3R's of Back-To-School

It's not only parents happy to see their children go back to school in the next few weeks. Retailers are also celebrating. According to our annual Back-To-School survey, average spend for clothing and supplies is up 10% over a year ago, or $584.


The consumer's view of the traditional retail 3R's used to be 'retailer,' 'rates,' and 'requirements,' - which retailer was offering the best prices for stuff the kids really needed. But as parents have already earned their Ph.D.'s in smart back-to-school shopping, this year 'requirements' has moved to the head of the class.

Unlike other major purchase events like Mother's Day, there's a more lopsided distribution in terms of which retailers will be the beneficiaries of back-to-school shopping: Discount Stores 95%, Department Stores 60%, Office Supply 55%, Online 50%, Specialty Retailers 45%, and Catalogs 35%. For some lessons as to parents' shopping plans, we invite you to read Jill Radsken's Boston Herald article, "Class Action."


The top-10 retailers who got A's in consumers' intent-to-shop were:



1. Amazon

2. Bed, Bath, and Beyond

3. Gap

4. J. Crew

5. Kohl's Footlocker

6. Nike

7. Staples

8. Target

9. TJ Maxx

10. Zappos



What brands get what piece of the academic pie is ultimately determined by what retail brands actually stand for. Brand meaning can quickly matriculate into surrogates for added-value, and these days you don't need a crib-sheet to discover that consumers seek out brands that possess meaning and act more positively to those retailers who do as well.


And that behavior should be a fundamental lesson for all retailers.


Brand Keys, Inc. partner of
Brand Lounge in the Middle East
www.brandloungeme.com

Brand is Grand

The "Decade of the Brand" opens with 2010 as consumers continue to search for meaningful value-and use brands as a critical variable in the value equation.


For all 518 brands in the 71 categories tracked in Brand Keys' 14th annual Customer Loyalty Engagement Index®, attributes and loyalty drivers relating to "brand" have increased dramatically. And while a powerful finding, it's not entirely surprising. Our 2009 findings predicted that value, not price, was the watchword in consumer behavior. And you can't have the value conversation without the brand conversation, and that makes brands a surrogate for value and more important than ever.


But we're talking about brands - real brands, not just well-known products and services or the latest celebrity-endorsed offerings that stand for nothing in consumers' minds. The desire for real brands that mean something has reached its highest level of consequence since the 1960's, and real loyalty and engagement assessments can tell you what you really need to know: how consumers will behave in the marketplace, and most importantly, what will get them to behave more positively toward you.


For additional insights into 2010 consumer loyalty we invite you to read Noreen O'Leary's Brandweek review, "Starbucks and Wells Fargo Surge in Customer Loyalty." The complete listing of the 71 category rankings can be found at www.brandkeys.com/awards


At a time when brands are struggling to differentiate from their competition and to find ways to profitably engage their customers, the changes this year serve as a 'bellwether' for marketing managers. It will be the products and services that dig in the right place, based on a truly consumer-centric view of their category that will strike gold, and establish themselves as this decade's brand leaders.


Brand Keys, Inc. partner of
Brand Lounge in the Middle East
www.brandloungeme.com

Listening to a Billion Consumers

Windows 7, the latest version of Microsoft Windows, a series of operating systems for use on personal computers, was released today less than three years after the release of its much-denigrated predecessor, Windows Vista.

With the official launch currently underway around the globe, Microsoft has released four new advertisements to market Windows 7. This round of advertisements is very direct and dubbed 7-Second Demos, with the theme “I’m a PC and Windows 7 was my idea,” an extension of the “I’m a PC” campaign, having consumers take credit for “developing” various aspects of the new operating system.

We cannot comment upon whether Windows 7 will live up to promises and expectations, but we think that the concept of a billion consumers co-creating the product, is a wonderful example of meaningfully leveraging the real voice-of-the-consumer, an often overused advertising expression.

Lots of companies – especially big companies like Microsoft – do all kinds of research. Most of that research ends up providing excellent answers to meaningless questions, and virtually none reflect the real voice or expectations of the consumer. Check out the new GM campaign if you doubt us. And while a product positioning approach of “we not only hear you but we’ve listened to you” isn’t new, it’s usually the small niche brands that do it well.

And it shouldn’t be surprising that it’s Microsoft who’s doing it now. After all it was Bill Gates who pointed out this strategy back in 2000, in his book “Business @The Speed of Thought.” “Your most unhappy customers are your greatest source of learning.”

And perhaps a meaningful voice for the brand.

What do iPhones, Grey Goose, Wal-Mart, and Mary Kay have in common?

Each was one of the top-10 brands in this year's Brand Keys Loyalty Leaders List. This year we rated 63 categories and 440 brands, so who else was among the top-10? Rankings were as follows:


iPhone
Samsung
Google
Blackberry
Wal-Mart
Grey Goose
Mary Kay
AVIS
Apple
Amazon.com

Customer values intrinsic to technology brands were seen to best meet, and even exceed, customer expectations, and the 'emotional engagement' that women share with their favorite beauty brands is still very powerful. But for a more in-depth look at this year's results (and a list of the top-25 brands with the most loyalty customers) we invite you to read Kenneth Hein's Brandweek coverage, "Dial 'L' for Loyalty."

More important than "satisfaction," and infinitely more important than "awareness," loyalty is a leading-indicator of consumer behavior and, thus, predictive of brand profitability. It's become more and more important, especially these days when many products and services are turning into commoditized category placeholders. And loyalty isn't static or managed via points, as witnessed by this year's big loyalty swings.

In the Automotive category, Hyundai moved up from 295th on last year's list to 24th - an increase in loyalty due to improved product quality, and it's emotionally resonating 'Assurance' campaign: their one-year promise to buy back cars from any customer who became unemployed.

McDonald's perked up loyalty and profits with an enormous increase in the Coffee category, moving from 156th last year to 16th, mostly to Starbucks detriment. Starbucks, already feeling the pain of customer disloyalty, ranked 191st last year and now ranks 428th, in the bottom dozen brands - a move that correlates highly with decreases in their same-store sales and profitability.

Some segments have, of course, suffered because of the economy, but brands that understand that the old 'price-value' equation has been transformed to a instantaneous 'value-for-dollar' consumer calculation, will have also realized that the brand can have meaning and can act as a surrogate for value, thus buttressing loyalty.

For a list of complete 2009 rankings - who got it right and who still can't figure it out - we invite you to visit http://www.brandkeys.com/awards/leaders.cfm

Which national brand ranked last? Much to the dismay of the bailer-outers of our great nation, General Motors clearly didn't get that memo and was ranked 439th (down this year from 363rd). GM might want to start with doing more than investing in a big string section in their advertising, and doing some value-based and meaningful branding.

Because when it comes to engendering loyalty, that's what sets us apart from other life forms - or at least the ones with driver's licenses.

Brand Keys, Inc. partner of
Brand Lounge in the Middle East

10 Branding Trends for 2010

Niels Bohr once noted that “prediction is very difficult, especially about the future,” but then he didn’t have access to predictive loyalty metrics. Happily, Brand Keys does. And as they measure the direction and velocity of consumer values 12 to 18 months in advance of the marketplace and consumer articulations of category needs and expectations, they identify future trends with uncanny accuracy.

Having examined these measures, we offer up ten trends for marketers in 2010 that will have direct consequences to the success – or failure – of next year’s branding and marketing efforts.

1) Value is the new black.
Excessive spending, even on sale items, will continue to be replaced by a reason-to-buy at all. This is trouble for brands with no authentic meaning, whether high-end or low.

2) Brands increasingly a surrogate for “value.” What makes goods and services valuable will increasingly be what’s wrapped up in the brand and what it stands for. Why J Crew instead of The Gap? J Crew stands for a new era in careful chic—
being smart and stylish. And the first family’s support of the brand doesn’t hurt either.

3) Brand differentiation is Brand Value.
The unique meaning of a brand will increase in importance as generic features continue to plague the brand landscape. Awareness as a meaningful market force has long been obsolete, and differentiation will be critical for success—meaning sales and profitability.

4) “Because I Said So” is so over.
Brand values can be established as a brand identity, but they must believably exist in the mind of the consumer. A brand can’t just say it stands for something and make it so. The consumer will decide, making it more important than ever for a brand to have measures of authenticity that will aid in brand differentiation and consumer engagement.

5) Consumer expectations are growing.
Brands are barely keeping up with consumer expectations now. Every day consumers adopt and devour the latest technologies and innovations, and only hunger for more. Smarter marketers will identify and capitalize on unmet expectations. Those brands that understand where the strongest expectations exist will be the brands that survive – and prosper.

6) Old tricks don’t work/won’t work.
In case your brand didn’t get the memo here it is: consumers are on to brands trying to play their emotions for profit. In the wake of the financial debacle of this past year, people are more aware then ever of the hollowness of bank ads that claim “we’re all in this together” when those same banks have rescinded their credit and turned their retirement plan into case studies. The same is true for insincere
celebrity pairings: think Seinfeld & Microsoft or Tiger Woods & Buick. Celebrity values and brand values need to be in concert, like Tiger Woods & Accenture. That’s authenticity.

7) They won’t need to know you to love you.
As the buying space becomes even more online-driven and international (and uncontrolled by brands and corporations), front-end awareness will become less important. A brand with the right street cred can go viral in days, with awareness following, not leading, the conversation. After all, everybody
knows GM, but nobody’s buying the cars.

8) It’s not just buzz.
Conversation and community is all: ebay thrives based on consumer feedback. If consumers trust the community, they will extend trust to the brand. Not just word of mouth, but the right word of mouth within the community. This means the coming of a new era of customer care.

9) They’re talking to each other before talking to the brand.
Social Networking and exchange of information outside of the brand space will increase. Look for more websites using Facebook Connect to share information with the friends from those sites. More companies will become members of Linkedin. Twitter users will spend more money on the Internet than those who don’t tweet.

10) Engagement is not a fad; it’s the way today’s consumers do business.
Marketers will come to accept that there are four engagement methods including Platform (TV; online), Context (Program; webpage), Message (Ad or Communication), and Experience (Store/Event). But there is only one objective for the future: Brand Engagement. Marketers will continue realize that attaining real brand engagement is impossible using out-dated attitudinal models.

Accommodating these trends will require a paradigm change on the parts of some companies. But whether a brand does something about it or not, the future is where it’s going to spend the rest of its life.

How long that life is up to the brand, determined by how it responds to today’s reality.


Brand Keys, Inc. partner of
Brand Lounge in the Middle East

Getting it right in retail

Has the story you tell your customers become more important than the product?
Richard Lewis, Friday September 04 2009

At a time when consumers are cutting back and businesses are failing, taking care of
customers has become more crucial than ever. So why do some stores continue to get
it so wrong?

I live in close proximity to two competing supermarkets, in France. Shop A is known
for lower prices, while Shop B has a more pricey perception. Shop A is closer and so
became my default choice for a short time. However, this came to an end. It was
nothing to do with the quality or freshness of the product and, although the store-fit was tattered, the store itself was intuitive and easy to shop. The real problem came at the tills. The store was staffed by four very unfriendly and unproductive people. None would greet you, none would help you and sometimes a cashier would get up in the middle of bleeping your shopping through and wander off, leaving you standing, while a queue built up. The staff worked painfully slowly, talking to each other, not the customers. The queues were interminable.
So I started walking a little further and paying a little more to visit Shop B. Here the cashiers were bright, chatty and friendly. They worked fast, there was never a queue and they fussed over my small daughter. There was a duty manager by the door who greeted customers as they entered. But the basket price was often higher, for much the same product as Shop A. So I was pleased when Shop A closed for refurbishment, imagining that the management had decided to address the outlet’s problems. I was wrong.

Getting it wrong
The refit was attractive, with wider aisles, a clean, modern feel and better lighting. But the decision to add more upscale product and place it front and centre seemed like an error, since it clouded the store’s chief point of difference in the neighbourhood: price.
But there was worse to come: the store added state-of-the-art tills and increased their number – but kept the same four unmotivated people to staff them. Long queues now block the aisles, while expensive, unmanned tills sit idle. The result, during busy periods, is nothing short of chaos. Shop A missed what should have been a great
opportunity to win new loyalty. And it did it by failing to confront and address the
only thing that was ever really wrong: people. Meanwhile, the ergonomic changes
failed to take into account the real size of queues and the speed at which staff worked.

In all, the relaunch raised customer expectations about experience while
simultaneously dashing them.
I was bemused by this missed opportunity, so I called Robert Passikoff – founder and
president of Brand Keys and a thought leader in engagement and loyalty – to get
some perspective. The problem, says Passikoff, is that retailers tend to look at their world through the eyes of retail, rather than those of the customer. “For too many retailers, store experience translates into better lighting and wider aisles. Whereas some [wage] raises and anger management training might have been a more
efficacious approach in this case.” But many retailers fail to measure for this sort of thing; the value equation of the customer is not the same as that of the retailer,
Passikoff says. “Basically, today, products are all the same. Value is now derived
beyond the primary features of the product.” In other words, the story you tell your
customers, through branding and store experience, is now more important than the
product or price.

Getting it right
I came across some examples of this while visiting the UK. I stayed in an area served
by a multitude of grocery retailers, each vying to give the best experience. I visited three well-known UK food retailers operating within a stone’s throw of one another and discovered that, in a market where competition is intense and often fierce, each retailer had decided to focus on one primary point of difference and tell that story strongly from the word go. Superstore A had clearly opted for Service. Although this was a large shop, the retailer managed to convey a sense of intimacy and hospitality. It achieved this primarily with highly visible and engaged staff, although design, lighting and neatness also contributed. The message was clear on entering the store: a customer service manager sat facing the entrance and smiling. Two steps into the store, I was able to enquire about child-friendly shopping trolleys and the gentleman leapt from his chair and procured one. Around the store, staff in clean, bakery style uniforms were chatting with customers and demonstrating products.
Superstore B had clearly decided to tell a story about Price. A giant display in the
atrium showed budget private label cleaning products piled high at a very low price.
The store was making sure that its primary message was strongly communicated right
from the outset. Within the store, point-of-sale banners displaying a bold low-price
message were attached to every gondola. Despite the “cheap” feel of the store, the staff experience was high-end, with friendly, helpful cashiers and aisle staff communicating well.
Superstore C had just opened next to Superstore B. However, it did not compete with
its neighbour on price. On the contrary, it had a single message from the word go,
using billboard displays outside the store and in the car park to display a slogan about Quality. The prices were often higher in this store, but the expectation of premium had been effectively set.

Managing the experience
Where these retailers win, and our French example would seem to lose out, is around
managing customer expectations. Each of the UK retailers told customers what to
expect, either as they entered or before they entered the store, and then set about
strongly delivering that experience. By contrast, our French retailer set customers up for disappointment and then compounded it by giving terrible service.
It’s tempting to see shopper data as a possible way for both the French supermarkets
to get a clearer picture of what their customers want. Neither operates a loyalty
scheme. Nearby, however, a Carrefour hypermarket has just relaunched following
extensive customer research via its loyalty card scheme. The data pointed to an
affluent shopper and so the new hypermarket has a premium feel and really does
deliver a market experience in places, with an extended fresh fruit and veg section,
alluring displays and a fishmonger calling out the day’s specials. In the US, Food Lion used shopper data to segment its customers and then executed a multi-banner
strategy, with each banner addressing a different cluster of shopper types. The first
two UK stores operated loyalty schemes. It should also be noted that both the French
stores are franchised, while all the UK examples are wholly-owned.
Researchers such as Mintel are sceptical about the ability of loyalty schemes to
engender loyalty by themselves. Even so, they can give the retailer valuable
information about who is shopping with them; information that can then be used, as
Carrefour has done, to create an accurately targeted experience, which may in turn
inspire loyalty. “In the 1990s, category management was all about point of sale data,” writes Willard Bishop analyst Craig Rosenblum in the August edition of Competitive Edge. “In the 21st century it’s all about shopper data ... With shopper data, retailers and consumer goods manufacturers can create unique promotional programs and events tailored to unique customer groups.” However, Rosenblum warns against starting without a clear vision. Before you begin leveraging the power of shopper data, you need to ask: “What is my strategy to win with shoppers?” he says.
Surely, though, it is even cheaper to spend some time talking to your customers on the shop floor. Had it performed this simple task, Shop A may have discovered that a refit was not necessary, that staff levels, morale and training were the issues damaging the business.

A Shock to the System

A week ago GM announced its plans to plug into the alternative-vehicle market with the Chevrolet “Volt,” an electric car Chevy claims will get 230 mpg in city driving. This would make it the first car to break the triple-digit barrier for mileage, and deliver over four times the mpg of the most popular car in the category, Toyota’s Prius. The price tag? Also a lesson in multiplication for car buyers: $40,000, or nearly twice the cost of the entry level Prius II.

While clearly GM needs to restructure the brand in serious ways, there remain some unanswered questions about how the buying public—already jaded with GM products—will respond to an electric car that comes with sticker shock, not to mention the challenge of plugging in, especially for city dwellers whose outlets may be out of range of any power cord. The “build it, they will come” philosophy was never a very good one, and is less so today when our research in the category continues to demonstrate that consumers expect their cars to be increasingly green, while more green stays in their wallets.

And while “green” and “fuel economy” are certainly high-percentage loyalty contributors, the current overall rankings in, for example, the smaller sedan and crossover vehicle segment demonstrates the marketplace reality of the data and match up pretty well to the top sellers in the recent “Cash for Clunkers” program:

1. Toyota
2. Ford
3. Honda
4. Jeep
5. Hyundai/Nissan

Faith, they say, is like electricity. You can’t see it, but can see the light. For consumers recently too often that light has not been a new car, it’s been a train. As Americans, and thus part-owners of General Motors, we would like nothing more than to see it move up in the world. But it will be consumers’ belief, and not faith, that will turn on the GM brand. And that belief will come when the brand delivers against the expectations consumers hold in the category, not before.

Brand Keys, Inc. partner of
Brand Lounge in the Middle East and North Africa