Ian Schrager Hotel Segmentation

Ian Schrager May Be (Thankfully) Transforming Hotel Segmentation With His Public Brand

/in /by

The hotel industry uses a segmentation designed by consultancy STR that is all about price, service and amenities. This segmentation uses language that most humans would find bizarre when thinking about their hotel stay. No matter how many consultants provide insight to hotel groups, the default is always price, service and amenities. The STR hotel segmentations basically looks like this: Economy, Mid-Scale, Upper Mid-Scale, Upscale, Upper Upscale and Luxury.

But, now, possibly, as intriguingly described in Bloomberg BusinessWeek, Ian Schrager, entrepreneur, hotelier and co-founder of famed Studio 54, has decided to defy the conventional hotel segmentation approach in describing his vision for his new hotel idea. Mr. Schrager wants to create hotels that are luxury but without the services and amenities. Mr. Schrager wants to create hotels with luxurious experiences that do not depend on multiple on-site staffers and niceties.

In other words, M. Schrager is looking at the hotel from the guest’s standpoint, appealing to their emotional and social rewards associated with experiences rather than the owners’ views as to “… how little can I offer for the room fees I am charging?”

According to Mr. Schrager, the idea for expanding and enhancing his already established lower Manhattan Public hotel is based on his observation that “… luxury has a new and different meaning today. Luxury right now is having freedom – freedom from hassles to make everything easy, freedom of time, freedom to devote your personal tie to the things that matter to you.” Mr. Schrager envisions a chain of these hotels.

This new luxury concept turns the standard STR segmentation on its head. Forget the linear track from Economy to Luxury. In this new world, Economy and Luxury are merged: a luxurious lifestyle feel of bold and cool delivered minimal staff and lack of goodies. Mr. Schrager compares his new Public concept to his legendary (notorious) Studio 54. The aura of luxury is delivered socially – a mixture of celebrities and locals of all ages– rather than by “white glove services that are over two hundred to three hundred years old.” 

The new Public will be a new “genre.” At its core is a “soul of luxury” packaged into a lifestyle hotel configured with less expensive, limited services. How is this such an explosive thought? Here are the standard STR definitions of hotel segments (see STR online definitions):

Economy hotels: Tend to have a mix of mostly K-type (king-size) rooms, offer only a self-serve breakfast and usually lack function space and recreational facilities.

Midscale hotels: Usually have a mix of mostly K-type (king-size) rooms, offer self-serve breakfast only. They may have limited function spaces (if so I typically is about less than 1 seat per key) and offer fitness room and/or swimming pool.

Upper Midscale hotels: Typically have a mix of mostly K-type (king-size) rooms, may offer full service or fast casual model F&B facilities. They offer a function spaces (about less than 2 seats per key), fitness room and may have a pool.

Upscale hotels: Typically have a mix of mostly K-type (king-size) rooms. May offer full service or fast casual model F&B facilities. They offer a function spaces (about less than 3 seats per key), fitness room and swimming pool.

Upper Upscale hotels: Typically have a mix of mostly K-type (king-size) rooms and Club level rooms, they will offer at least 1 full service 3 meal restaurant plus one bar or lounge. They offer a function spaces and business center (a minimum than 3 seats per key), fitness room and swimming pool and they might have a spa.

Luxury hotels: Typically have a mix of mostly K-type (king-size) rooms and Club level rooms. Typically, they have two or more restaurant plus one or two bar/lounges. They offer a function spaces and business center (a minimum than 3 seats per key), fitness room and swimming pool and spa facilities.

As you can see from the definitions of the hotel segments, the merging of Economy and Luxury is antithetical to hotel owners.

Of course, there is a financial benefit to an economy luxury hotel. Margins are better at economy style hotels. Luxury hotels have much more overhead what with staff, bathrobes, slippers, towels, restaurants and spas. Since Mr. Schrager does not franchise his hotels, he is quite conscious of margins, according to Bloomberg BusinessWeek.

But, just imagine the merging of both ends of the hotel segmentation. Imagine a segmentation that includes the guest’s emotional and social desires. Mr. Schrager believes that the first iPhone exuded these same qualities of desire, luxury, simplicity, “design and utility.” When you first opened the iPhone box it was a “wow” moment.

If Mr. Schrage pulls off this new concept in hospitality, and there is no reason to doubt his success, the standard approach to hotel segmentation may forever be altered. No potential guest discusses their hotel stay using language like Upper Upscale or Upper Mid-Scale. The hotel industry would be able to create properties designed to satisfy guests’ functional, emotional and social benefits while reflecting guests’ personal values.

Trust Busting At CNN: CNN’s Public, Acrimonious Internal Volatility May Damage Its Brand

/in /by

There is turmoil at CNN. What should have been an internal situation is a never-ending series of headlines. Reading about the problems surrounding actions by former CEO Chris Licht due to his “perceived missteps” and his candid commentary in The Atlantic is unfortunate. It brings front and center instability at CNN. CNN employees are distraught that the news channel has become the news.

What is more unfortunate is the damage all of this agita may be doing to the CNN brand. The issues raised are organizational as well as journalistic. Yet, one has the feeling that this mess is messing with the CNN brand. And, that is a problem. For years, CNN has positioned itself as “The Most Trusted Source in News.” The public airing of internal mistrust is extremely harmful to the CNN brand. Employees want to believe that their leaders are trustworthy. When employees lose trust, users, in this case, viewers, may wonder if they should question the trustworthiness of the brand-business. If employees do not trust the brand, viewers may be questioning their trust in the brand.

Putting the internecine issues aside, the CNN brand is in trouble. Diminishing or lack of trust is frightening from a brand-business stand point. The CNN brand stands to lose its credibility. Makes you wonder who is minding the CNN brand? Who is in charge of trustworthy brand leadership at CNN? 

In all of the press, no one has mentioned the CNN brand. The Licht fiasco was based on the idea that the CNN brand should be perceived as “balanced.” That means the reporting should more evenly cover all sides of political conversations. But, as The New York Times points out, the idea of “balance” focused on what CNN should not be rather than what it should be. And, more problematic from a brand standpoint, “balance” remains a vague, undefined concept.

The closest reference we have about the future of the CNN brand is a quote in The New York Times by Warner Bros Discovery CEO, David Zaslav. He said that he is proud to “… have a chance every day to be a purveyor of facts and truth in journalism and to be a place that people can go to have a national conversation about what’s going on in the world.” But, trust? Truth is fact. Trust is feeling. Talking facts is good. But, if you are not rebuilding the trustworthiness of the CNN brand, the CNN brand is in trouble.

Trust is critical. Trust is a precious asset. We live in a world of distrust and mistrust. Trust in institutions has declined precipitously. There is massive distrust of public authorities, declining trust in business and lack of trust in traditional establishments. People prefer to trust themselves, peers or ranking and rating sites for trusted information. People are also willing to use misinformation or “alternative facts” or other sources. We live in an increasingly skeptical, questioning and demanding society. 

Trust is at the heart of every relationship. The literature on trust is vast and complex. Social scientists, market researchers, political analysts, psychiatrists and psychologists, academics and others view trust as an essential element for any type of relationship building. And, because of all of this interest, trust has many definitions.

Trust is a willingness to rely on an exchange partner in whom one has confidence. Trust is a perception of confidence in a partner’s reliability and integrity. Trust is an expectation derived from the ability to perform (expertise), reliability and intentionality. There is research that focuses on the role that trust is increasingly central in building a strong, durable, profitable, growing and enduring brand. Trust is considered to be an important mediating factor on customer behaviors before and after the purchase or use of the brand. Other research indicates that trust causes long-term loyalty strengthening the relationship between two parties, in this instance, the brand and the viewer.

When it comes to brand, trust is the confidence one has in relying on a brand to live up to its promise and its reputation of authority based on leadership, credibility, integrity and responsibility. Trust is the willingness of the consumer to rely on the ability of the brand to perform its stated functions.

Trust is an important driver of enduring, profitable growth.  As trust increases, so does brand value. If there is no trust, there is no brand value. Trust capital is a significant element of organizational wealth, along with financial capital, intellectual capital and human capital. Creating trust capital allows a brand-business to generate a trust reserve that helps the brand-business through crises of brand-business character.  Trust capital is the customer confidence in the authority, credibility, integrity, leadership and responsibility of an organization to deliver promises of value to stakeholders. It remains to be seen if the years of positioning itself as the most trusted source in news has generated a bank of trust capital large enough to see CNN through this turmoil.

A brand is a promise of a relevant, differentiated expected experience. A brand is about an experience the customer will have. Failure to deliver the expected experience forces the customer to reconsider the trustworthiness of the brand. 

The thing about trust is this: it can take years to build, but it can dissipate in an instant. And, once gone or diminished, it can be years before it is rebuilt, if it can be rebuilt. Trust is earned and re-earned over time. Trust is lasting but when it is damaged, the bond can break quickly.  Trust can be lost in an instant. Trust cannot be bought. Trust cannot be claimed. 

It is too soon to know whether CNN’s brand-business trustworthiness has been tarnished by the internal leadership issues and journalistic directional changes. However, there are some basic principles for trust building that CNN might keep in mind.

First, you are what you do.

Trust must be displayed before it can be declared. Customers must consider the brand to worthy of trust before they can commit to trusting the brand. Saying “trust me” does not track with today’s users. Saying we are the most trusted source does not generate trust. This may make the journalists feel good rather than viewers.

Provide iconic tangible evidence that what the brand claims can be trusted. In tough trust situations, it is not enough to say that the brand is changing or the brand is listening. Demonstrate through tangible, credible evidence.

Be predictable. Creating a pattern of predictable behavior is a critical component of trust building 

Second, Lead the debate; Do not hide from it.

In other words, do not stay silent. Staying silent when important issues are at stake is not a signal of leadership. Silence means agreement Trust is too important for silence. Leaders stand up for what they stand for. 

Be specific. Vague, generic statements are harmful. You can drive a truck through “balance.” At the moment, CNN is providing mixed, unclear messages about the brand. It is not clear just how CNN leadership defines balance.

Avoid being defensive. For a brand-business to be taken seriously, a defensive posture implies there is something to hide. When a brand-business is silent or behaving defensively, others can create “truths’ about the brand. Other will recast the brand’s profile. CNN has a brand reputation. The questions will be, who will have the strongest voice in managing that reputation. It is not in a brand-business’ best interest to let outsiders trample on a brand-business’ truths.

CNN has allowed the press to create the scenarios. None of which has been in the best interest of CNN.

Third, Openness is an opportunity 

Truth is not the same as trust. Truth is a fact. Trust is a feeling. To rebuild trust, a brand-business needs both truth and trust. To be worthy of users’ trust, users need to see the truth not just read about it. Without openness, trust is blind.

Of course, openness has its risks. The brand-business must be above board. There are no secrets anymore.

Thinking that turmoil can be enclosed is wishful thinking. CNN opened itself to others’ opportunities. The brand-business is now paying the price.

Fourth, Trusted Messages Must Come From a Trustworthy Source

CNN should own this: it must be a trustworthy source. Trust relies on a relationship of shared values. Trust relies on conversation and interactions. Trust is more than having the right argument. Trust needs the right voice. Peer testimony is more trustworthy than corporate testimony. So, remember the voice of the customer in communications. There had been an aggressive tone to CNN. New leadership was attempting to ameliorate this with “balance.” Reporting indicates that “balance” was supposed to be more of a tonal change than a substantive change. Somehow this did not happen as one observer stated.

Providing trustworthy information is essential. The challenge is to become a trustworthy source of information that is helpful, convenient, understandable, accessible, timely and valuable to users.

Fifth, good citizenship pays.

Being a good citizen is multi-dimensional. But, at its heart, is doing good deeds. Trust does not come from how big the brand is. Trust is a result of how big the brand acts. Sometimes, big brands can act very small. Doing the right thing is the right thing to do.

Customers want to know that a brand’s motivations are authentic. Customers want to know that a brand is using its size and strength to set powerful examples for others to follow. Be a responsible neighbor and a responsible leader.

For all of the turmoil at CNN, the CNN brand must be protected and managed for enduring profitable growth. Right now, the CNN brand is under pressure. If the CNN brand wishes to remain the most trusted source of news, then the CNN brand must act now to retain and rebuild its accrued trustworthiness now.

Taco Bell and Chipotle Know That Relevant Differentiation is Essential 

/in , /by

Several years ago, Restaurant News, an industry trade press, told us that the latest, greatest new trend in restaurants was Mediterranean food. From Italian to Greek, to Turkish to Lebanese food, Mediterranean restaurants were the next big thing on the radar. Not all of these concepts took off. There was a lot of overlap in menu offerings. Falafel anyone?

Recently, Restaurant News focused on taco restaurants, eight up-and-comers. Apparently, tacos have become our anytime food, for everyone food, with tastes and flavors from everywhere foods. These new taco restaurant concepts want to claim a spot in the yet-to-be-solidified space somewhere next to Taco Bell and Chipotle but slightly more upscale, with full bars and service. As one taco restauranteur stated, the Tex-Mex field is wide open.

Do Taco Bell and Chipotle need to worry?

Being aware of competitive entries at any level is strategically smart. But, critically, it is necessary to know the brand’s market focus: the brand’s target audience, the brand’s special benefits and rewards, the brand’s personality, the context (how, when, where) for the brand, the permission to believe the brand claim and its competitive set.

Taco Bell and Chipotle are powerful brands not just because of the food they create and serve, but because each brand knows its brand promise and its market focus. No one expects food from Taco Bell to be crafted on site. But, customers do expect innovative products with out-of-the-box flavors. Chipotle makes its foods on site. There are no freezers. That guacamole or rice that you like is made on premises. Unlike Taco Bell, the Chipotle experience is not focused on delivering seventy different offerings a year. Chipotle focuses on its Food With Integrity promise.

Spend time reading The New Yorker article on Taco Bell and you will understand that no matter what goes on in the innovation center, the brand is front and center. The question is not, “Is this a great, new flavor or design?” The question is always, “Is this a great new Taco Bell flavor or design?”

These eight growing taco brands are described as being flavor bombs. But, exceptional tastes and flavors are features that support the brand’s expected benefits and rewards.

What is troubling about the eight new taco concepts highlighted by Restaurant News is their lack of strategic focus. The articles are all about the flavors and the store designs. But, when it comes to the market focus and the brands’ relevant differentiations, the brands all seem to be alike. 

Relevance is critical for brand health. Relevance is a key driver of purchase intent. Relevance means the brand-business is up-to-date and current in customers’ minds. Relevance means the brand-business is seen to be addressing current customer needs and/or solving customer problems. Relevance, along with differentiation, is necessary for defining brand-business value. Customers ask, “Is the branded experience I receive or expect to receive relevant and differentiated relative to other brands?”

Relevant differentiation means knowing the prime prospect, knowing their problems and needs and the occasions in which they have these needs and problems, and having a well-defined, compelling brand-business promise. The brand promise is the statement defining the expected experience that the brand-business will deliver time and again.

Relevant differentiation has some rules.

First, identify a customer target.

Brands need to have a target customer in mind. Wanting to be a brand-business for everyone is a big thought. But, that strategy can genericize a brand. Even big brands such as McDonald’s identify target audiences. Having a target audience in mind does not mean other customers cannot use your brand. No one is going to stop a customer at the front door because that customer does not fit the target audience description. Focus is clarifying and strategically sound. Also, it is possible to have more than one target audience. McDonald’s has young adults but it also has caregivers with kids.

When a brand says it is for anyone and everyone, that brand tends to be liked by a lot of people but loved by very few. Taco Bell and Chipotle know their target customers. Both brands also know that because of their focus on a specific target audience, the brands will attract like-minded others. Having a tight understanding of the customer is FEDA: a focused enduring differential advantage.

All these new taco brands agree that they want to be something for everyone. As they describe their brands, being something for everyone is more than just having a wide variety of menu items – from traditional proteins to plant proteins – and from tacos to bowls and burritos. Something for everyone also includes pricing. No one should be priced out of the restaurant. So, even with full service and a bar, there are entry level tacos.

Second, identify the relevant differentiated benefits and rewards.

It is easy to think that a brand-business’ features are its benefits. This is incorrect. Features are support for benefits and rewards. To have a clear, compelling brand-business promise, know the functional benefits and emotional and social rewards the brand delivers to users. Tastes are important. This is food, after all. No one wants food that does not taste good or does not excite on some level. But, tastes are the support for why the customer wants to eat at this restaurant and how eating at this restaurant makes customers feel.

For these new taco concepts, the goal is “tastes and flavors” beyond the standards offered by Taco Bell and Chipotle. The flavor profiles are global or specific to a Mexican region not yet explored by other Tex-Mex establishments. The idea is to be either globally inspired or as one restaurant states, Taco Bell on steroids.

In the descriptions of the new taco restaurants, there is no insight as to how tastes and flavors support the benefits and rewards, nor any understanding of exactly what these benefits and rewards are exactly.

Third, have a customer-based view of the marketplace.

Let the customers’ needs, problems and unmet needs create the competitive set. Do these new taco restaurants see each other as the competition? Or do they see Taco Bell and/or Chipotle as the competition. Understanding the brand-business’ customer-perceived perception may surprise.

This is especially important when attempting to define the particular market segment in which you believe your brand-business will win. Based on the comments from the creators of these new taco brands, the market segment is ill-defined. Is this Taco Bell with full service and a bar? Is this Chipotle but more inclusive?  Is this non-traditional tacos?

Fourth, use the Brand Pyramid construct to generate your brand-business promise.

The Brand Pyramid construct is really simple. It has five levels. 

At the bottom level are the brand-business features that provide the credible support for the brand’s claims. These features are essentially the evidence of the truth of the brand’s promise. Taste, price, variety, décor are features.

The second level are the brand-business’ functional benefits. These are the things that the brand does for the customer. For example, because the restaurant offers new and unusual tastes, this taco restaurant opens up my perspective on international foods.

The third level are the brand-business’ emotional and social rewards. These are how the customer feels when the brand delivers its functional benefits. So, when the restaurant helps me to open up my perspective on international foods, I feel less provincial. With my international perspective, I gain status within my group of friends.

Fourth level, Customer values.

What are the values of the target customer in terms of lifestyle, attitudes, beliefs, opinions, interests? Who are these people and what do they hold dear?  To whom am I focusing my brand-business? What do I know about my prime prospect?

Fifth, Brand personality.

What is the personality of the brand-business that differentiates in the mind of the target customers and makes the brand-business so personally appealing? If this brand-business were a person, who would it be?

Generating a brand promise from the Brand Pyramid is a creative challenge but it has the pyramid as its frame of reference. Specifically, use this template: For people with these values… Who seek these rewards… Our brand-business with this personality… Is best at providing these benefits… Because it has these features.

For these growing taco brands to actually win in today’s increasingly competitive and grueling marketplace, there are some key Do Not Do’s.

Do not genericize.

Being generic, offering generic category benefit leads to becoming a commodity product with no relevant differentiation. When you stand for everything and everyone general, you stand for nothing.

Do not maintain a mass market mentality.

Mass marketing is death-wish marketing. Mass marketing leads to genericization.

Do not confuse features with benefits.

Describing the interior design as differentiated is good. But interior design is a feature. As are tastes and flavors. Focus on what benefits and rewards the.se features deliver

As Restaurant News points out, these taco establishments have grown exponentially. Some started as a food truck and now have stores across multiple states. Yet, it is more important than ever to focus on who the brand-business is for, why these people want to use this restaurant and how, when and where they use it. There is a difference between growth, profitable growth and enduring profitable growth. Enduring profitable growth can only happen is the brand-business creates a compelling brand promise and does everything possible to be relevantly differentiated relative to its competitors.

Elizabeth Arden Brand

Elizabeth Arden Stakes Its Future on Its Past Provenance

/in /by

There have been many pioneers in the cosmetic industry. Just to name a few, Lawrence and Joan Gelb of Clairol made hair coloring something acceptable rather than declassé. Max Factor created pancake makeup becoming the go-to authority for the burgeoning Hollywood film industry. 

And, then, there was Elizabeth Arden who believed women should learn how to apply makeup properly focusing on color coordination of eyes, lips and skin makeup. Ms. Arden also put stock in the ideas of scientific cosmetic formulations as acceptable and, actually, required, for creating and maintain a demure, respectable, decorous image. Ms. Arden underscored the power of cosmetics to provide a youthful, beautiful perception. The epitome of the Elizabeth Arden gestalt was her eponymous Red Door salon.

Over the decades, there has been a wild proliferation of cosmetic and beauty brands. The originals, the pioneers, have taken back seats to new, lab-based, nature-based, organic-based, hipster and elite European and Asian brands.

The Elizabeth Arden brand is fighting back.

Elizabeth Arden is using its provenance in beauty to reignite and reintroduce its brand to younger generations.

According to Glossy, Elizabeth Arden has created a “virtual space based on Elizabeth Arden’s historic Fifth Avenue salon with its iconic red door. It features product information alongside a mini online museum on the history of the brand. The launch makes Elizabeth Arden one of the early beauty adopters of AI-generated imagery. Users will be able to click through “multiple spa ‘rooms’ with products on display that users can click on to receive more information and purchase.”

Ronald Rolleston, global General Manager of Elizabeth Arden told Glossy, “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.”

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. 

Provenance is trustworthy evidence of a brand-business’ authoritative character; the brand-business’ principled foundation of trustworthiness. All relationships rely on trust.

Powerful brand-business relationships gain strength from the brand-business’ heritage. Strong, relevant heritage builds credibility. Strong, relevant history provides customers with authoritative information. This adds credibility to a brand-business’ message. A brand-business provenance is unique in that it can provide continuity and consistency across all platforms. 

The provenance of a brand-business is its consistent, compelling, relevant, distinctive heritage. A focus on a brand-business provenance is not about preserving everything from the brand’s past; it is about preserving the best of the brand’s past for the present and future. Provenance is uniquely past, present, and future. A brand-business provenance emphasizes a past of authority, a present of user connection and a pathway towards a future of enduring, profitable growth. 

This is what Elizabeth Arden is counting on with its new provenance-enhancing virtual store.

The virtual store is basically “… a virtual museum” featuring “images depicting the 120-year history of the brand and its founder, including her support of the suffragettes and the introduction of the “Victory Red” lipstick during WWII.”

Elizabeth Arden hopes the new virtual store with its focus on using the past for present and future success will connect with younger customers.

For those who think that provenance is only important to antique dealers, museums and auction houses, think again. Brand-business provenance is essential for building a strong foundation for building trust capital, leading to high quality revenue growth.

Brand-business provenance influences customer-perceived value. Customer-perceived value contributes to increased brand-business preference. This in turn generates trust capital, leading to high quality revenue growth. 

A brand-business is more than an identity. A brand-business is also a culture and the culture’s values. A brand-business is a seal of “permission to believe.” Provenance provides “permission” because it reflects and articulates a heritage of credibility, integrity and authority.

A powerful, credible provenance is competitive advantage; a leverage against competitive actions. Provenance signals truth. Provenance provides a common connection across all stakeholder relationships. And, this is a foundation for enduring brand success.

Elizabeth Arden’s Red Door may have opened in 1931. But, its values and core brand elements are just as relevant today as these were over 90 years ago. This continued relevancy is on display in the virtual Red Door salon.

leadership marketing wayfair

Wayfair And Leadership Marketing

/in /by

Wayfair CEO Niraj S. Shah recently told analysts that the Wayfair brand-business – home furnishings and décor – is 

“… clearly demonstrating that the Wayfair model is inherently profitable and that there is considerable opportunity in front of us to rapidly drive further margin expansion, while investing for future growth.“ 

About Wayfair’s progress on its “pathway to profitability,” announced August 2022, Mr. Shah said, 

“… these efforts have resulted in increasing market share and a significant reduction in operating expenses versus last quarter, getting us to nearly adjusted EBITDA breakeven in Q1. And we’re excited to share that we expect to have positive adjusted EBITDA in the second quarter.”

On the surface, this three-pronged strategic approach of “driving customer and supplier loyalty, nailing the basics and cost efficiency” seems fairly generic. However, based on a review of Wayfair’s brand-business and people-centric approach, underlying the three-pronged approach is a focus on brand-business leadership marketing.

Leadership is not the same as management. “Management” means to “take charge or take care of….” Managements means “to handle, to direct, to control the actions.” A manager is a person who controls and manipulates resources and expenditures. 

“Leadership” is a different role than “manager.” Leadership means “to guide or direct.” A leader achieves success through passion, persuasion, persistence, conviction, commitment, drive and diplomacy. 

Leadership marketing is internal but its effects are external. Leadership marketing is built on five principles:

  1. Inspiration—Defining a motivating vision and goals. What is the organizational ambition? Why should we care? 
  2. Education—Clarifying why this new vision is important. What will we have to do differently to succeed? How will we do it? 
  3. Influence—Impacting the work of others through guidance, experience, and expertise rather than relying only on direct command and control. The leader must be a collaborative authority bringing people together (unifying the teams) for productive action on behalf of the brand. 
  4. Support—Not just hoping that people will perform differently, but by providing the necessary training and tools. We provide tangible and emotional encouragement and reinforcement to help people resist the cultural tendencies to return to old habits. 
  5. Evaluation—Providing regular progress reports based on relevant metrics. We also mean recognizing and rewarding people who produce.

Leadership marketing is not about command and control. Leadership marketing is about creating an internal environment where team members are energized, motivated and activated to do their best on behalf of the brand-business.  

It is leadership’s responsibility to direct, to guide, to support, to inform, to educate, to facilitate, to influence, to evaluate and learn, and above all, to inspire. Leaders succeed through the actions of others whom they influence. A leader’s greatest achievements come not by telling managers what to do, but by influencing managers to do the right things in the right way producing the right results. 

There are two essential elements that bind a brand-business together. One is articulating the brand-business promise and how the brand-business wishes its customers feel as they experience brand. The other is the way team members are inspired, educated, influenced, supported and evaluated as they create the brand-business experience.

  1. Articulating the brand-business promise and desired customer experience

Leadership marketing requires a stated purpose. Wayfair’s purpose is: 

“We’re here to help everyone, anywhere create their feeling of home. We give you the power to create spaces that are just right for you. We provide true partnership to help you define your vision. We empower you to create spaces that reflect who you are, what you need, and what you value, so that you and the ones you love can feel right at home.”

Wayfair believes in this mission. Wayfair believes in its people. And, so, Wayfair reinforces and reiterates the essence of its brand-business throughout the organization.

A desired customer-perceived experience is articulated via three to five specific, defining words or phrases. And, for each word or phrase, there is a definition. Since different people have different ways of describing customer feelings, it is absolutely essential to have a common language. A common language creates consistency, in every market in which the brand-business does business, regardless of geography.

A great construct for identifying the desired customer experience is to think of customer feelings and definitions as part of a flower. In the center of the flower is the brand-business’ brand essence. Each petal surrounding the center includes one desired experiential element with its definition.

Wayfair has a brand-business essence that encapsulates its brand promise. This essence is Built For Home. This is at the center of everything Wayfair does for its customers. It is not a slogan. It is an organizational, aligning short-hand statement capturing the very core of the brand-business.

Built For Home is expressed through four drivers of the desired customer experience and their definitions as follows (visit the website):

Expertise in Home

Home is where we started, and it’s our number one priority. We’re experts at getting you the products you want most and are champions for your home needs. If you’re looking for guidance on selection, sizing, inspiration, and more, we’re here and ready to help in the way that works best for you.

Unparalleled Selection

We’ve got what you need, carrying the widest and deepest selection, so you can find the one thing that reflects you, your life, and the people you share it with.

Tangible Value

Whether you want to spend a little or a little bit more, we make sure it’s just what you want – right value, right quality, and free shipping. And if it isn’t, we’ll help make it right.

Seamless Experience

Wherever you are, we make it easier to shop, purchase, and get home furnishings, appliances, and more. We provide a great experience online and off. Whether your order is big or small, you can expect to get it fast, on time, and just right.

  1. Galvanizing Team members to Create and Deliver the Promise and Desired Customer Experience

For galvanizing Wayfair team members, there are the brand-business’ people principles which are underpinned by three key aligning elements:

Great People

Great people have diverse perspectives but share a commitment to respect, a love of solving hard problems, and a spirit of having fun through the hustle.

Great Ideas

Great ideas come from anywhere within our walls and are grounded in both data and instinct, inspired by what we see in the world, and often fully bespoke and homegrown.

Great Ambition

Great ambition is what drives us. We’re in constant pursuit of doing better – by our customers, by our people, and by our community.

According to Wayfair, these three elements anchor the people principles. Wayfair’s people principles deliver against the five critical components of leadership: inspiration, education, influence, support and evaluation.

Relentless Customer Focus

Delivering an exceptional customer experience drives everything we do. We invest in understanding our customers and partners. We are all in customer service.

Deliver Results With Agility

We prioritize work that drives long-term value. We execute with urgency, learn from failure, and nimbly pivot. The outcomes of our efforts are impactful, measurable results.

Use Good Judgement

We are bold and confident, never reckless. We make reasoned, calculated decisions based on data, critical thinking, and pattern recognition.

Build the Best Team

We lead by setting the bar high, articulating clear goals, and diving deep. We hire, develop, and leverage only the best. Our leaders continually reevaluate and strengthen their teams and do not shy away from hard decisions. We expect and demonstrate excellence.

Collaborate Effectively

We invest in cross-functional global partnerships that maximize impact and minimize duplication. We prize collaboration in all interactions – with our teammates, stakeholders, and suppliers. We disagree, align, and commit. Effectiveness and efficiency in collaboration are required.

Respect Others

We earn and show respect, treating our teammates and partners with empathy and inclusion. We presume good intent while prioritizing impact. We balance confidence and candor with humility and kindness.

Be an Owner

We are Wayfair first. We act on what’s best for the company, ahead of team or individual goals. We spend every dollar as if it is our own. We take pride in Wayfair’s success while planning the next win. We always think long-term.

Innovate & Improve

We are not limited by precedent. We boldly challenge the norm. We continually identify opportunities to innovate, improve, and simplify. We value incremental improvements, but we also look for game-changing breakthroughs.

Adapt & Grow

We value adaptability and self-reflection. We find opportunity in every change, experience, and mistake. We are committed to continuous self-improvement.

Leadership marketing is about coherently, consistently managing the brand-business ina quality manner. Effective leadership marketing is not merely about message and media management; it is about brand-business management. 

Brand-business leadership management is fundamentally about attracting more customers who purchase more often and become more loyal, generating more sales and becoming more profitable. Brand leadership management is about generating value for customers and creating value for the company. To increase shareholder value, a brand-business must generate customer-perceived value. To build brand-business value, it is essential to manage the relationship between what customers are willing to pay in terms of their costs relative to the experience they receive for those cost expenditures multiplied by trust.. 

When asked by an analyst why Wayfair was doing so well relative to competition, CEO Shah replied, 

“As to the why are we doing better than competitors, I think it’s less about what the competitors are doing, and it’s more about what we’re doing. And, so, when we mentioned that recipe, again, great availability, fast delivery, great retail prices and then kind of coupling that with all the things we’re known for around customer service, an emotive shopping experience and product discovery and being tailored for home and kind of proprietary delivery advantage on heavy bulky items.” 

It is clear from Wayfair’s CEO, that the brand-business is strengthened by its commitment to leadership marketing. 

Leadership marketing requires that ideas be borderless. Wayfair believes this, saying ideas can come from anywhere. Specifically, that “No person, no geography has a lock on idea generation. Wayfair endorses the challenge leverage the power of ideas. Powerful ideas do not care where they come from.”

Leadership marketing at Wayfair allows teams to have the freedom to innovate and improve within the framework of the brand-business’ mission, customer-perceived brand-business experience and it people principles.

Of course, CEO Shah has stated that financial discipline and operational excellence are critical components of Wayfair’s pathway to profitability. But, Wayfair is also committed to making the brand-business a place where customers will shop more frequently and enjoy the benefits of Built for Home.

Sprouts Farmers Market Marketing

Sprouts Farmers Market has a Plan to Win

/in /by

On May 1, 2023, Sprouts Farmers Market reported very positive news during its earnings call. The Wall Street Journal’s Market Report indicated that Sprouts’ first quarter earnings rose 24%. Sprouts’ CEO Jack Sinclair told analysts, “We are pleased with our first quarter; we believe our long-term growth strategy is gaining traction and driving positive performance. Our results included comparable store sales growth of 3.1%, total sales growth of 6 percent and adjusted diluted earnings per share growth of 24 percent.” Sprouts’ shares rose 8% after the announcement.

From reading Sprouts Farmers Market transcript of the earnings call, it is clear why the brand-business is doing well in a category where Whole Foods and Trader Joe’s are serious players.  Sprouts Farmers Market has a Plan to Win.

A Plan to Win is a single page stating the brand-business’ purpose, actions to progress towards its purpose and performance metrics to which everyone must adhere. A Plan to Win document is a commitment for achieving organizational alignment. A Plan to Win ensures that everyone, every function and every division in the organization are on the same page. 

For successful brand revitalization and for brand growth, the brand-business’s culture must define and commit to a roadmap that defines how to win. The Plan to Win is this roadmap. The Plan to Win integrates brand-business actions for success across Eight Ps: Purpose, Promise, People, Product, Place, Price, Promotion and Performance. 

Brand Purpose is the compelling statement of the brand-business’ intent or mission defining the brand-business’ destination, its North Star.  Brand Purpose is the common goal for all the actions on behalf of our brand-business. The entire organization must be aligned behind a single, clear, shared brand-business goal. 

Sprouts compelling purpose is, “Healthy living is a journey and every meal is a choice. We love to inspire, educate and empower every person to eat healthier and live a better life. This isn’t just a mission. It’s our passion.”

Brand Promise is the contract a brand-business makes with its customers. The Brand Promise expresses the promise that if you buy this brand, you will get this relevant, distinctive brand experience. Brand Promise summarizes the brand-business’ focus, directing how the brand-business will develop the connection with its customers. By consistently living up to a Brand Promise, the brand-business will be relevant, distinctive, powerful and great. 

Sprouts’ Brand Promise is to “… offer a unique grocery experience inspiring wellness naturally with a carefully curated assortment of better-for-you products paired with purpose-driven people.” As a “healthy grocer,” Sprouts continues to bring the latest in wholesome, innovative products made with lifestyle-friendly ingredients such as organic, plant-based and gluten-free.

In the Investors Presentation available on Sprouts’ website, Sprouts states: “Sprouts delivers a unique farmers market experience: bringing together passionate, knowledgeable team members and the assortment of high-quality food that is good for us and good for the world.”

The goal of the Plan to Win is to yield more customers, who use more often, are more brand loyal and are more profitable. 

Sprouts’ focus on the bottom line of the Plan to Win is apparent in Mr. Sinclair’s statement that 60% of the brand-business is driven by high-frequency customers. Sprouts goal is to drive current core customers to shop more often and to encourage trials from new customers who are also with Sprouts’ target audience.

When an analyst inquired about the 60% of high-frequency customers, Mr. Sinclair indicated that these are Sprouts’ most important customers and the goal is to have even more of them. Sprouts’ data indicate that Sprouts’ assortment of goods really “resonates” with this 60% of customers. And, Sprouts’ hope is that by investing more into the high-frequency customers, Sprouts will generate lifetime value from their shopping behavior and loyalty. One way to engage more completely with this 60% is through personalization. This will happen by more creative omnichannel experiences.

Effectiveness of a Brand Purpose and Promise is achieved by actions taken across: People, Products, Place, Price, and Promotion. 

People

Employees are the most important assets of any brand-business. Employees are the frontline when it comes to customer relationships. Data continue to show that internal brand-business pride and satisfaction are critical success factors affecting external brand attitudes. 

On its website, Sprouts describes its team members as proud to provide unwavering commitment to customers with friendly, knowledgeable and engaging service to support customers on their healthy living journeys each and every day. In the earning report, Mr. Sinclair made it clear that growing customer engagement was critical. Customer engagement happens many ways, not the least of which is team member “happiness and helpfulness” as cited in the investors presentation.

Additionally, “Sprouts’ commitment to friendly service doesn’t stop at our stores. We pledge to be a good neighbor in every community we serve through volunteer work and local event support. Each year, our direct and in-kind donations help local nonprofit organizations, food banks and service groups touch millions of lives to help make our world a better place. Our team members inspire, educate and empower our customers to live healthier lives through various in-store, online and community events.”

Product (and Service)

This is the tangible evidence of the truth of the Brand Promise. A brand-business needs to be relevantly differentiated, delivering superior customer-perceived value. Continuous renovation and innovation are imperative for success. Product and service renovation and innovation are keys to sustainable profitable growth. 

Sprouts promises a fresh, friendly take on grocery shopping, where exploration and discovery happen naturally. Sprouts is known for the season’s freshest, most delicious produce around. Sprouts takes extra care in curating uniquely healthy products to fit any lifestyle.

The analysts heard that Sprouts focuses on curation and innovation to inspire customers. Mr. Sinclair stated that Sprouts stocked its stores with innovative, attribute-friendly products appealing to its target customers. He added that Sprouts is building a strong affinity to its own brand, Sprouts. Customers recognize that the Sprouts brand provides quality offerings that taste great and that are good to for you.

Place

This refers to any location where the customer interacts with the brand-business. It can be a physical location (a grocery store, for example) as well as a virtual one on any device possible (a website, app, virtual world, etc.). Wherever and whatever it is, place is the face of the brand. 

Sprouts is segueing to smaller stores, from 30,000 square feet to 23,000 square feet. The Investors Presentation indicates that a smaller format is closer to Sprouts’ framers market heritage. 

 The brand-business finds that the smaller stores are more cost effective. There is noticeable improved performance from the newer format. Sprouts is opening new stores and plans to achieve 10% unknit growth per year.

Price

Price is an important part of the customer’s trustworthy brand-business’ value equation. But, it is not the entire cost-definer. Price is only one of the customer’s costs. Price is not the same as value. Value is determined by the total branded experience a customer expects (functional, emotional, and social benefits) relative to the costs spent (in terms of time, money [price], and effort) multiplied by trust. 

Pricing at Sprouts is a critical strategy. Mr. Sinclair indicated that with the high inflationary environment, Sprouts brought in “more value forward offerings like multipack grocery items and value-sized meat and daily offerings, while continuing to offer great pricing in the produce department and on important items such as Sprouts brand cage-free eggs at $3,99 and healthy sandwiches at $4.99.

Mr. Sinclair responded to an analyst on pricing indicating that Sprouts is constantly looking at what other competitors are doing. But, Sprouts believes that its margin growth will maintain regardless of price wars or further issues with inflation.

Promotion

This is about creating an integrated approach to raising awareness, familiarity, and preference of the brand. Promotion includes every communication on behalf of the brand. 

Sprouts uses in-store tastings of its Sprouts own brand. These own brand-business tasting promotions are successful in convincing customers to purchase a Sprouts-labeled item.

Although not mentioned in its earnings report, Sprouts is spending on its brand identity. The goal is to further differentiate Sprouts in fresh food. Mr. Sinclair wants to move Sprouts from being known for great pricing on fresh food to a destination for elevated quality and distinction in fresh food. Again, the goal is to attract and grow a more loyal and more profitable customer base.

Along with an improved logo, digital advertising and mass media, there is a new slogan, “Sprouts, Where Goodness Grows.” This reinforces Sprouts community efforts referred to as “Here for Good.”

This updated brand identity is a way of not only emphasizing the in-store differentiation with fresh foods, but also the array of vitamins and associated health products and the availability of bulk items.

Performance means designing and implementing a system-wide measurement program for monitoring progress with annual milestones spanning three years. These are the metrics that will be used to evaluate the progress toward the achievement of the Brand Purpose and Brand Promise through implementation of the activities of the Five Action Ps. 

The Investors Presentation provides insights into Sprouts’ performance metrics. Sprouts employs Net Promoter Score, but also collects data on its ecommerce penetration, sales penetration of its Sprouts own brand, long-term financial targets, comp sales, EBIT margins, supply chain and ESG.

Sprouts Famers Market has a Plan to Win. Sprouts’ brand-business’ success can be linked to this over-arching strategic outline. Wall Street may not care about how the results are generated just as long as positive results are generated.  But, from a brand-business standpoint, there is no better way to move forward towards enduring profitable growth than by having a Plan to Win.

Tupperware: Trapped in Tendencies for Trouble

/in /by

We may soon have a world without Tupperware. Recently, there have been numerous doom-laden reports on the sad situation for this iconic American brand-business. In fact, a brief Nexis search of Tupperware-demise articles for the past week alone turned up 13 pages of commentary. 

Pundits and analysts identified the many reasons for Tupperware’s dire straits. There is the lack of innovation. There is the lack of focus on the changing roles of women. There are the two-year Covid-19 restrictions on gatherings. There are the supply chain issues created by Covid-19. There are the price increases on materials. And, so forth.

Tupperware has yet to die. But, what is clear is that the brand-business fell victim to several brand-business tendencies for trouble. Not every brand-business enmeshed in troubling landscapes dies. Brands such as Lego, Campbell’s, McDonald’s have all been in trouble and managed to claw their way back to incredible success. Even Toy R’ Us is actively seeking rejuvenation with its stores inside of all Macy’s stores. Unfortunately, others such as Blackberry, Nokia, Sears, Avon, Kodak and Bed, Bath & Beyond have left the scene, are leaving the scene or are shadows of their former selves. Sometimes brand-business decline is a fast, free fall. Sometimes it takes decades. Some observers indicate that Tupperware’s current troubles were years in the making.

Tendencies for trouble are the result of brand mismanagement. Tendencies for trouble must be considered as “stop-now” behaviors and attitudes. When it comes to brand-business revitalization, brand-business teams need to eliminate these “stop-nows” as these are impediments to invigoration. 

Tendencies for trouble have financial consequences. Anything that stops a brand-business from growing customer-perceived brand value has financial consequences. Customer-perceived brand value depends on renovation, innovation and relevant differentiation. Without customer-perceived brand value, there is no shareholder value.

Tupperware is a poster child for several corporate tendencies for trouble. The jury is out as to whether Tupperware will find a pathway back to success. However, in order to do so, Tupperware will need to reverse its engagement with the behaviors and attitudes that have forced the brand-business into its downward spiral.

First, Tupperware became complacent. Complacency is comfortable but it is a hindrance to success.

For brand-businesses, complacency must be avoided. Complacency stops ideas and innovation. Complacency allows brand-businesses to stop focusing on changing customer needs. Complacency permits employees to keep on doing what they are most comfortable doing, lulling people into laziness and inaction. Complacency crushes curiosity and creativity. 

Complacency gives brand-businesses permission to stop looking at the changes in the world and in its specific market segment. Specifically, complacency takes eyes off new entries in your category and in identified segments. Complacency blinds a brand-business to the forces of the changing world. It creates a “staying alive” mentality rather than a “moving forward” mentality. Complacency supports the static mind-set that keeps the brand away from risk. As the Frederic Forrest character Chef says in Apocalypse Now, “Never get off the boat.” 

Complacency is simply brand-business mismanagement. Brands are not passive; they are promises. Brands are active promises of an expected, relevant, differentiated experience. Brands can be soft, quiet, traditional, laid back, and chill. But, they have to move if they want to deliver a relevantly differentiated experience. Complacency is anti-movement creating inaction and, eventually, irrelevancy. 

The more powerful and successful the brand, the easier it is to walk off the complacency cliff. Complacency leads brand-businesses to believe that there is now nothing left to do but live off past success. 

Brand-businesses that fall into complacency due to their belief in their historical power lose because other brands in the competitive set are innovating all the time. Complacent brand-businesses are so enamored with their success that they stop looking outside at new entries and new threats.

Complacency is a culture flaw. Brands need leaders who fight complacency. Complacency is satisfying. But, from a brand-business perspective, it generates inaction supporting the trajectory of continuing to do what has worked in the past instead of what will work in the future. 

Second, Tupperware fell for the belief that what worked yesterday will continue to work today and tomorrow.

Customers change; the world changes; brand reputations change; competition changes. Doing what once worked when the current landscape is different makes no sense. Standing still while changes rage around you is a formula for failure. 

Peter Drucker, the marketing guru, recognized the pitfalls into which so many great brand-businesses fall when it comes to doing the same thing over and over again. His lessons include these: 

  • Environments change. Continuing strategies and actions that created past successes will eventually lead to failure. 
  • Being defensive and unyielding will also lead to failure. Brand-businesses must be willing to (quickly) abandon formerly successful approaches. 
  • Believe that change will happen and that sometimes the change will be revolutionary. Brand-businesses should create the future by making changes even though it means “obsolescing the products or methods of its current and past success.” 

Leadership is critical. Brand-businesses need leaders who are able to change their minds and switch direction when necessary. Leadership must be able to ditch a no-longer-viable strategy. At some point, leadership must be able to say that it knows as much as it can know and is capable of making an informed judgment call, even if it seems to be a leap of faith. 

Markets and customers change quickly. Brand-businesses must be flexible, agile and quickly decisive. This is why it is important to have leadership that is willing to look outward rather than backward. Just think of all the brand-businesses that had to quickly rethink and implement new strategies when Covid-19 restrictions changed people’s lives.

Building a culture that is not afraid of letting go is critical. This does not mean giving up the brand-business’ core values. It does mean being ready to take leadership in a fast-moving, changing world. Staying out of trouble hinges on how willing the brand-business’ leadership is to recognize when it is time to move on and jettison a strategy that is holding the brand back. 

Third, Tupperware disregarded the changing world.

 Not paying attention to core customers and their changing wants and problems means the brand-business is not up to speed. Disregarding the changing world means not understanding and attracting prospective, like-minded potential new customers. Disregarding the changing world means not renovating or innovating a brand-business. This means not thinking about the present or thinking about the possibilities for tomorrow. Disregarding the changing world means the brand-business is looking backward, trying to reproduce the past. The brand-business is not evolving with the changing times.

Tupperware missed adapting its in-home party model when women quit staying home and went to work in an office. Tupperware turned a blind-eye to the behaviors and attitudes of new younger cohorts. Tupperware did not pay attention to people’s lack of free time.  Tupperware missed competitive entries.

Covid-19 was just a fraction of Tupperware’s problems. Tupperware’s problems started a while ago. Like Avon, Tupperware suffered from lack of recognition that women were no longer at home all day. Additionally, Tupperware did not recognize that younger cohorts were less interested in plastic than previous generations. These younger cohorts were interested is more eco-friendly products and services. SodaStream built its business on consumers’ dislike of buying so many bottles of sparkling water. Recently trending is the idea of reusable containers for take-out foods and restaurants.

Tupperware missed the decline of leisure time. Having or attending a Tupperware party carves out precious time from individuals’ time banks. Tupperware parties may be a luxury in a world of time-deficient people. Tupperware time might be the only time a family has for being together. This is a trade-off that most people will not make.

And, then there is the competition. Tupperware missed plastic food-container products from grocery stalwarts in the plastic bag business such as Glad and Hefty. Tupperware missed competitive food container products from take-out deliverers and restaurants. Tupperware overlooked the food containers from delicatessens. 

Lots of brand-business observers believe that there is a natural brand-business life cycle from birth, to growth, to maturation, to decline, to death. This is wrong. Brand-businesses do not inevitably die. They can live forever. Brand-businesses get into trouble due to self-inflicted actions of brand-business owners and leaders. Brand-businesses die from brand-business mismanagement.  Tupperware neglected staying relevantly differentiated. Having the lid make a ”burp” sound when closing is just not enough in today’s world.

And, then, there is the name. Some analysts are saying that Tupperware allowed its name to become generic for the category. It is true that Tupperware has become the category definer. However, other brand-businesses have managed to maintain the integrity of their brand-business while becoming a catch-all name. Kleenex and Scotch Tape, for example, have well-defined, relevant, differentiated positions in customers’ minds.

Bloomberg BusinessWeek ran an article indicating that a transformation at Tupperware will take another Brownie Wise, the woman who inaugurated and ran the hostess parties. Maybe this will work. 

Tupperware has the opportunity to revitalize its brand-business. It will be a challenge. But, it can be achieved. However, in order to do so, the Tupperware brand-business will need to extricate itself from the trap of the tendencies for trouble.

Netflix Needs to Be Bigger, Better, Stronger To Have Both Quality of Growth and Quantity of Growth 

/in /by

Netflix just reported its half year earnings to analysts. Wall Street’s reactions were typical. 

After the initial knee jerk punishing of Netflix’s stock because Netflix did not capture enough subscribers, Wall Street, its analysts and media talking-heads focused on Netflix’ positive news regarding operating margins, free cash flow and operating profits. 

Either way, Wall Street, as usual, focused on quantity of growth. Everyone was completely bummed that Netflix missed the mark on new subscribers. Then, everyone was incredibly pleased that Netflix surpassed expectations with margins, profits and cash flow. 

This attitude and ensuing behavior are incredibly harmful for brand-businesses. Wall Street only looks at brand-businesses to determine if the brand-business is getting bigger. Bigger customer base, bigger margins, bigger profits and bigger shareholder value leading to enduring profitable growth.

But, to generate enduring profitable growth, a brand-business must have quality revenue growth. Quality revenue growth relies on two pillars: Quality of Growth and Quantity of Growth. Without quality of growth, there is no generation of customer-perceived brand value. And, without customer-perceived value, there will be no shareholder value. Quality of growth and quantity of growth require a focus on being bigger, better and stronger.

Quality of growth means that the brand-business 1) continues to focus on its brand promise; 2) understands its specific target audience and like-minded others through market segmentation; 3) knows that quality is consistent conformance to customer expectations; 4) recognizes that customer-perceived value is brand-business total costs relative to the total brand-business experience multiplied by trust; and 5) seeks to become the customer’s preferred brand-business. 

Quantity of growth is having more users who use more frequently, more offerings, more revenues, more share, more margin, more profit.

The combination of quality of growth and quantity of growth drives quality revenue growth. Not only are customers loyal to the user experience, these customers have less price sensitivity. There cannot be sustainable profitable growth with only quantity of growth. It is not just about being bigger. A brand-business must be better and stronger.

Bigger

Being bigger rests on generating familiarity thereby growing the customer base, i.e., market penetration. Familiarity is not the same as awareness. Awareness is a yes or no question. 

Awareness is a light switch: on or off. There are no degrees of awareness: it is binary. Familiarity is more than mere awareness. Familiarity is not an absolute measure; it is measured in degrees, from extremely familiar to not at all familiar. 

Penetration means growing the customer base, with the marketing goal to increase both penetration and loyalty. Brand loyalty refers to having customers purchase more often, building brand preference and reducing price sensitivity. Attraction and retention are necessary and are bottom-line goals. 

It is quite possible to have increased brand loyalty among a shrinking base of customers. But, increasing loyalty among fewer customers is a risky business. Building loyalty within a declining customer base is just slowing the rate of brand death. If Wall Street wants to fret about Netflix’ fewer customers, they should keep this thought in mind.

Brand loyalty is more than repeat purchase. Brand loyalty is repeat purchase over time based on brands commitment. This means that customers believe a particular brand is the superior alternative for satisfying their particular need in a particular context. It means that the brand is their favorite – their brand preferred – the brand that will be bought again; the brand that will be willingly recommended. 

It is unfortunate and short-sighted that analysts and Wall Street are only concerned that fewer subscribers are signing up for Netflix. The concern should be that with fewer customers, there might also be a smaller or declining loyal base which does not bode well for Netflix and shareholder value.

Better

Being better means enhancing the brand-business reputation and generating overall customer satisfaction. Getting bigger is important. But, generating bigness for the sake of sheer size is a waste of resources. The brand-business goal is to be better, not just bigger. Be bigger by being better. Netflix needs to show continuous improvements in the way the brand-business is perceived. Is Netflix perceived for the things for which it wants to be perceived? Are Netflix customers satisfied? 

Brand Reputation means Netflix is delivering on its Brand Promise. Is Netflix brand delivering against its agreed upon defining elements? A relevant, differentiated brand-business is a multidimensional promise. It is essential to truly understand the relevant differentiation of the brand-business and include specifically designed metrics to reflect these dimensions. 

Satisfaction is about Netflix fulfilling customer needs, desires, expectations. Satisfaction is relative. Relative satisfaction means satisfaction compared to competition. In today’s world, the competitive bar of customer expectations is high. 

Stronger

Stronger is about Brand Loyalty, Brand Preference, Trustworthy Brand Value, Trust and Brand Power.

Brand loyalty anchors quality of growth. Loyalty builds high-quality revenue growth, which needs trustworthy brand value to increase. Because there is no shareholder value without brand value, brand loyalty becomes an important element for enduring profitable growth. Netflix must show metrics for brand volume (new subscribers) and brand value (loyalty of subscribers). 

Brands preference is a reflection of the strength of the commitment the customer has to Netflix relative to competitive brands. Brand preference is like a ladder. Netflix needs to move customers up the brand preference ladder to true brand loyalty. Moving customers up the ladder from commodity consideration to true brand loyalty can have a big impact on revenues and profitability. 

Trustworthy Brand Value is total costs (price, time, effort) relative to total brand experience (benefits, rewards, brand-business character) multiplied by trust. Value is not low price. Price is one of the elements of total costs.

Trust is a multidimensional idea that underpins and drives relationships. Trust is not a single statement. Trust cannot be determined by simply asking, “Is this a trustworthy brand?” The key is identifying the brand-business-relevant “attributes” of trustworthiness. 

Brand Power does not mean a brand is big.  A big brand is not the same as a powerful brand. Brand Power focuses on three dimensions: familiarity, specialness, and authority. Familiarity means that the customer is not only aware of the brand but feels sufficiently familiar with the brand to express an opinion about it. 

Specialness is the combination of both relevance and differentiation. 

Authority is the combination of perceptions of overall quality, leadership, and trustworthiness. Quality is driven by customer perception of consistent conformance to expectations. Leadership is driven by an image of not only leading in size, but also leading in thought, popularity and innovativeness. Trustworthiness is based on a reputation for credibility, integrity and responsibility. 

Brand power is customer-perceived. It is nice to know how Netflix rates. But, when it comes to making money and satisfying customers, it is necessary to win within the brand’s competitive set. The competitive set must be seen through the eyes of the customer. 

Netflix showed some good results. And, Wall Street noticed. However, both Netflix and Wall Street only focused on quantity of growth; only focused on getting bigger. Netflix and Wall Street were really pleased. But, the pleasure is not sustainable until the focus broadens to include getting better and getting stronger generating quality of growth as well as quantity of growth. 

Uber’s Undercover Problem Detection Study

/in /by

Problem Detection is one of marketing’s most effective strategies. Profitably solving and satisfying customer problems is the aim of marketing. So, marketers tend to focus problem detection on customers. But, as brand-business’ know, having motivated, committed, proud and loyal employees is a most critical factor in brand-business success. Recent research from Deloitte, the global services group, re-confirms the fundamental principle that loyal employees generate loyal customers. 

This is why the recent actions of Uber’s CEO, Dara Khosrowshahi, are so remarkable. Uber’s CEO went undercover to understand problems with the Uber experience from Uber drivers’ perspectives. Not only were problems recognized, Uber went about solving the problems in order to make driving an Uber a much better experience. As Mr. Khosrowshahi stated, his focus has always been on the rider experience. Now, he understands that to have a great rider experience, Uber needs to have a great driver experience. What Mr. Khosrowshahi learned is that the drivers’ issues were valid and needed to be addressed. As one analyst said, “Having loyal drivers makes Uber more competitive and sets it up to expand into new categories and deliver better returns for investors.”

The Wall Street Journal catalogued Uber’s problems and the solutions in a detailed story. Mr. Khosrowshahi’s undercover problem detection study while driving has been the foundation for “one of the biggest makeovers of Uber’s brand-business since its inception in 2009.” 

To demonstrate the power of problem detection and the solutions that come from this approach, Uber used to use incentives to motivate drivers. But, incentives put a financial strain on the brand-business’ results. And, money cannot buy true brand loyalty, just look at the car industry. Of course, as pointed out the article, pay is a motivating factor. Yet, Uber drivers wanted to be heard on a lot of other issues besides pay. While driving for Uber, Mr. Khosrowshahi discovered that believing incentives would fix everything was not the answer. It became clear to him that there were fundamental changes that needed to happen.

Problem-solution is a practical, flexible, effective approach for marketers when it comes to product and service renovation and innovation. Ubfirtunately, it is not used enough. And, it is certainly not used enough to improve employee brand-business interactions and experiences.

A problem-focused approach is the most productive way to identify new development and marketing opportunities. Asking drivers what they might want is not that helpful. Usually answers to what people want are generic such as “I want a good driving experience” or “I want to feel good about my Uber role.” 

Unlike wants, problems are not speculative or imagined. Problems are based on actual experience; problems are real roadblocks or snags or impediments to seamless functioning. 

For example, Mr. Khosrowshahi discovered problems with the sign-up process where drivers choose whether they wish to deliver food or people. Mr. Khosrowshahi is quoted as saying the process was “clunky.” Uber fixed this problem.

While driving for food delivery, Mr. Khosrowshahi discovered that food pick-up at restaurants was “confusing” and so this was also fixed. Uber created a delivery driver video to clarify the steps for food pick-up making it easier for drivers. Also, there were issues with misinformation on how many orders were to be picked up and delivered. Uber fixed this as well.

As for driving passengers, Mr. Khosrowshahi became as frustrated as many Uber drivers were. He learned that not all passengers were polite. Mr. Khosrowshahi was “punished” – as Uber drivers are – for certain actions such as rejecting some trips. The solution is the ability of drivers to see passenger pick-up destinations in advance without restrictions. Furthermore, Uber is working on making some destinations more attractive. This has changed the way in which Uber calculates pay for drivers. 

There were glitches in the software that stymied address navigation for multiple passenger pick-ups. This was fixed, as well.

The list of problems in The Wall Street Journal article is long. And, to Uber’s credit, solutions to all of the issues were created. The solutions not only covered Uber-specific problems but also include driver safety issues relating to conditions such as maps that avoid accident-prone turns and in-car video cams. 

Problem Detection is a superior way to market, whether externally or internally. As the Deloitte study reiterates, some of the priorities in developing a workforce built on trust are: 

1) implementing technologies for workers to complete their tasks effectively and efficiently;

2) listening and solving based on the worker experience and their evolving needs; and 

3) generating initiatives for different segments of the workforce.

Mr. Khosrowshahi and his team addressed these priorities using Problem Detection. It is clear from this Uber initiative that internal marketing can be boosted and furthered by focusing on solving workforce problems. Of course, an aligned workforce wants answers to questions about: What is my role? What do these changes mean to me? How do I grow? And, other important issues around education, inspiration and leadership. 

But, as Uber is showing, fixing the most important and frequently occurring “experience” problems should be an integral part of any internal marketing program. Uber now has shown its commitment to its driver workforce by listening, learning and changing. This is making Uber the preferred choice for many people who wish to drive for food delivery or passenger pick-ups and drop-offs. Being the preferred employer is an incredible competitive advantage. Internal Problem Detection can help make this happen.

Claire's Marketing

Claire’s Pierced The Boredom Barrier With Global Innovation

/in /by

For retailers, Covid-19 did a lot more than create supply chain disruptions causing huge inventories of unwanted items and changes in customer behaviors. Retailers put innovation on the back burner. According to The Wall Street Journal, retail brand-businesses “paused” innovation for the past three years. A playing-it-safe strategy was adopted by multiple retail establishments. Best Buy, Nordstrom’s and The Gap are cited as retailers with “a dearth of new products, styles and colors.”

Now that the urgency of Covid-19 has abated and with consumers shopping in person again, there is a race for newness. As one consultant indicated, ‘Something as simple as a new flavor, color or style can create demand. With a decline in newness, we are boring consumers to death.”

Innovation is generating products, services and experiences that are breakthrough and transform the market or the organization addressing known or unknown human needs. Innovation reflects higher risk. Innovation is life-asserting for brand-businesses. But, so is renovation.

Renovation is improving the efficiency of or evolving the performance of existing products, services and experiences. Renovation reflects lower risk and should happen on a continuous basis.

Both innovation and renovation are critical for brand-business success. Lack of innovation – and renovation – are not just about “boring people to death.” Lack of innovation – and renovation – is brand-business mismanagement. This is because without innovation (or renovation) the brand-business stultifies. 

Based on The Wall Street Journal story, one might think that retailing is in yet another predicament: no new products or services. Worse yet, because of the difficulties faced to Covid-19 and its aftermath, retailers are more risk averse. Risk aversion is anathema to innovation and renovation

Except at Claire’s. Claire’s is a shining star in retail, unmentioned in The Wall Street Journal article. Claire’s has been a font of innovation and renovation. If you think Claire’s is just that ear-piercing, affordable earrings teen magnet, mall kiosk you would be wrong.

Let’s set the record straight. In case you missed it, Claire’s Holdings LLC was recognized by Fast Company’s (the monthly business magazine) prestigious, annual list of the World’s Most Innovative Companies for 2023. Claire’s was number two on the retail sector list.  Fast Company recognized Claire’s creative brand-business strategy that turned Claire’s into a global, powerful, fun fashion brand. Additionally, Fast Company cited Claire’s ability to connect with its consumers through surprise and delight with on-trend offerings, consistency of the total brand-business experience and its caring customer service.

For those who do not have tween, teen and/or young girls in their household, Claire’s is an American retailer of accessories, jewelry, and toys. Claire’s is a “fun fashion destination for jewelry, cosmetics, accessories and ear piercing.

On its website, Claire’s indicates that it is 

“… a global brand powerhouse for self-expression, creating exclusive, curated and fun fashionable jewelry and accessories and offering world-leading piercing services. The company operates under two brand names: Claire’s and ICING.”

Founded in 1961, Claire’s 

“… operates 2300 Claire’s stores in 17 countries throughout North America and Europe and 190 ICING stores in North America. Claire’s also sells Claire’s products in thousands of concessions locations in North America and Europe… and Claire’s has more than 300 franchised Claire’s stores, located primarily in the Middle East and South Africa.”

While many retailers were drowning in excess merchandise and figuring out what to do to survive the holidays, Claire’s was proceeding with its innovative growth strategy. Underlying its strategy is an exceptionally clear understanding of Claire’s target audience. Claire’s calls these individuals “Genzalpha.” According to Claire’s, the Genzalpha cohort is 

“…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.” 

By knowing its prime prospects, their needs, problems and values, Claire’s became a tween, teen and young girls brand-business juggernaut. Rather than being Covid-19 risk averse, Claire’s has been relentless. And, its focus is not specifically on individual products. Claire’s is innovative in experiential ways.

For example, Claire’s has a presence in grocery stores. This makes sense. Lots of Claire’s customers go to the grocery store with their parent(s) or caregivers. Claire’s creates custom programs for each grocery store. There are currently 2200 grocery locations. These programs offer curated selections of Claire’s hair accessories, jewelry and cosmetics. According to Progressive Grocer, a grocery trade publication, Claire’s is present in Kroger and Albertson’s as well as Food City, WinCo, Giant Eagle, Smart & Final and Schnucks. And, according to The Business Journals, Claire’s is planning to open an additional 230 more in-grocery-store locations. Claire’s has programs in non-grocery stores such as CVS, DSW, Walmart and Macy’s. These special programs are in addition to the 2300 global stores and the 190 North American ICING Stores.

In continuing to be where its customers and their parents are, Claire’s inked an agreement with Walmart last September to expand Walmart’s selling of Claire’s products to 2500 Walmart locations. There are also 360 Walmart locations with Claire’s stores inside.

Claire’s focus is on fun fashion and self-expression.  For Claire’s audiences, being an individual with a unique “look and style” is essential. But, so is belonging to the Claire’s community. These are the customers who want to be different just like all of their friends. 

To bring Claire’s brand-business to life, Claire’s opened a new store in Paris, France, this March 2023. The Paris location is a testament to the future of the Claire’s brand. As described by Claire’s president of Europe, 

“We want our customers to feel inspired – through our product, our content and our innovative creative partnerships – but most importantly, through the shopping experience itself. The new Paris store is a portal into our brand world and a glimpse into our future. Full of immersive experiences and innovative touches, we’re inviting consumers to have fun, experiment and co-create with Claire’s.”

ENP Newswire, an online newsletter, describes the Paris store as follows:

“The 1,200 square foot Paris store is designed for total brand immersion with experiences and social storytelling at its core. An ear-shaped ‘chandel-ear’ designed by (Nicola) Formichetti (Claire’s Creative Director in Residence) celebrates the brand’s #EarPrint campaign, whilst two dedicated ear piercing studios showcase Claire’s industry-leading service and a content creation studio invites consumers in to have fun with creativity. The store will serve as a launch pad for exclusive, new products and test lines while hosting a steady rotation of experiential and pop-up events.”

Not resting on its brick-and-mortar presence around the globe, Claire’s partnered with Formichetti and V Magazine. The idea is to shine a youth-oriented spotlight on “photography, fashion, music and culture for the new generation.” Called MINI V, the magazine will be “… a nonstop festival of artistry, beauty and inclusivity by exploring today’s fashion and pop-culture trends and sparking important conversations around topics like cyberbullying, self-acceptance and political policies through powerful essays penned by Gen Z activists, artists and politicians.”

As Ms. Formichetti said at the Paris store opening with the news of the MINI V magazine, 

“Claire’s and I believe in individuality, and together we hope to send the younger generation on an enjoyable and fun journey of self-expression,’ said Nicola Formichetti. ‘With the launch of MINI V, we have a unique opportunity to offer young consumers tools to unlock their personal style while also providing a space to explore deeper topics and a powerful platform to share their voices.”

Contrary to The Wall Street Journal’s discussion of innovation in retailing, Claire’s shows how innovation is more than flavors, colors and style. 

Innovation and creativity involve both risk and courage. Creativity is not an isolated event. Creativity is not a process. Creativity is not a department. Creativity is a cultural mindset. Creativity takes all kinds of ingredients. It takes time; it takes energy; it takes enthusiasm. It involves passion for an idea. Claire’s created a great global creative, innovative community focused on its customers.. Claire’s created a place where people are more concerned with the quality of the inspiration rather than the quantity of the ideas.

Claire’s took the time to progress from an ear-piercing brand (more than 100 million ear piercings since the service began over 25 years ago) to a brand-business helping its customers be themselves and express themselves by providing the products for self-expression in a fun, fashion-oriented experience.

.