergers and de-mergers, finally winding up in the arms of Italian automotive maker Fiat. 

However, Stellantis will give us one more year to manage our angst. Stellantis tells us that the Charger’s and Challenger’s last model year will be a throwback. The goal is to keep the brands alive in the minds’ of its loyalists so that these buyers will make the segue to the EV version. This is a big bet. Giving us the best of the best for one last time may make us view the electric model as cringe-worthy.

As reported in JALOPNIK, an online automotive newsletter, Dodge will use the last models to “pay homage” to the Charger’s and the Challenger’s past. There will be seven models, colors from the cars’ heydays and an “expansion of SRT Jailbreak models.” The Jailbreak models will include the 717 horsepower Charger and Challenger SRT Hellcat. 

The idea is to connect each 2023 model with some element of Dodge’s 1960’s and 1970’s history. There will be a “Last Call” plaque on each vehicle as well as a nod to the American origin of both brands “Designed in Auburn Hills” and “Assembled in Brampton.”

The CEO of Dodge, Tim Kuniskis said, “We are celebrating the end of an era – and the start of a bright new electrified future – by staying true to our brand. At Dodge, we never lift and the brand will make the end of our iconic Charger and Challenger nameplates in their current form in the same way that got us here, with a passion both for our products and our enthusiasts that drives us to create as much uniqueness in the muscle car community and marketplace as possible.”

This sounds great. But, the reasons for the demise of the Charger and the Challenger brands are more complicated and not as brand-passionate as stated. To stay competitive, Stellantis has stated that it wants half of its portfolio to be battery-operated by 2030. This cannot happen with The Challenger and The Charger in the roster.

The Wall Street Journal indicates that Dodge and other makers of sports cars have the problem that the popularity of their models “mostly resides in the power and performance of the engine. Some, like the Chrysler-developed Hemi engine, have become recognized names in themselves.”

Additionally, “the popularity of gas-guzzling models like the Challenger and Charger are dragging down Stellantis’s average fuel-economy rating, which has long lagged behind competitors. That has resulted in the car maker having to pay fines for failing to meet certain environmental regulatory requirements.”

In July, Stellantis announced that it had allocated $685.5 million in anticipation of fines related to not meeting US fuel-economy standards.

One dealer speaking with The Wall Street Journal said, “The transition to electric is going to be important, and I don’t know that we will still have those same buyers,” said John Morrill, who owns a dealership in Massachusetts that sells the Dodge, Jeep, Ram and Chrysler brands.

He said muscle cars attract a very specific kind of old-school customer and getting the shift to electrics right will be critical because the brand’s lineup is already narrow. Dodge currently sells only three models.” Another dealer agreed, saying that he did not see current muscle car drivers making the transition.

If you are in doubt as to the impact of ending the lives of The Challenger and Charger, please note that these two brands “accounted for nearly 62% of the brand’s U.S. sales in 2021. The third model is the Durango SUV.” Other muscle car competitors have not fared as well. And, Ford has already manufactured an EV version of the Mustang.

Whatever the case, the reality is that the end of The Charger and The Challenger marks an end of an American era. It is unclear whether an EV with a synthetic sound may help. American muscle cars were defining. All you need to do is type into Google “muscle car chase scenes” to confirm how embedded muscle cars are in the American psyche.

Dodge is mindful enough to recognize that its muscle car loyalists may not transition well. But, the exigencies of a changing world, changing consumer behavior and changing regulations require automotive companies to change their ways.

It takes guts to cancel The Charger and The Challenger brands. 

Airbnb And The Power of Localization

In a recent Wall Street Journal interview with Brian Cheskey, CEO and a founder of Airbnb, reporter Preetika Rana discussed the way in which Airbnb survived during the pandemic and is now flourishing.

Although there were several financial measures that Airbnb employed to sustain itself during the crisis of Covid lockdowns and quarantines, one of the most important Airbnb strategies was to leverage the power of localization.

Globalization, personalization and localization shape how brands must be managed. These three dynamics are colliding and intertwined. The challenge for marketers is to harness the strengths of each to build strong brands. 

Globalization delivers a familiar, consistent, and reliable branded experience. Personalization delivers a branded experience that recognizes and reflects the customer and is exclusively designed to meet an individual’s needs for a particular occasion. Localization delivers a relevant, respectful, place-based branded experience.

Globalization provides us with the comfort of seeing familiar brands anywhere we travel. We appreciate their regularity and standardization. We are calmed by their familiarity and security. Perceiving a brand to be a global leader enhances the brand’s status and stature. 

Personalization creates valued, unique experiences that meet an individual’s physical, psychological, social and emotional needs. Personalization reinforces respect, status, and positive self-image. 

Personalization is different from customization. Customization focuses on features and functions – the practical aspects of a brand – readying the brand for a transaction. A custom-made Nike shoe is about finding the features you like – colors, stripes, laces, and so on – creating a transactional event. It is similar to finding your measurements and fabrics that customize a bespoke silk suit or shirt. Personalization is experiential. It happens when, based on who you are and what you like, an entire branded experience is created. 

Localization provides us with that special sense of place. Locally sourced, locally crafted, locally owned, regionally authentic, one-of-a-kind, and so on bring a sense of cultural, ethnic, economic and social connection. Artisanal cheeses from a specific region, local distilleries and breweries, grass-fed cows on local farms, cage-free chickens, arts and crafts, non-GMO, fresh, organic, locally made employing local people and other local elements and activities that bring “real” into our lives continue to grow and are increasingly attractive and affordable.

Airbnb is a global entity. It has rentals around the world. Airbnb is also a personalized brand. Its website, for example, makes it easy for customers to select the exact type of home rental suited to their needs and desired experiences.

But, it is the brand’s leveraging of localization that saw it through the worst of the pandemic. According to Mr. Cheskey, Airbnb’s localization strategy was threefold.

Airbnb capitalized on the desire for staycations. Briefly, a staycation is when people either stay at home or venture only as far as their locale. It can also mean taking a vacation in one’s own country as opposed to traveling abroad. During the pandemic, as with the financial crisis of 2008, staycations became popular. Airbnb switched its emphasis to local travel and local stays.

Additionally, with office closures, office workers could work remotely from anywhere. This also created an opportunity for Airbnb. Some workers left for more exotic areas. But, many workers chose to relocate locally and domestically. Rather than work from a hotel room, working from a home in one’s locale offered many risk-free benefits.

Lastly, with salaries and overtime cut for many workers, hosting became a way for many people to make many money. For erstwhile local travelers and remote workers, an Airbnb stay was a way to save money on stays away from home, being less expensive than a hotel. In other words, with Airbnb, one could locally “make a buck” and “save bucks.”

One of the great elements of localization is its enhancement of the concept of neighborhood. During the pandemic, neighborhood was important. Neighborhood is safe. Neighborhood is known. Neighborhood is comfortable and secure. Neighborhood is predictable and reliable. Neighborhood allowed for school pods, for example, where children could learn with their local school pals. Neighborhood grows from people living near each other in time, space and relationships. When the pandemic isolated us from our normal social contacts, the people in our neighborhood became our sole human contact outside of our families or roommates. Neighborhood has always been much more about the people than the place.

Many brands tend to focus on globalization and personalization. In fact, because of digitalization, personalization tends to receive a lion’s share of resources. However, localization has an important role to play by bringing people together and by enhancing the nearby neighborhood. Localization delivers place-based benefits such as local farmers’ markets and crafts. With a focus on digital, we sometimes overlook the fact that localization of experiences delivers great results. This was certainly true for Airbnb. Localization helped keep Airbnb afloat when hotel chains were suffering. In our virtual reality-augmented reality world, nearness has value. Localization is extremely meaningful in a world where the emphasis is on virtual, digital reality.

happy brands branding

Have you Noticed That Brands Are Here To Make Us Happy

In 2013, Pharrell Williams had a huge hit song called Happy. That song played everywhere. Happiness was all around us.

Now, it appears as if we really need to be happy. Having been released from our Covid confinements, we are looking for ways to get happy again. Type in “happiness” for the last month on LexisNexis, the information retrieval brand, and you will see over 25,500 articles on happiness, from how to be happy, what it means to be happy, happiness classes, happiness indices, and so forth.

In 2020, Arthur Brooks of Atlantic magazine started writing about happiness. The idea was to help readers and listeners (of his podcast) “… reframe the misery and loneliness of the coronavirus pandemic’s early days as an opportunity to think more about well-being?” It must be successful because just recently Mr. Brooks wrote his 100th happiness column.

And, it turns out that brands want to jumpstart our achievement of happiness. Today, multiple brands are selling happiness as the core of their brand promise. It is as if we need to be reminded that being unhappy should be a thing of the past and that now we should “c’mon … let’s all get happy.” At least four brands are betting that the benefit of happiness is the perfect way in which to connect to customers. 

So, who wants us to be happy?

Happiness is now a promised benefit for Carvana, a brand that greatly benefited from the woes of coronavirus. Buying and selling a car from your home without risking the possibility of Covid infection or the frustration of dealing with a car dealership had a lot of pluses. What with Covid now more endemic than pandemic, Carvana wants to remind you that car buying and selling with Carvana does not drive you crazy like a dealership experience might, but drives you happy. 

Stouffer’s, the frozen food brand owned by Nestlé, wants you to feel “happyfull” when enjoying its offerings. Stouffer’s has a history of making people happy. At the turn of the 20th Century, Stouffer’s was a dairy, then a milk stand selling milk, buttermilk and sandwiches and then a restaurant offering buttermilk, sandwiches and the owner’s wife’s homemade Dutch apple pie. Stouffer’s is probably hoping that we lay off the meal deliveries and make do with the satiating, convenience of its frozen foods. Happyfull is: the first bite of mac and cheese, the smell of lasagna in the oven, a belly-full of lasagna, French bread pizza, a comforting meal that everyone in the family can agree on. Rather than worry about what is for dinner, we can now be happy with a freezer full of Stouffer’s.

Ice cream is a happy food. And DQ, aka Dairy Queen, wants you to remember that. Once an ice cream parlor, DQ is now a full-fledged fast food restaurant offering hamburgers, chicken, tacos and hot dogs alongside its soft-serve ice creams treats. DQ wants us to know that it is serving happiness because “happy tastes good.” Populated with smiling, shiny, happy people, DQ’s messaging is that DQ is the place for happy: “to Share your happy, Burger your happy, Flip your happy, Scoop your happy, Dip your happy, Dunk your happy, Cheer your happy, Red spoon your happy, Tuesday your happy. At DQ, we make happy.” 

Let’s not forget our dogs. Dogs were rescued and adopted in record numbers during the pandemic. If we had to be alone, let’s be alone with a dog who shows unconditional love. And, if the pandemic showed us one thing, it was that regardless of pestilence, we will do anything for our dogs. We want our dog to be happy. This premise is behind the messaging from Bark Box, a subscription service delivering dog products, services and experiences. With Bark Box, you will have and you will be “dog happy.”

Brands with happiness as a benefit are not a new selling approach. Disney has always had happiness as part of its brand. From the beginning, its purpose was to create happiness. McDonald’s began by telling us it was a “hap, hap, happy place.”  Zappos, the online shoe seller, is all about “delivering happiness” with boxes covered with the word happy. Hershey’s has registered “Hersheypark Happy” for its experiential activities. For its gift store, Hershey’s tells us that we can take home Hersheypark Happy through buying a souvenir or two. Some brands have identified “joy” – a close relation to happy – as a desirable benefit to deliver. Coke has used joy as a benefit. 

Just to be clear, in English, happy has a lot of meanings. Content, satisfied, delighted, blissful, glad, appropriate, willing (to do something), overjoyed, in high spirits are just a few of the meanings associated with happy. For a brand selling happiness, it is critical to know what kind of happy you are selling.

Brands that go all in with the happiness benefit must make sure that happiness is delivered. In the early 1990s a large bank billed itself as the friendly bank. Yet, when you went to the teller, all you saw was the top of the person’s head. United Airlines told us to Fly the Friendly skies of United, until those skies were no longer friendly.

Promise what you can deliver. Deliver what you promise. Know your unique, delightful type of happiness. If your goal is to make sure that we are happy, everything from people to product to service to price to place and to promotion must be focused on customer and employee happiness. The last thing your brand needs is to have customers who unhappy with your happy.

The Phoenix Brand: Toys “R” Us

Guess what? The iconic world of Geoffrey the Giraffe, Toys “R” Us, is back. 

Toys “R” Us is a Phoenix Brand. 

A Phoenix Brand is a brand that has been burned to death yet attains new life and rises the next day. The mythology around the Phoenix is that it is a symbol of renewal. 

If any brand in the last ten years deserves the Phoenix Brand label it is Toys “R” Us. Toys “R” Us’ rising from the flames with renewed life supports the principle that brands can live forever if properly managed. And, now that Toys “R” Us is in the capable hands of a brand-focused firm, your toy shopping just became easier and more delightful.

It is an extraordinary turn-about. Five years ago, the Toys “R” Us brand was in a conflagration.

In 2017, an extraordinary debt load of $5 billion pushed the storied brand into Chapter 11. Reports are that 33,000 people lost their jobs. The 2017 bankruptcy filing set off a months-long effort to restructure the company in bankruptcy court. But, sadly Toys “R” Us liquidated. 

To make matters worse, creditors brought a lawsuit against Toys “R” Us executives claiming that the executives misled their suppliers about Toys “R” Us’ dire financial condition while the company tried to stay afloat in bankruptcy. Then, executives left these suppliers with more than $600 million of invoices. Furthermore, the creditors allege that millions of dollars of bonuses were dished out to 117 Toys “R” Us executives and managers just prior to the company’s 2017 bankruptcy. The suppliers allege that this was a breach of the former executives’ fiduciary duty. Former Chief Executive Officer David Brandon received the largest bonus totaling $2.8 million. The trial of the former executives is slated to begin now in 2022 after several years of legal wrangling.

The bankruptcy judge’s opinion supported Toys “R” Us creditors because sufficient questions surrounding the payment of executive retention bonuses and advisory fees to the company’s equity sponsors – including Bain Capital, KKR & Co. and Vornado Realty Trust – do appear to require the legal proceedings to continue.  The bankruptcy judge said:

“The evidence submitted by the trust, if proven, is sufficient to establish a prima facie case that the defendants violated their duties of loyalty and good faith in addition to their duty of care,” Judge Phillips wrote in his opinion, referring to the retention bonuses paid to 117 Toys “R” Us executives before the bankruptcy filing.

“Payment of the advisory fees was not endorsed by court order, as the payments were made prior to the bankruptcy filings. The evidence offered by the trust supports a finding that the defendants were not constrained by their contractual obligations to the sponsors and had other options available.”

From the ashes of this ugly situation, the Toys “R” Us brand is currently in revitalization mode. And, in a very clever manner.

The brand’s owner, WHP Global, partnered with Macy’s, another iconic retail brand, allowing Toys “R” Us to place Toys “R” Us shops inside all of Macy’s stores. Press reports indicate that by mid-October 2022, Toys “R” Us will open shops in all of Macy’s stores. When Toys “R” Us closed its stores, Walmart, Target and Amazon saw and leveraged the opportunities. Now, Macy’s sees an opportunity to sell toys increasing traffic and loyalty while Toys “R” Us sees the opportunity to rebuild its brand back to enduring profitable growth.

What both Macy’s and Toys “R” Us are implementing is a Combination Branding strategy; more specifically, a component brand approach to Combination Branding. With the component approach to Combination Branding, both brands maintain their own source of their promises. Combination Branding using a component brand approach is “a brand within a brand” not a brand with a brand. The latter would be a co-brand approach where the two brands share the identification of the source of the promise.

For Macy’s, having an iconic, beloved toy shop brand inside its stores provides the ability to compete for holiday shoppers and year-round shoppers in a retail environment currently led by Amazon for online purchases and by Target and Walmart for brick-and-mortar purchases. Toys “R” Us offers Macy’s (as the host brand) and Macy’s customers an additional benefit of a glorious, enchanting world of quality toys and toy shopping. 

For Toys “R’ Us, the partnership provides instant brick-and-mortar facilities, a reliable stream of shoppers and the ability to reinforce its brand with old and new customers. The benefits of Toys “R” Us do not replace Macy’s benefits; Toys “R” Us just enhances Macy’s with a new benefit. Toys “R’ Us does not delegate its brand management to Macy’s and Macy’s does not delegate its brand management to Toys “R” Us.

The chief merchandising officer of Macy’s told investors, “Macy’s cannot wait to bring the Toys “R” Us experience to life in our stores. We hope Toys “R” Us kids of all ages discover the joy of exploration and play within our shops and families create special memories together. The customer response to our partnership with Toys “R” Us has been incredible and our toy business has seen tremendous growth.”

Since Macy’s has been selling Toys “R” Us toys online and with the cascading in-store Toys “R” Us shops, Macy’s CEO, Jeff Gennette, said during its second-quarter conference call that first-quarter toy sales were 15 times higher than the comparable period prior to the Toys “R” Us partnership.

As for Toys “R” Us, the CEO and chairman of WHP Global, told CNBC, “We’re in the brand business and Toys “R” Us is the single most credible, trusted and beloved toy brand in the world. We’re coming off a year where toys are just on fire. And, for Toys “R” Us, the US is really a blank canvas.”

If all goes according to plan, this partnership should be a boon to both Macy’s and Toys “R” Us. Press reporting indicates that brands such as Hasbro are already stocking up inventory to avoid any supply chain issues this holiday season. Hasbro’s CFO confirmed that Hasbro is “well positioned” this year when it comes to inventory. Very good news for Macy’s and Toys “R” Us.

A component brand approach is gaining strength with retailers due to the pandemic. It does not always work out, however. J.C. Penney had a partnership with beauty brand Sephora. But, that relationship is ending to be replaced by J.C. Penney Beauty, an offering with more “mass” brands.

What is clear is that Toys “R” Us is alive and well and focused on rebuilding itself after years of fire and brimstone. Its partnership with Macy’s has a lot of brand potential. And, finally, the Toys “R” Us brand is being properly managed. Toys “R” Us is a story about a brand that is renewing itself. Toys “R” Us is today’s Phoenix Brand.

peloton marketing branding

Marketing Under Economic Adversity

In October of 1980, The Conference Board (the business and economics organization focused on corporate governance, HR, business ethics, global corporate citizenship and corporate performance) held a conference titled “Marketing Under Economic Adversity.” The title is apt for today as we are experiencing the highest inflation inn 41 years, at 9.1% in June 2022. We are also experiencing product shortages, population declines, declining consumer sentiment and are expecting recession. Google is limiting hiring. Microsoft is cutting staff. Peloton is moving to outsource manufacturing. 

Brand-businesses must manage through the current volatility implementing strategies designed for sustainable profitable growth during current and predicted hard times. Action now is essential. 

Some marketers believe that hard times are the time for a hard sell, defined as shouting maximized performance or minimized price or both. This is not the way to sell. This is limiting and misleading. In hard times, it is not about selling: it is about buying. Unless marketers are able to generate buyers, there will not be any selling. 

No matter how troubled the times, people do not just buy on price and performance alone. People buy on value. It is an everyday truth: the best value wins. Value is a virtue. But, brands do not just wake up one day and have perceived brand value. Brand leaders must develop and implement strategies for generating brand value.

Perceived brand value is already necessary for brand consideration and purchase. The goal of every marketer in our turbulent economy is amazing value, staggering value, extraordinary quality at a great price. For marketers to generate buying, the goal must be irresistible trustworthy brand value. 

The basic definition of customer value is: value is what you expect to receive, and what you do receive for what you expect to pay and do pay.  We all have a mental value equation when we make a purchase.  A consumer’s value equation is not math: it is a mindset. It is a mental process of evaluating an offering relative to its costs. However, over the decades, the consumer’s value equation has evolved from product or service for the price.

People assess a brand’s worth based on the total brand experience they receive (functional benefits, emotional and social rewards) relative to the total costs (money, time and effort).  But, there is a very important new component to the equation. It is a value multiplier, and that multiplier is trust. Trust is the consumer’s belief that the brand will deliver the experience relative to the costs.

The new mental model of value is total brand experience relative to total experience costs all multiplied by trust. This is today’s new Trustworthy Brand Value equation. And, this must be marketers’ focus. Success in troubled times requires creating and implementing a trustworthy brand value strategy right now. This is how to create buying so there is selling. The threat and consequences of our current pandemic and financial distress may change people’s behavior and habits. But, changed behaviors and new habits will not decrease the importance of value. Value does not vanish due to volatility. Trustworthy Brand Value is vital for a brand’s enduring profitable growth.

Trust is the consumer’s evaluation of a future experience with the brand: How confident am I that this brand will deliver this experience for these costs? If trust in the brand is high, then as a multiplier, the perceived brand value is increased. If trust in the brand is low, then the perceived brand value is decreased. If there is no trust in the brand, if trust in the brand is zero, then it does not matter what the promised brand experience is relative to the costs anything multiplied by zero is zero.

Years of data support the point that credibility or expertise will not matter if there is no trust.  Brand trust significantly affects consumer commitment. This influences price tolerance. Brand trust is a critical piece of the decision process. If you want a strong, enduring, loyal relationship with a customer, you must have brand trust. Trust is essential to the calculative process of brand acceptance.

Here are seven marketing actions for navigating in troubled times:

  1. Do not confuse price and value. Many marketers continue to use these terms interchangeably.  Price is what marketers charge. Trustworthy Brand Value is what customers perceive an offer to be worth.  A sign of troubled marketing is defining value as merely low price. Do not reference a particular brand as a “value brand.” Each brand must be a value brand. Each brand is valued for different reasons. Price is important. However, a brand’s worth depends on a lot more than price. Value can happen at any price point. Value is in the eye of the customer: every customer is value conscious.  
  2. Maintain relative price. Do not increase price in the hopes of making up for lost sales. Avoid this losing strategy that sacrifices long-term value creation. Do not focus on deals: deals destroy brand loyalty. Deals increase price elasticity. Right now, many consumer brands such as Gatorade and Doritos have raised price significantly. At some point, consumers may no longer see the value in paying over $4 for a bag of Doritos. On the other hand, mobile phone service carriers are providing deals that basically give the customer a new phone for free. According to The Wall Street Journal’s analysis of pricing, the trade-ins for old or damaged phones offer up to a $1000 discount. Same with TV’s. NPD Group indicates that 71% od TVs sold from January through April 2022 were sold at discount.
  3. Make sure that your brand’s perceived value is seen as a fair value for the promised experience. Marketers do not determine fair value. Customers do. Marketers set price. Consumers decide fair value: is this brand a fair value relative to competitive alternatives that I am considering? As The Wall Street Journal points out, many consumers are buying whole chickens at $1.56 per pound rather than spend $4.26 per pound for boneless, skinless chicken breasts. These consumers find the price of pre-cut, pre-skinned chicken breasts a poor value relative to cutting the chicken themselves.
  4. Focus on maintaining and maximizing Trustworthy Brand Value not merely messaging. Do not allow marketing to focus solely on how to best communicate with customers, when to communicate with customers and across which devices. Brand management is much more than brand messaging. Creating and strengthening Trustworthy Brand Value is the goal of the business, not just finding the perfect messaging and media. 
  5. Create and implement a Plan to Win. A Plan to Win aligns the entire enterprise around creating and strengthening Trustworthy Brand Value. A Plan to Win puts the brand’s purpose, its promise, its five must-do actions (people, product, place, price, promotion) and its brand performance metrics on a single page. A Plan to Win is a brand-business roadmap for aligning all business units around the same goals, actions and measures. Create cross-functional teams. Trustworthy Brand Value is not just for marketers. Finance, legal, sales, HR, IT and all other functions have a role to play. 
  6. Maintain or increase product/service quality. Cutting quality to reduce costs is wrong. Data show there is better return on investment performance after bad times if a brand maintains quality. Value added is an advantage. A strong value-added business is the best defense in troubled times. A recent article stated that hotels are increasing room rates while not increasing the service experience. This is not the way market during adversity.
  7. Defend the profitable business that you already have. It is risky to focus on new products at the expense of beloved, existing brands. Focus on the business you do have before focusing on the business you do not have. Love the customers who already love your brand.

The time to guard against a recession is before the recession starts. Troubled times are trouble: but trouble for some does not mean the trouble for everyone. Do not just accept trouble; create trouble for others. Build and nurture your brands because your brands are your consumer protection. Your brands are a trust assurance policy for the consumer. “Troubled times” is not the threat; troubled marketing thinking is the threat. 

building great brands

Becoming a Great Brand

When times are tough, people look for brands upon which they can rely. People look for brands they can trust. This is why now is an excellent time to aim for brand greatness. 

Grand greatness has several basic components. Without these, the brand cannot be on the road to greatness.

First, be popular. Great brands are the popular choice. Marketing is a popularity contest. People prefer to buy books that are best sellers. They seek movies they think their friends are seeing or likely to see. People frequent restaurants that receive great reviews from their peers. People talk about popular brands. They recommend popular brands. They voice their opinions about popular brands.

Second, be a leader. Great brands represent undeniable leadership. Leadership is not about how big you are. It is about how big you act. It is not the number of stores or hotels or offerings or the size of the brand’s sales. Brand leaderships is about size of your ideas.

Third, have great aspirations. Great brands have great aspirations. Leading brands aim high. A great aspiration is the guiding force that provides the direction for all thought and all action on behalf of a business. 

Fourth, Be relevant. Great brands stay relevant. To remain relevant in a changing world is essential for brand health. Relevance is a key driver of purchase intent.  When a brand is no longer relevant, customers think the brand does not understand them anymore. Your brand’s promise is the contract with the customer. Make sure that you know what that contract entails.

Fifth, be consistent. Great brands stay consistent. Consistency is a hallmark of a great brand because consistency leads to quality. Quality is all about consistency. Quality is the consistent satisfaction of customer expectations. This means brand leadership must know what are the promised customer expectations. Brand leadership does not leave quality to chance. Inconsistency is ruinous. This ability to change (be relevant) and be the same (be consistent) is a marker of great brands. It is about being new and old – familiar and contemporary – at the same time: a critical, paradoxical element of astute and successful brand marketing.

Sixth, Be trustworthy. Great brands are trusted. A great brand is more than a trademark: it is a trustmark. Even though we live in an instant culture, trust cannot be earned instantly.  Trust cannot be bought. It must be earned over time. Being a trustworthy brand is not an advertising claim. Trust is built through the everyday reality of how brands behave toward all stakeholders, toward the communities in which they operate, toward the environment and so on.

These six elements are the table stakes for brand greatness. But, there are more components of a great brand. Our world has changed. People require a moral, principled set of commitments from a brand.  It is no longer acceptable to think only about the brand you are building today: it is an imperative to think about the brand’s social impact on tomorrow. 

A great brand must commit to a four-point ethical framework: 1) It must commit to being a Credible Source; 2) It must commit to a Reputation for Excellence; 3) it must commit to being a Pillar of Integrity; and, 4) It must commit to a Responsibility Ethic.

Being a Credible Source means consistently providing true, trusted information about itself and its actions.  All stakeholders should have confidence in what the brand communicates. And, all stakeholders should believe that the brand would answer questions accurately and truthfully. When stakeholders perceive a brand to be a credible source, they use the brand’s past actions to predict the brand’s future behaviors. 

Social media is struggling with the fact that a lot of what is posted is not credible but, in fact, misleading. Facebook has changed its corporate name to Meta hoping to distance its VR vision from being tainted by its social media brand’s issues. Google is positioning itself as a credible source with its corporate ads touting its safety and its enterprise services such as Google Workspace.

Having a Reputation for Excellence means continually behaving in the same quality manner each time, every time, across geography. Reputation signals past accomplishment. Reputation is the amalgam of the brand’s past behaviors, and past results. Reputation describes the brand’s current and future ability to deliver valued outcomes across multiple stakeholder constituencies. Having a reputation for excellence is a competitive advantage.  Because a brand’s reputation is the collection of stakeholder perceptions over time, the brand manages its reputation but is not the creator of its reputation. Toyota has an excellent reputation in automotive, a reputation that extends to its Lexus brand. 

Being a Pillar of Integrity means making sure that all actions and behaviors, internally and externally, have stakeholders’ best interests at heart, for today and for tomorrow. It means that external constituent groups perceive the brand as fair, impartial, honest, open-minded, truthful, and just.  Apple has taken on users’ concerns about privacy by offering the ATT framework. The ATT framework, launched in 2020, gives users a choice on whether they wish to be tracked or not across apps and websites owned by other companies. 

Having a Responsibility Ethic means the brand behaves as an aware, effective global citizen acting and reacting positively on behalf of people, communities, nations, the planet, and society in general. Patagonia is a prime example of a brand with a responsibility ethic. It has an activist commitment to the environment and social issues.

Recently, Google has been enmeshed in a discussion of sentience within its LaMDA project. A researcher on the project believes he is speaking with a sentient being. Google is repudiating this. LaMDA, (Language Model for Dialog Applications), is one of several large-scale AI systems that has been trained on large swaths of text from the internet and can respond to written prompts. They are tasked, essentially, with finding patterns and predicting what word or words should come next.  

What is Google’s ethical responsibility? 

In a statement, Google stated that LaMDA went through 11 “distinct AI principles reviews,” as well as “rigorous research and testing” related to quality, safety, and the ability to come up with statements that are fact-based. “Of course, some in the broader AI community are considering the long-term possibility of sentient or general AI, but it doesn’t make sense to do so by anthropomorphizing today’s conversational models, which are not sentient,” Google concluded.

Being a popular, leading, trustworthy, consistent, relevant brand with great managerial talent and processes along with innovation and renovation are all critical elements. But, in today’s world, these alone will not take the brand from good to great. 

Great brands are not only defined by the quality of their products and services. Great brand leadership must not only ask, “What is the future we wish to create in which our brand will win?” Great brand leadership must also ask, “What is the impact my brand will have on that future world in which my brand will win?” 

In order to journey onward to that world, brands must commit to the ethical framework of being a credible source, having a reputation from excellence, being a pillar of integrity, and having a responsibility ethic.

Brand Loyalty Is Not Dying

Brand loyalty is not dying. But, you would not know this if you are paying attention to the business press.

Recently, there have been many articles describing the impact of higher prices and lack of product availability on brand loyalty. These articles and opinions state that when consumers do not see their favorite brand due to supply chain issues or price increases, consumers buy some other brand. The conclusion is always that consumers are no longer loyal to their favorite brands. In most cases, the stories feature supporting data showing that consumers are shifting their buying behaviors to new brands or familiar but never purchased brands such as private label brands. 

It is possible that by switching brands, consumers may find a new brand that they love. And, that would be great. However, assuming that a change in purchase due to difficult in-store circumstances is destroying brand loyalty is just not true.  

The pundits, journalists and researchers seem to be overlooking some basic tenets of brand loyalty. Let’s look deeper into brand loyalty.

One: brand loyalty has two dimensions: behavioral and attitudinal. Behavioral loyalty refers to purchase frequency. Attitudinal loyalty refers to the emotional commitment a customer has for the brand. It is a mistake to look only at the behavioral aspect of brand loyalty, as it is possible to create frequent buying based on deals, lack of availability and/or price changes. Repeat purchase in and of itself is not brand loyalty. And, deal loyalty is not real loyalty. Attitudinal loyalty that is based on deep brand commitment, affects repurchase intentions, consumer willingness to recommend to others, and price tolerance. Repeat purchase based on attitudinal commitment to the brand is the true measure of brand loyalty. Focusing on behavioral loyalty alone is misleading.

Two: brand loyalty is not an on-off switch. Customers are not loyal or disloyal. Brand loyalty is a matter of degree. Customers are more loyal or less loyal.  It is the degree of commitment to a customer’s preferred brand. As brand loyalty increases resistance to competitive brand marketing activities also increases. Switching to a new brand due to in-store issues may not generate a lot of loyalty towards the new brand. The new brand may be a stop-gap measure. 

Three: in our data-driven world, marketers tend to look only at behavioral datasets. Any review of the marketing literature will reveal that loyalty is almost always defined behaviorally. Either brand loyalty will be defined as a share of requirements measure or as a pattern in choices often using an experimental design. Citing a correlation such as not-on-the-shelf relative to buy-another-brand is not the same as causality. Having to but a different brand does not necessarily mean that the favored brand in no longer the favored brand.

So, in “Brand Loyalty Takes A Hit From Inflation,” The Wall Street Journal, cites two separate research studies, both focused on consumer behavior. One of these studies showed that if a favored brands were not on the shelf, the favored brand lost “share of wallet” – a share of requirements term the study uses for brand loyalty.  Share of wallet is a term for the percentage (“share”) of a consumer’s expenses (“of wallet”) that a consumer spends on a brand. There are some data showing correlations between share of wallet and brand loyalty. However, share of wallet is sometimes defined as a consumer’s purchase of a particular brand over a period of time. 

For example, a consumer may stop at the same drive-thru for breakfast every day, increasing the frequency of usage. That frequency may be attributed to other things than brand loyalty such as being on the right side of the street, having a double drive-thru or breakfast promotional deals. Or, a person may commute frequently by plane to a city serviced by only one airline. That airline has a huge share of wallet from this traveler but it is not necessarily a reflection of brand loyalty. Brands do not own the consumer. Brands should not confuse repeat purchase with brand loyalty.

Four: sadly, The Wall Street Journal article associates “convenience” with brand loyalty. Convenience is not a good criteria for brand loyalty. No one wants inconvenience. All brands must be easy to choose, easy to use and provide ease of mind.  Inconvenience is a cost that consumers factor into their assessments of brand worth. Being “convenient” is a generic definer.

Five: the era of exclusive brand loyalty (i.e., loyalty to one brand in a category) ended ages ago. We live in a world of multi-brand loyalty. People used to say, “This is my favorite exclusive brand.” Now, they have more than one brand to which they are loyal because they see more than one brand that is good quality and provides value. Consumers have a consideration set of brands to which they have varying degrees of loyalty. Consumers may find that their first choice brand is not available nor affordable but their second choice brand is available and affordable.

Six: it used to be that a loyal consumer would buy their first choice brand even if it meant shopping at a second store. But, right now, what with the price of gasoline, no one is really interested in driving to a second store for their favorite brand when that brand is not on the shelf in the first store. Shopping around for a bag of laundry pods is just not affordable. The consumer will probably switch to an available brand. Data from Kroger, the large grocery chain, supports this: “More than 90% of consumers say they will buy another brand if their preferred choice” is not available. Assuming that this means brand loyalty is dying is a stretch. Consumers may still harbor attitudinal attachments to favorite brands.

Seven: at some point, price sensitivity pops up, no matter how loyal the consumer. Many favored brands thought they could pass along supply chain surcharges to the consumer. These brands recognized that a loyal consumer is less price sensitive. But, these favorite brands did not conduct price sensitivity research to learn just how much prices could be raised. These favorite brands did not consider that at some point the consumer will see the cost of the brand as too high for the brand experience. Instead of rewarding loyal consumers, brands took advantage of them by raising prices too high. 

Today’s economic brand-business situation is similar to the early 1990’s. At that time, there was a lot of hand-wringing over the imminent death of brand loyalty. Step into the time machine and go back to April 2, 1993, a day of stock market infamy called Black Friday. On that day, Marlboro cigarettes announced that the brand (one of the world’s most popular and profitable, as The Economist pointed out) was losing smokers to cheaper brands. Of course, Marlboro’s stock tanked. But so did the stocks of other consumer goods. Polling and other market research showed that brands had raised prices creating huge price disparities between them and store brands. The Economist (June 5, 1993) described the situation as follows: 

“Partly this is due to recession and to consumer-goods firms jacking up prices on many brands until there is a huge discrepancy with own-label rivals.  Last year Kraft was forced to slash prices when it began losing sales to own-label cheeses that were 45% cheaper.  Last month P&G cut prices for the same reason on its two leading brands of nappies, Pampers and Luvs.  Consumers have discovered that the quality of many own-labeled goods is just as high as that of established brands.”

Of course, since then, most of these branded consumer goods have not faded away. Nor have their cadres of brand loyalists. Brand loyalty did not disappear. And, it is not disappearing now.

As for the new brands consumers are now buying, these brands should be employing brand loyalty management techniques to convert category shoppers (those who are brand indifferent and see brands as parity) up the loyalty ladder to the point where they become “brand enthusiasts. These loyal consumers have a propensity to account for a greater share of a brand’s overall profits.  They are also less price sensitive and will actually pay more for a product up to a point. Creating and reinforcing brand loyal consumers is the only enduring basis of growth.

CMO Voice Of The Customer

The CMO Must Be The Voice Of The Customer

The primary role of the CMO is to be the voice of the customer for the brand-business. The CMO embodies the customer informing the organization. Customer understanding and insight generation are the CMO’s highest priorities. Sure, the CMO has numerous other functions these days. But, being the voice of the customer must be the number one function.

CMOs must embed themselves in customers’ psyches and, then, create future scenarios and actions to keep the brand-business viable, especially during volatile, uncertain times. According to a new book from two Deloitte principals, one of the main CMO roles is to translate customer needs into “… trendspotting that will then generate observational insights” that will hopefully “… shift” the brand-business strategies. 

To do this well, CMOs cannot just rely on interpreting digital data. These data provide answers on what customers have done and what they are doing. Based on past and current behaviors, data can provide predictions. But, these predictions are behavior-based and do not allow for consumers changing their minds and their behaviors. Most data do not tell the CMO why customers are behaving in these ways. Knowing what is happening is interesting. Knowing why it is happening is imperative. Knowing what is information. Knowing why is insight. This means the CMO must not just focus on what the customer wants. It means focusing on problems and concerns. For which the brand-business can create solutions.

CMOs need to be interacting with consumers daily, in real time, translating what into why. With this knowledge, the CMO must act. CMOs must allow their informed judgments to provoke strategic actions. Without actions, the knowledge is useless. As the well-known, well-respected economist and Harvard Business School professor Theodore Levitt said, “Ideas are useless unless used. The proof of their value is in their implementation. Until then they are in limbo.” Professor Levitt believed that just having the insights without taking the responsibility for implementation is irresponsible.

According to the Deloitte authors, CMOs are supposed to be the “sensing system” for the organization. As you will read, that sensitivity was not as acute as it should have been over the past year.  Unfortunately, for some big-box retailers, a lack of real-time customer knowledge and strategic action triggered bad, grim news.

Target, Walmart, Big Lots and Wayfair are just a few retailers that admit to being blind-sided by changing consumer behavior and the speed of this changing consumer behavior.  

Statements from executives indicate that during the pandemic, these businesses went out of their way to give customers what they wanted. Target and Walmart went as far as hiring their own container ships to bring in goods that consumers desired.

But, with lock-downs ditched and with inflation rearing its ugly head, consumers have changed their minds. Products consumers wanted during the pandemic are not the items they want post-pandemic. Retailers are stuck with inventory that will need to be sold with steep discounts. Such a scenario eats into margins, affecting profitability and earnings.

Of course, there are multiple reasons for this disastrous situation. Consumers stuck at home bought goods for the home and for dressing at home. That balky washing machine could no longer be ignored. It had to be replaced. Dressing for Zoom meetings did not require that buttoned-up office look. US manufacturing lines were hindered due to operators calling in sick with coronavirus. Overseas manufacturing was also slowed. Ports faced similar issues: longshoremen get sick, too. Containers piled up at piers.

When these backs-ups started to ease up, the products in-store were no longer desired. As Bloomberg reported, retailers have “too much stuff” that no one wants and is now piled up in warehouses and stores.

This current dilemma is not due solely to supply chain issues, although supply chain is a driving force for the inventory mishaps. CMOs could have provided better real-time intelligence. Although knowing the customer intimately could not have prevented the current inventory situation, it definitely could have worked to prevent the scope of the current inventory situation. CMOs could have been quicker to alert the brand-business to rapidly changing customer attitudes and behaviors.

CMOs had an amazing opportunity to get ahead of the pandemic. However, The CMO role is now tasked with far-ranging, multi-functional responsibilities. CMOs’ array of functions – digital transformation leader, personalized customer experience leader, leader of customer-focused data capture and usage, and customer data privacy captain – means that there is less time allocated to being the voice of the customer. 

Reading the press reports, it is clear that real-time consumer intelligence could have been better. Predictive analyses that forecast demand and potential disruptions to inventory are terrific tools. But, in a volatile environment, there needs to be a more intense focus on the customer. The retail brands experiencing the worst inventory pile-ups are all admitting that there needs to be a stronger focus on customer understanding.

As reported in The Wall Street Journal, Brian Cornell, Target CEO, told investors, “We’ve had some additional time after earnings to really evaluate the overall operating environment.” This includes “watching consumers’ behaviors as they face high rates of inflation.” He added, “the demand signal has changed.”

The CEO of Big Lots, Jonathan Ramsden, told The Wall Street Journal, “We didn’t anticipate the abruptness of the change in consumer behavior.” Suffering from excess inventory, Big Lots’ net sales fell 15% in the quarter ending April 30th.

Macy’s CFO, Adrian Mitchell, said, “We know that our ability to maintain margin depends on our understanding of consumer demand within and across categories. A spokesperson for Macy’s told The Wall Street Journal that the brand had anticipated declines in certain popular pandemic categories, it was just that “The shift happened at a quicker pace than expected.”

There is an urgency to truly understanding the customer. As Andrea Felsted writes for Bloomberg, retailers are soon going to be ordering for the holiday season. What will consumers want to purchase?

This current situation at these remarkable retail brand-businesses should be a wake-up call for the C-suite’s perspective on the value of the CMO. Being the voice of the customer must be the highest priority of the CMO’s role. When a brand-business loses its real-time connection to customer behavior and customer attitudes, the brand-business suffers. Even when there are extenuating circumstances such as supply chain issues, taking your eye off of the customer creates losses. Let’s make sure that the CMO is the brand-business’ is the voice of the customer.

covid 19 brand effects

Covid-19 Killed Either/Or

Demographers say that aside from an apocalyptic event, demography is destiny. A global pandemic can be considered an apocalyptic event. Covid-19 did not just eliminate the lives of millions worldwide. In developed nations, Covid-19 upended or fast-tracked existing trends that have now changed the landscape of dozens of categories. The effect on brand-businesses has been immediate, profound and mind-blowing. 

At the core of these tumultuous changes is the idea that people want brands to satisfy contradictory needs. The days of trade-offs are over.

It used to be that brands could survive by doing one thing very well. And, although, there are proponents of mono-positioning thinking, the days of one brand-one benefit are long gone. Now, we expect brands to satisfy two conflicting needs at the same time. Covid-19 killed the idea of either/or: post-pandemic, we wanted the best of both and Covid-19 handed it to us on a silver platter. 

Welcome to the Paradox Planet where trade-offs are no longer acceptable. Brand-businesses have no choice but to adapt.

The pandemic made us feel uncertain. When life is uncertain, difficult choices feel more challenging. Making a trade-off – even a simple one -requires too much personal justification for not enough benefit. Rather than having to choose or accept a lesser solution – a solution that is only good enough, post-coronavirus, we seek the maximization of contrary needs. We do not want either/or; we want both. Optimizing contradictory needs into a relevant, differentiated, trustworthy paradox is now defining many aspects of our everyday lives. Entire categories of business are delivering paradoxical experiences. This delivery of two conflicting ideas at the same time is an outcome of the pandemic’s massive uncertainty… and a game-changer for brands.  

It is true that many of these categories were evolving prior to Covid-19.  The evolutions were seen as trends. These changes are no longer trends. These changes are entrenched.

The forces of Covid-19 affected categories and their brand-businesses in ways beyond health and wellness. Just to name a few, the pandemic:

  • Changed the way we view entertainment, 
  • Changed the way we buy and sell cars, 
  • Changed the way and where of work, 
  • Changed the way we approach doctor visits, 
  • Changed the way we learn and educate, 
  • Changed the way we exercise, 
  • Changed the way we shop for groceries, and 
  1. Before Covid-19, we went to theaters to see the new movies. At home, we could stream with Netflix and watch original series and existing movies, but not always the blockbusters. During Covid-19, we were able to watch movies in their first run directly at home. New streaming channels arrived.  We were able to expand our viewing across multiple streaming brands with extraordinary film libraries. Now, we have the best of both. Theaters are open and we can watch new movies via streaming. Our choices are not theater or home viewing. We have the best of both. 
  1. Before coronavirus lockdowns, we purchased cars at dealerships. Yes, Carvana was taking customers. But, it was just the beginning. During the pandemic, public transportation was mostly shunned. Many people opted for buying a car. But, going to a dealership was fraught with fears about Covid-19 exposure. Online auto purchasing became normal. Post-pandemic, car buyers and sellers actually can have the best of both worlds. There is the option of going to a dealership or there is the option of having Carvana deliver and pickup without the dealership. Carvana has made the process easier, more convenient and eliminated the distaste that many have when it comes to buying or selling a car. Since Carvana’s inception, there are now numerous online automotive experiences like Carvana, including ones from dealerships. As for the dealerships, these exist to sell new models. You can only buy a new Ford electric F150 Lightning at a Ford dealership.
  1. Prior to coronavirus, it was rare to have people working remotely. Covid-19 changed this. Post-coronavirus, working remotely is commonplace. And, employees are balking at returning to the office.  Coronavirus lock-downs demonstrated that productivity is not especially linked to being in the office.

Elon Musk aside, hybrid scheduling is the new normal, unless you work in hospitality or in a factory or some other serviced role such as in a car dealership or a doctor’s office. A day does not go by without some consultancy or business press writer commenting on how the basic concept of the office has changed. Many employees are opting for 3-day in the office work weeks while others are sticking to 100% remote work. Employers are being creative in how they wish to entice employees back to the office. The New York Times wrote extensively about employers who are bending over backwards to make office workers happy. Employees who do not have to be on site, now can have both work at work and work at home options. For example, this September, Airbnb will be instituting a policy allowing its 6,200 employees to work for up to three months a year from any of Airbnb’s 170 countries and regions of operation. 

According to Colleen Ammerman at director of Gender Initiative at Harvard Business School, a larger issue stemming from the change in how we work is “… rethinking what it means to be on a leadership track, what it means to be a high performer and get away from that being associated with being in the office all hours.” Worker stereotypes are changing. 

  1. Technology has made telemedicine a reality for many people. That doctor’s office visit does not have to happen unless there is a real need for such an experience. For example, special tests and blood draws require in person visits. But, finding out the results of those tests do not. The availability of home testing is growing. Many medical centers and doctors’ groups have online websites where patients can log in to see their tests, their visit summaries, their appointments and their medications. It is all very transparent. Patients can now decide whether it is worth the trip to have a doctor visit.
  1. Putting aside the travails and loneliness of elementary-through-high school remote learning, technology allowed classes to continue. Educators were able to sort out the benefits and negatives of schooling at home. Many schools have used that learning to create hybrid education plans. At universities, there was creativity, for example, in how to generate MBA networking when in-person networking became impossible. Brands like Coursera, mass open online courses, increased in popularity. As with the other categories, education, learning and libraries benefitted from both online and in-person teaching. Students and educators have options and do not have to trade off.  

According to one international educational study on the role of cloud-based video in education, “Despite returning to in-person learning, many institutions successfully implemented hybrid solutions…. 98% of institutions have students taking at least one hybrid course this academic year with 58% responding that over half the student body will have at least one course that is both in-class and online. 95% of schools will have some students that are receiving a fully remote education.”

  1. When gyms closed, in-home fitness expanded meteorically. Brands such as NordicTrack, and Bowflex which have been around for some time and Peloton, a relative newcomer, saw incredible increases in activity. Even though gyms are now open, coronavirus showed the benefits of working out at home or through an app. Peloton Outdoor provides training for running and walking, no studio or home needed, just the great outdoors.

 A tour through You Tube indicates that several fitness centers are combining in-person and virtual for workouts. As with education, video can be very engrossing. Although instructors enjoy the feeling of training rooms of engaged individuals, instructors are also conscious of their physical health, especially since individual status of exercisers is unknown. Hybrid solutions balance the needs of exercisers with the needs of their trainers and coaches.

  1. Grocery delivery was available before our virus lockdowns. But, it was the pandemic that turned in-store shoppers into online shoppers and delivery devotees. It is a habit for many that is here to stay, especially for people with full-time jobs. Instacart, Amazon Prime and others became life savers for those who dared not venture outside and into a store. The grocery stores also entered the fray. As did dairies. In Seattle, WA, a local dairy delivers milk, eggs, butter and other dairy products as well as items from a local bakery such as croissants to a tin box place outside your door. Additionally, the delivery companies have now branched out into same-day delivery of more than just groceries… regardless of order size.

As complicated as these changes are for brand-businesses, these changes are creating brand value. In today’s social, economic, political, institutional, personal and business environment, finding solutions to address contradictory has helped to create and build value for customers, shareholders, employees and other stakeholders. Forcing customers to make either/or decisions is yesterday’s behavior. People want the optimization of conflicting benefits. Winners will be brands that satisfy paradoxical benefits.

mercedes benz brand icon

Mercedes-Benz’ New Strategy May Be Flawed

There is angst in Stuttgart, Germany. The executives at Mercedes believe that Mercedes has lost its luxury caché. Part of this concern has to do with its brand image. And, part of this has to do with its valuation in the eyes of investors and analysts. It seems that Mercedes is troubled that it is valued at a lower multiple than, well, tobacco. Mercedes CEO, Ola Källenius, wants analysts and investors to reconsider how they assess the brand’s PE multiple, especially when compared to Ferrari and Tesla.  

At its analyst and investor event in Monaco, Mercedes “pleaded” with investors and analysts “to take another look at Mercedes”. In order to raise its valuation in the eyes of the financial community, Mercedes is rebranding itself to become “the world’s most valuable luxury car brand”.  According to its new brand ambition, Mercedes will focus on luxury in order to woo the financial community.  In fact, Financial Times reporting indicates that the new Mercedes strategy is designed to entrance the financial community.

Mr. Källenius is said to be frustrated. He is quoted as saying, “Our (price to earnings) multiple now is kind of stuck with every other incumbent… which we don’t think reflects the true value of this company. I am not dreaming about (a multiple of) 20. We are not crazy, but five or six is not the right number.”

So, now, the brand’s new strategy organizes Mercedes vehicles into three luxury groups: Top-End Luxury, Core Luxury and Entry Luxury. Top-End Luxury will have the lion’s share of resources, including the Maybach brand. Core Luxury will primarily focus on E-Class vehicles while Entry Luxury will have only 4 models. Three entry models are being axed, as there is concern that these less expensive models have tarnished Mercedes luxury perceptions. Mr. Källenius told the business press that luxury has always been at the core of the Mercedes brand. But, now luxury needs to be woven into its strategy.

There are two problems with the new Mercedes reorganization and mission. First, Mercedes is turning itself inside out to become a darling of analysts and investors rather than customers. Second, Mercedes has confused luxury and prestige. This confusion will affect its marketing and communications with its customers.

  1. Focusing on Satisfying Analysts Rather Than Customers

In its quest to raise its PE ratio with analysts and investors, Mercedes is admitting that it will do whatever it takes to create an organization and a brand that analysts and investors will love. Being analyst/investor-driven may not be in the best interest of customers or in the best interests of the brand. 

Brand-driven, customer-driven growth must be the goal of the brand’s management. This is how the brand’s management links its business performance to brand performance. How you manage your brand is how you manage your business and vice versus. The goal of a brand’s management must be about profitably attracting and retaining customers. This leads to quality revenue growth and enduring profitable growth.  

Brands must focus on satisfying customer needs, rather than catering to shareholder interests. Losing customer focus is a certain path to trouble. The future will belong to customer-focused businesses that are best at attracting and retaining customers.

  1. Confusing Luxury and Prestige

Unveiling its new strategy in Monaco, Mr. Källenius made it clear that he wanted Mercedes to be rated the same as Tesla and Ferrari.    Tesla and Ferrari may not be in Mercedes’ customer-perceived competitive set. Tesla and Ferrari are in Mr. Källenius competitive set.

Tesla and Ferrari are different types of brands than Mercedes. Tesla is not a luxury brand. Neither is Ferrari. Tesla and Ferrari are prestigious brands. These two concepts – prestige and luxury – tend to be used as synonyms. This is a marketing mistake. And, for Mercedes, it is a strategic mistake. Mercedes may have mis-defined its competitive set for the sake of proving itself to investors and analysts.

The misuse and muddling of these two concepts – prestige and luxury – is a problem for luxury brands and for prestigious brands. It is also a problem for brand owners. The two words are different, denoting different brand and cultural experiences. 

Prestige and luxury should not be used interchangeably. Prestige is something a person assumes; it is bestowed; it is given; it is leveraged. Prestige is objective. Luxury is a state of being defined by great comfort, extravagance and the absence of vulgarity. Luxury is subjective. A prestigious brand is not necessarily a luxury brand and a luxury brand is not necessarily a prestigious brand. 

Although not mutually exclusive, prestige and luxury deliver different functional, emotional and social benefits. And, the values of the target customer may be profoundly different.  For example, a power seeker will want to associate with goods and services that bestow an image of control over and a sense of elevation relative to others. This does not mean that this power seeker will refuse to buy luxury items. What it does mean is that the power seeker uses the luxury items not for the experience but for stature and reputation.

Bernard Dubois of the HEC School of Management, a French grande écoles, wrote a journal article in 2002 on this subject of prestige and luxury. He reported, “… prestige is based on unique human accomplishment” while luxury refers to the “benefits of refinement, aesthetics and sumptuous lifestyle.” His research demonstrated that prestige and luxury have different consumer perceptions that if ignored have “substantial consequences” for a brand. Prestige was associated with admiration for a person or for an object while luxury reflected perceptions of comfort and beauty. 

Professeure Elyette Roux teaches at the University Paul Cézanne in the IAE Business School, in Aix-en-Provence. Professeure Roux is considered to be France’s most reputed (luxury) brand researcher. 

In 1999, Professeure Roux wrote a “white paper” on understanding luxury, describing the difference between prestige and luxury. She wrote, “Prestige is the act of striking the imagination, demanding respect and admiration. Prestige implies that one is looking for power over others, impose power over others.” Luxury is not about seeking power over others. “Luxury is more a way of being, a way of living. Luxury refers to pleasure, refinement, and perfection as well as to rarity, and the costly appreciation of that which is not a necessity.”

According to the French, and they should know, luxury is “a way of living represented by great spending to show elegance and refinement… it is a way of being rather than a way of appearing.” Professeure Roux regrets that the concept of luxury has come to be associated with ostentation, which is all about “showing”. In her opinion, luxury is this paradox of total rejection of everything economical and the aesthetics of sensory consistency. Coco Chanel was quite clear when she said, ‘Luxury must be comfortable, otherwise it is not luxury.”

The American sociologist, and author of The Power Elite, C. Wright Mills, wrote, “Prestige is the shadow of money and power.” Synonyms for prestige are status, standing, stature, reputation, repute, regard, fame, note, renown, honor, esteem, celebrity, importance, prominence, influence, eminence, and more. These are not synonyms for luxury.

Ferrari is a racing vehicle. And, it is a prestigious brand. Ferrari’s website says so. 

“The Prancing Horse symbolises exclusivity, performance and quality all over the world. 

Our prestige is built upon decades of sporting success and the inimitable style of our cars, which are unique in their innovation, technology and driving pleasure.

We craft exclusive, authentic and memorable experiences for our clients in everything we do.”

Tesla is a prestigious brand. And, it is a brand that is not afraid of offering less expensive, entry level models. The brand is prestigious because of its credibility and innovation in sustainability and environmental impact. Being associated with Tesla says a great deal about a person’s ecological commitment, whether warranted or not.

For Mercedes, using Tesla and Ferrari as its competitors, from a marketing standpoint is a mistake. There is no indication in the new strategy that actual customers see Tesla and Ferrari as brands among which to choose. 

Mercedes is correct in wanting to emphasize its luxury pedigree. Perhaps, over time, its luxury perceptions have diminished. Certainly, some investors and analysts think so. In fact, one automotive analyst at the Monaco event told Financial Times that although its Maybach brand is luxury, the Mercedes brand is “everyday” as in common.  

Mercedes should clarify whether its reorganization and new strategy are designed to create customer love and loyalty. If it has made changes just to satisfy shareholders, then this is a terrible mistake.

Additionally, brands must identify whether they wish to deliver a promised experience of prestige or a promised experience of luxury. And, then, uphold whichever is chosen. Prestige is about the power of respect, status, and reputation. Luxury is “a world of creations that make life more beautiful.” Brands and their owners must understand and never confuse or misuse these differences.