Brand Architect

The Fickleness of Brand Loyalty

Tom Fishburne’s cartoon on brand loyalty is very accurate. In his notes, Tom states “Brand loyalty can be pretty fickle. Marketers often overestimate the motivations of their brand loyalists and how prominent their brands are in their consumers' lives. This is particularly apparent when more than half of all grocery items are sold on price promotion. We train consumers to buy our brands on deal and then wonder why we have so many brand switchers. To exacerbate the challenge, many categories feature very little difference across competing products, making it even easier to substitute brands.” To read his full notes, click here.

Survival by the Most Adaptable

Also true for brands.

Not a Fan of Groupon

I have never been a fan of Groupon and similar discounting services, believing that they succeed more in cultivating the deal hunter mentality rather than delivering the promised legions of loyal consumers for participating brands. Management cartoonist Tom Fishburne is also not a great fan and captures the danger beautifully in the above cartoon and his notes which accompanied the cartoon.

“The last time I tried to redeem a Groupon, I arrived at the sushi restaurant to find an “out of business” sign in the window.

“The restaurant had launched a daily deal promotion six months before. Half-price sushi at a good restaurant is a great deal for consumers (more interesting than the eyebrow waxing and air duct cleaning deals I usually see). Sure enough, the restaurant was suddenly and constantly full, and I saw Groupon printouts on most of the tables every time I went. From all the traffic, it looked like a very successful restaurant — until the moment they went out of business.

“The daily deal bandwagon of the last couple years has created a number of cautionary tales like our neighborhood sushi restaurant. I think the lessons apply to any premium brand that uses price promotions, a tactic that long predates Groupon of course.

“There’s a role for price promotions to bring in new consumers. But tread carefully. Deep discounting carries seen and unseen costs. Beyond the discount itself, it can bring in deal hunters who will never buy full price and it can train your customers to only buy you on deal. If you’re not careful, it can irreparably impact your profitability.”

A Management Consultancy Embraces Creativity

AdAge recently published an article about advertising agencies and technology consultancies competing over software systems to handle and analysis data from large-scale digital marketing. But what interested me most was the fifth paragraph of the article:

“This week, consulting firm Deloitte introduced a unit, Deloitte Digital, that it said will handle strategy, creative, user experience, engineering and implementation services for marketers in digital channels. The firm, which acquired mobile-agency Ubermind this year, said it plans to expand Deloitte Digital aggressively over the next year.”

A major global management consultancy is providing creative services for its client and will build and implement the technology to deliver the creativity. That is a gamer changer and further challenges the creative agencies distinct value add to clients.

Perspective is everything

 

Rory Sutherland, Vice Chairman of Ogilvy Group, spoke at TEDxAthens about the importance of perspective and how the presentation of information influences people. He argues that reality is often less important than the perception of that reality.

Toys ‘R’ Us Offers Insights as it Battles to Reinvent Itself

Interesting article in The New York Times about Toys ‘R’ Us battling to reinvent itself as it struggles with management defections, a decline in same-store sales and relentless competition from Walmart and Amazon.

Two key observations in the article: being physically big has become a problematic business model for many retailers, and traditional video games are being hurt by more nimble game manufacturers focusing on smart phones and tablets.

These observations are summed up in a couple of paragraphs taken from the article.

“Toys ‘R’ Us is part of a group of big, lumbering retailers trying to reinvent their businesses for a new era. Sears is trying to turn around sales declines through customized offers to customers, in-store technology and an online push. Best Buy is adding small stores to balance its big-box ones. J. C. Penney is creating stores-within-a-store to give shoppers more variety.”

“A major challenge has been a sharp reversal in video game sales. Once an area of growth, thanks to Nintendo Wii and other consoles, they have fallen as children move to iPhone games and apps for iPads. Last year, about 8 percent of Toys ‘R’ Us’s business was in video game sales, down from 11 percent in 2009.”

The Future of Branding is Nonfiction

Author and futurist Douglas Rushkoff, in an interview with Fast Company, argues that brands needs to strip away the carefully crafted stories and mythologies and simply tell the truth. The value of the brand, Rushkoff argues, is engaging consumers in an open and frank way. Here are some excerpts from the interview:

“[But] it’s not about creating a mythology around the way a product was created, so it’s no longer “these were cookies made by elves in a hollow tree.” That’s not the value of the brand. The value of the brand is where did this actually come from? What’s in this cookie? Who made it? Are Malaysian children losing their fingers in the cookie press or is this being made by happy cookie culture people?...

“Every company has a social media strategy whether they know it or not. You can have your dedicated social media person chasing down consumer complaints, but your real social media strategy is how are the people who work at your company and the people who buy from your company and people who supply to your company, how are they talking about you in social media? The way to make them talk about you [favorably] is by walking the walk of the thing that you do. And that’s so hard for so many of these companies because they’ve become so abstracted. They’ve become so distanced from the core competence of their industry.”

In reply to a question about what marketing companies will look like in the future, Rushkoff spoke of a shift from creative communication to more PR-type communication.

“It will be companies that figure out how to communicate the non-fiction story of a company, so it’s going to look a lot more like a communications company than a creative branding agency. It’s going to look a little bit more like PR, in some sense. It’s going to be people who go and figure out what does your company do and how do we let the world know about that?”

Reactivity, Flexibility and Speed

Increasingly these days brands are accepting and embracing the fact they need to react swiftly to ongoing changes in the market. The above quote comes from The Wall Street Journal and an article about how luxury brand Cartier is approaching the reality of change. "If something happens, and you start to sense a reverse trend coming, you must be able to reduce production overnight, otherwise you will build up your stock and reduce your cash-flow," Cartier President and CEO Bernard Fornas told the newspaper. "I am able to reduce production at almost no cost, quicker than anybody else in the market," he says. "Similarly I can increase production quicker than the others. That is very important; we are in a volatile environment."

When Brands Fail to Realize What They Have

I came across an interesting observation by consumer market researcher Robert Passikoff of Brand Keys who noted that “Kodak is going to stop doing what they were once the first to ever do. No, not produce Kodachrome. They stopped that 10 years ago. They’re stopping the manufacture of digital cameras.”

I didn’t know that Kodak invented the digital camera in 1975, but, as Passikoff notes, “because they had a 90% share of the US film market they relied on film and developing chemicals to make a living. Digital remained an afterthought.”

Well that afterthought has contributed substantially to their Chapter 11 bankruptcy. They won’t be the first brand not to realize what they have. Nor will they be the last.

As Print Media Embraces Video, So Must Brands

Increasingly print news media are embracing video in the online arena and that further heightens the need for brands to use online video as a way of telling their stories.

The New York Times reported recently that the Internet and portal device like the iPad have redefined the print media business and “made it possible for, say, The Wall Street Journal to compete with CNBC and CNN for viewers’ time”.

The Wall Street Journal already produces roughly four hours of live programming each weekday. Other players like The New York Times and The Washington Post are also embracing video. Even existing online news organizations are adding more and more video to their offerings.

“The Huffington Post said that it would enter the emerging market in a big way this summer with 12 hours of live video each weekday,” The New York Times reported.

The major implications for brands are two-fold. First the increase in online video offers more opportunities to deliver video ads (one of the main lures for print media to embrace video is the higher CPM fees that video advertising attracts).

Secondly, and more importantly, is that brands (and their managers) must become fluent in communicating in the online video medium. Text press releases with quotes attributed to, but hardly ever written, by CEOs will be complemented and/or replaced with video releases of the CEO speaking directly to his or her audience.

The increase in video reporting will also increase the need for background video on the brands and/or their industries. Brands that can supply that video in a way that they don’t seem to be subjective or spin doctoring will be well positioned to control how the brand is portrayed to the world.