The in-store experience is set to change as well. After experimenting with warm sandwiches, the company has decided to give up on the egg-and-cheese and concentrate on its core business, namely coffee. Speaking of coffee, it would appear that Starbucks is testing $1 cups of coffee, in a move that is surely designed to counter the likes of McDonald's and Dunkin Donuts. For the company that built an empire by selling $4 frappucinos, this could be a radical move, made necessary by increased competition and a lagging economy.
After a few years of branching out and experimenting with new items (sandwiches, cd's, etc...), Starbucks is being challenged on its own turf, which is why company is looking at ways to get back the upper hand. But is undercuttind Dunkin' Donuts on the price of a cup of coffee really the way to go? Starbucks currently stands for premium coffee drinks and a premium store atmosphere. $1 cups of coffee run the risk of cheapening the company brand, and might also cannibalize sales of the more expensive (and more profitable) drinks.
One thing is for sure: Starbucks is going to face a lot of competition in the next few years, and if it intends to keep building thousands of stores per year, it will have to come up with something new.
-"Starbucks Tests $1 Cup, Free Refills in Seattle", 01/23/08, The Wall Street Journal
So when Wal-Mart announced on January 23rd its ambitious plans to become a greener company and offer cheaper health care to companies, it was easy to be skeptical. Wal-Mart has long been known for its low wages and often devastating impact on small businesses around its stores. But the Bentonville giant can't be discounted that easily. What makes Wal-Mart stand out is its sheer size: over $350 billion in sales annually, and a supply chain second to none.
What does this mean? If Wal-Mart actually follows through on its promises (which include forcing suppliers to meet stricter ethical standards, selling hybrid cars, and helping companies manager health care costs), the impact could be huge. Not only because Wal-Mart is so big, but also because other retailers will want to avoid being left in the dust.
Is Wal-Mart doing all this because it wants to help the environment? Probably not. But in this case, it might not matter.
-"Wal-Mart Chief Offers a Social Manifesto", 01/24/08, New York Times
-"Wal-Mart 2006 Annual Report", Wal-Mart.com
Still, many consumers (44% of them, according to an AOL-AP Autos poll) think that Japan makes the best cars, this despite recent improvements in GM's dependability ratings. So GM is putting out cars like the Malibu, and hoping that in time, it can recapture some of the market that it lost to Toyota and Honda. It's likely that GM's turnaround will take years: many consumers, especially younger ones, are highly skeptical of American cars.
In the end, this will be an uphill battle for GM and the Detroit three. But it would seem that GM is at least headed in the right direction. A billboard outside of Detroit featuring the Malibu contains these words: "We're tired of being a foreign car in our own country". I think that says it all.
-"Too many buyers for Malibu", Detroit News, January 3rd 2007
-www.jdpower.com
-"Americans still favor foreign cars" (http://www.msnbc.msn.com/id/16524038/)
The event will be held in two sessions:
Session 1: Customer Experience Management
An attractive
customer experience is critical for differentiating brands.
In his presentation, Dr. Bernd Schmitt will cover tools and
methodologies for managing the brand experience. He introduces
the five-step Customer Experience Management (CEM) framework,
a comprehensive tool for managing the customer experience and
connecting with customers at every touch-point. The framework
demonstrates how CEM enables managers to:
" Gain original insight into the customer's world
" Develop an experiential strategy platform
" Create a unique and vivid brand experience
" Provide dynamic interactions at the customer interface
" Innovate continuously to improve customers' lives.
As part of the CEM framework, Mr. Schmitt will present cases of successful CEM implementations in a wide variety of industries. Join us to see how he links customer experience to customer equity - the financial value of customers.
Session 2: Experience Engineering
Through illustrations from Fortune 100 clients, Dr. Lou Carbone will share how the systematic design and delivery of experience clues can have immense impact on customer value, loyalty and the bottom line. Experiencing thought leader and author Lou Carbone will change the way you think about customer experience forever. His message to business leaders and professionals is simple: Create customers that come back and customers that tell others, by connecting emotionally with them through the experiences you deliver.
Carbone urges business to focus on managing experience "clues", conscious and unconscious, because experiences are what customers value most. He stresses that the world has moved from making and selling to sensing and responding-a dynamic change that requires new competencies.
Complete info here >>
Gone are the days when environmental promotions consisted of a serious message paired with a side of guilt. No longer merely endorsed by the granola-crunchers of the world, the idea of “going green” is today downright cool.
Pro-environment agencies, for instance, have revamped their advertising campaigns to fit with a more laid back image. 1% for the Planet’s new ads capture the public’s attention with large-font all-caps statements which go against everything such a company would defend. “If the dolphins are so smart, they would start a small business and save themselves?”, reads one of their many ironic advertisements. By flipping around the typical “this is why you should care” statement, the campaign sends a perhaps even stronger message of “this is how ignorant it is not to care.” All this without losing its light-hearted touch.
Another company which makes it fun to be green is Ben & Jerry’s, built from the get-go on principles of environmental sustainability. The company that brought you ice cream flavors like “Phish Food” and “Chunky Munky”, brings the same attitude to “Lick Global Warming”. This new campaign involves a partnership with Dave Matthews Band and SaveOurEnvironment.org, and integrates the logo on their packaging with a website including games, facts & figures, and most importantly – information on what you can do to help the environment.
Green also plays its part in the beauty product market – as many would pay a premium for the knowledge that they are treating their planet and their skin as they apply body lotion made only of the purest ingredients. The Body Shop, a chic English beauty firm, prioritizes social responsibility and feeds off its powerful brand, characterized as high quality and eco-friendly, to give to the many environmental organizations it supports.
Laid back and fun, but also swanky? “Green” now seems to represent a multi-faceted image, a range of attributes applicable to differing concepts of "cool". And considering the large-scale human initiative necessary to make a significant positive impact on our planet, having the Green Concept relate to a variety of aspirations for a variety of people is a powerful idea.
In a world increasingly filled with advertising clutter, marketers are trying to find new ways to cut through the noise and send their message straight to the consumer. Although the phenomenon of celebrity endorsements is not new, there has been a resurgence of this trend in recent times.
Brands are using celebrities as sources of product differentiation through co-branding, a step beyond endorsement. For example, beginning last June, bargain clothes retailer Steve and Barry’s signed an exclusive agreement Sarah Jessica Parker to sell a line called “Bitten” in its stores. Parker, a celebrity famous for her Sex and the City character’s impeccable (and often expensive) style, will promote the brand of clothing consisting of 500 items ranging between $7.98 and $19.98. Along the same lines, Kate Moss designed a line for English retailer Topshop that became a hit with fashionable yet price conscious consumers. In fact, the line was so popular that it restricted shoppers to buying 5 items each. The success of the line continued in the United States when it was sold at discount retailer H&M, later expanding to upscale Barney’s New York.
While celebrity endorsements are a popular way for brands to gain publicity, there is a difference between celebrity endorsements and celebrity branded items. While endorsements claim “I like it” branded approaches say “I made it.” Both approaches are evident in many cosmetic campaigns. For example, Tyra Banks endorses certain Cover Girl products, claiming to use the products with great satisfaction. On the other hand, Queen Latifah has represented Cover Girl in the branded approach where she promotes the Queen Collection as a product line in which she had great influence and involvement in creating.
This trend of celebrity endorsement extends beyond clothing lines. Celebrities are endorsing products that range from cars to liquor. Harbrew Imports has begun a campaign that uses different celebrities to endorse different drinks; it has even signed Danny DeVito on to promote the launch of Lemoncello.
Such a strategy of product differentiation and branding has both upsides and downsides. On one hand, celebrities may add a credibility and likeability to a product. This may induce fans and new consumers to sample and eventually adopt the product. This trend may be an effective way to cut through the clutter that has come to characterize a market inundated with new products and increasingly skeptical consumers. For example, Proactiv, a brand of skin products, has used a series of celebrity endorsements such as Jennifer Love Hewitt and Jessica Simpson to promote the product. Although the ads are infomercials, the celebrity testimonies add credibility to the ads that have resulted in good publicity and increased brand awareness.
However, such source attractiveness may backfire. Using a celebrity endorser is both an art and a science; in order to be effective, an advertiser must use a celebrity that will enhance the marketer’s message without overshadowing it. In addition, an overexposed celebrity will not have the same effect on consumers as a celebrity that only endorses brands and products selectively. While such dangers may be guarded against by exclusivity contracts, marketers must weigh a celebrity’s past and present endorsement deals in evaluating a good spokesperson for their brand. Also, a celebrity endorser may become a liability to the brand because actions taken in their personal lives may affect their public image, and in turn, brand identity. For example, Nike and Reebok quickly cancelled their endorsement deals with Michael Vick, an Atlanta Falcon’s football player who pleaded guilty to federal dog fighting charges. In an attempt to disassociate their brands with a liability, Nike and Reebok sought decisive action in hopes of minimizing negative impacts of Vick’s personal life upon their brands. Pepsi is another example; in various attempts to match the brand equity of Coca-Cola, Pepsi Co. has used celebrity endorsers such as the Spice Girls, Michael Jackson, and Britney Spears to draw attention to their product and brand it as a trendy choice of soda. However, the volatile careers and personal lives of such celebrities have called both positive and negative attention to the brand. Even though Pepsi Co. has spent large sums in advertising expenditures, it still has a long way to go before it can match the timeless marketing campaigns of Coca-Cola, including Santa Clause and the Polar Bear.
Also, there is an argument that the pairing of a popular celebrity with a favorably perceived product ultimately detracts from the product’s brand image. If the product already has a solid brand image, an endorsement by a celebrity may have a negative impact because it does not allow the product to stand on its own.
Have retailers and advertisers found an effective way to publicize their products? The jury is still out. While celebrities may induce immediate sales and short-term growth, questions remain about the possible long-term impacts of celebrity endorsements. The personal lives and public images of celebrities may not be worth the short-term effects; their association with the brand may endure longer than the temporary boost in sales.
Sources:
Belch, George E., and Michael A. Belch. Advertising and Promotion. 7th Ed. New York: McGraw-Hill Irwin, 2007.
Janoff, Barry. "Sarah Jessica Parker to Star for Steve & Barry's." BrandWeek. 1 Oct. 2007 .
Americans today are obsessed with eating healthier. This trend, along with the hectic lifestyles of consumers, has heralded the arrival of functional food and beverages on the market. The idea here is that consumers are looking for a combination of convenience and health properties.
This is where functional foods come into play. Functional foods can be defined as "foods that are enhanced with added ingredients to provide specific health/disease benefits beyond general nutrition". The popularity of these foods across age segments is both an opportunity and a challenge for traditional food and beverage companies. As of 2007, the functional beverage market alone is valued at $9.8 billion, with the highest use among consumer aged 18 to 34. Energy drinks come to mind, with a different energy drink for every target market.
Candy makers are among the latest to take advantage of this opportunity, with a slew of new chocolates that promote the potential benefits of antioxidants. Keep in mind that antioxidants have not been proven to improve one's health (in fact, very high doses can have a negative effect!). Nevertheless, functional foods are appearing everywhere. The bulk of the growth is actually taking place in the beverage market. One success story is that of Glaceau's Vitamin Water, which grew at a staggering rate of 433% from 2004 to 2006. Vitamin Water is an enhanced water drink with added vitamins and nutrients. Unsurprisingly, Glaceau's parent company, Energy Brands, was acquired by the Coca-Cola Company in June 2007. Many other drinks focus on "healthy" fruit combinations such as acai and blueberry (apparently some fruits sound "healthier" than others). And some drinks incorporate up to 200% of the daily recommended amount for certain vitamins, without scaring anyone off apparently.
Other attempts have been more controversial. Enviga, a sparkling green tea, was launched by Coca-Cola in 2007. The company claimed that Enviga would burn up to 100 calories if the consumer drank three cans a day. In February of 2007, the Center for Science in the Public Interest filed a lawsuit against Coca-Cola, asserting that Enviga's calorie-burning "properties" amount to fraudulent claims (losing calories by drinking ice tea was too good to be true apparently). This type of backlash exemplifies the sensitive nature of functional foods in general. Consumers are looking for actual benefits, and even the suspicion that these claims are just part of a marketing ploy can potentially affect the market in a negative manner.
Just as interesting is the way in which beverage companies such as PepsiCo and Coca-Cola have approached the branding process for functional beverages. In most cases, the solution has been to acquire independent companies and essentially leave the brand unchanged. Odwalla and Vitamin Water products, for example, bear no mention of the Coca-Cola company name. From this we can infer that the strategy is to position these drinks as independent and possibly more authentic. More traditional drinks such as soda tend to be viewed as unhealthy. Nonetheless, Pepsi and Coke have been adding functional benefits to their flagship drinks, with Diet Pepsi Max and Diet Coke Plus appearing on shelves recently.
What does all this mean? For the manufacturer, it means continually innovating with new drinks and new functionalities while making sure that the consumer still has a clear understanding of what the product does. Manufacturers will also need to deal with the problem of economies of scale: how to produce so many different foods and beverages in a cost-efficient manner? For the retailer, it means a growing diversity in the products that appear on the shelf. For the consumer, it means even more choice (and probably more confusion) and a food for every ailment.
In the future, we might see manufacturers merge the benefits of several drinks into one as the number of variations becomes hard to cope with. In any event, the consumer must be able to trust the manufacturer and understand the benefits of the drink.
Welcome to the age of functional foods...
Logically, strategy must precede metrics.
However, in many companies, metrics develop a life of their own and begin to dictate strategy.
Because of reward and incentive systems based on key performance metrics, managers all too often manage metrics such as ROMI rather than managing the business. For example, when profits or returns are limited under adverse economic conditions, companies often cut back on marketing investments in order to produce acceptable performance (ROMI’s). Ironically, for strong companies, this may be the best time to go on an offensive because less robust competitors may be weaker still.
Using the same metrics to both measure past performance and to resource the future can have disastrous results:
- The best way to kill new product innovations that have long-run payoffs is to use short-term, backward-looking metrics such as margins, turnover and return on assets that favor incumbent products thus starving innovations of badly need growth funds.
- Blurred insights can lead to questionable decisions. For example, higher short-run sales response elasticity for price-promotions has led to a systematic decrease in the share of marketing mix budgets allocated to advertising in the long run.
- Because marketing activities are listed as expenses rather than investments, they must typically “pay” for themselves within a year. Ironically, market-based assets such as customers and brands are the only assets that appreciate, and not depreciate.
I always warn my clients that taking a half-baked product to market will actually do more damage than good. Now let's see if the same applies to nation-branding.
The Olympics will focus the media spotlight on China. But will China actually enjoy the focus? Will the Olympics help or hurt brand China?
The hurt has already begun.
In a New York Times article "As China Roars, Pollution Reaches Deadly Extremes", Joseph Kahn and Jim Yardley tell us that "Environmental degradation is now so severe, with such stark domestic and international repercussions, that pollution poses not only a major long-term burden on the Chinese public but also an acute political challenge to the ruling Communist Party."
Apparently the government has banned publication of data on the subject for "fear of inciting social unrest."
But the Kahn and Yardley give us some data nevertheless:
- An internal, unpublicized report by the Chinese Academy of Environmental Planning in 2003 estimated that 300,000 people die each year from ambient air pollution, mostly of heart disease and lung cancer. An additional 110,000 deaths could be attributed to indoor air pollution caused by poorly ventilated coal and wood stoves or toxic fumes from shoddy construction materials, said a person involved in that study.
- Another report, prepared in 2005 by Chinese environmental experts, estimated that annual premature deaths attributable to outdoor air pollution were likely to reach 380,000 in 2010 and 550,000 in 2020.
and:
- A World Bank study done with SEPA, the national environmental agency, concluded that outdoor air pollution was already causing 350,000 to 400,000 premature deaths a year. Indoor pollution contributed to the deaths of an additional 300,000 people, while 60,000 died from diarrhea, bladder and stomach cancer and other diseases that can be caused by water-borne pollution.
Wait, there's more.
An official study to estimate the environmental cost of China's runaway economic growth was shut down prematurely.
Greenwashing, apparently, is in. Here's an absurd story to drive the point home: "Villagers in southwestern China are scratching their heads after an estimated more than $60,000 was spent to paint an entire barren mountainside green."
Whoo-hoo.
Smog from China is contributing to bad air quality and possibly even affecting the climate in parts of the western United States. The Telegraph also reports: "Almost a third of the air over Los Angeles and San Francisco can be traced directly to Asia..."
And now, to make things worse, they're probably going to beat up the Chinese enviromentalists who dare to speak up. Again from NYTimes:
"At least two leading environmental organizers have been prosecuted in recent weeks, and several others have received sharp warnings to tone down their criticism of local officials. One reason the authorities have cited: the need for social stability before the 2008 Olympics, once viewed as an opportunity for China to improve the environment."
Ouch.
Nation Branding 101: Embrace reality.
Welcome to the Emory Marketing Institute's blog - where we focus on the intersection of branding practices and business performance.
Our goal is to start meaningful conversations around a few topics of interest to us:
- Branding History
- Benefits of Branding
- Brand Strategy
- Resource Allocation
- Brand Lifecycle Management
- Marketing Programs
- Operations Management and Branding
- Brand Strength Assessment
- Brand Performance
- Brand Valuation
- Business to Consumer Branding
- Business to Business Branding
- Technology Branding
- Services Branding
- Branding Case Studies
- Branding Best/Worst Practices
- Private Label Competition
- Branding Commodities
- Branding in Emerging Markets
- Branding Retail Organizations
We invite you to participate, to contribute - ideas, suggestion, comments and insights. Join us in our learning journey...
