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
Thursday, October 8, 2009
Wednesday, September 16, 2009
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.
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.
Thursday, August 20, 2009
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
Sunday, August 16, 2009
School Shoppers Looking Closely At Retail Value
Consumers will spend about 10% less on back-to-school shopping this year, although the recession is only partly to blame for the decline.
According to brand and customer loyalty research consultancy Brand Keys, shoppers will spend an average of $531 during the back-to-school season, about a 10% decline over last year.
"Despite whispers that the recession is over, consumers are showing steadfast frugality," says Robert Passikoff, president of Brand Keys. "They are looking at the back-to-school buying [season] by evaluating which retailer is going to offer the best prices for the things the kids really require."
According to the survey of 10,000 U.S. households with school-age children, people were expected to spend about the same on essentials like clothing (an average of $275, about the same as last year), while cutting back on luxuries like computers, software and printers (an average of $189, down 11% from last year). They are also expected to cut back on shoes ($105, down 10%), supplies ($95, down 5%) and books and study aids ($20, down 25%).
Meanwhile, consumers are expected to do more shopping at discount retailers than anywhere else, with 95% saying discount stores were their preferred back-to-school shopping channel -- up 12% from last year. Some 55% cited department and office supply stores as their preferred channel (the same and up 10%, respectively, compared with last year), while half cited online (up 25%). Only 30% cited specialty outlets as a preferred shopping channel, down 6% from last year.
"We've been seeing this pattern since before the recession," Passikoff tells Marketing Daily. "People are being much more laser-targeted about which [retail] brand will provide them the best value."
Among those discount store brands, Wal-Mart remained the most popular, with 70% of consumers citing the store as a preferred store (up 10% from 2008). Half cited Target (about the same as last year), while 40% cited Kmart, down 5% from a year ago.)
Among department stores, Kohl's led among consumer preference with 40% (up 15% from last year), while 35% cited Macy's (down 5% from last year) and Dillard's (about the same). Nearly a third -- 30% -- cited Sears as a preferred retailer (up 5%), while 15% said Sears was a preferred retailer (down 5%).
"Wal-Mart has spent the past decade getting the brand right for themselves," Passikoff says of consumers' continued preference for the retailer. "And they have broader merchandise offerings than they have had before. With all the companies outsourcing production to the same places, the quality is about the same, and Wal-Mart has been able to capitalize on that."
Ultimately, as the recession eases, consumers will still be looking for value, and may have decided that some products will not be worth the extra expense at some retailers. The answer, Passikoff says, will be to have a greater brand definition, both for the merchandisers and the manufacturers. "Consumers are going to be looking for brands that have a resonating meaning and differentiation," Passikoff says. "They're going to have to stand for something more than being a placeholder."
Brand Keys, Inc. partner of
Brand Lounge in the Middle East and North Africa
According to brand and customer loyalty research consultancy Brand Keys, shoppers will spend an average of $531 during the back-to-school season, about a 10% decline over last year.
"Despite whispers that the recession is over, consumers are showing steadfast frugality," says Robert Passikoff, president of Brand Keys. "They are looking at the back-to-school buying [season] by evaluating which retailer is going to offer the best prices for the things the kids really require."
According to the survey of 10,000 U.S. households with school-age children, people were expected to spend about the same on essentials like clothing (an average of $275, about the same as last year), while cutting back on luxuries like computers, software and printers (an average of $189, down 11% from last year). They are also expected to cut back on shoes ($105, down 10%), supplies ($95, down 5%) and books and study aids ($20, down 25%).
Meanwhile, consumers are expected to do more shopping at discount retailers than anywhere else, with 95% saying discount stores were their preferred back-to-school shopping channel -- up 12% from last year. Some 55% cited department and office supply stores as their preferred channel (the same and up 10%, respectively, compared with last year), while half cited online (up 25%). Only 30% cited specialty outlets as a preferred shopping channel, down 6% from last year.
"We've been seeing this pattern since before the recession," Passikoff tells Marketing Daily. "People are being much more laser-targeted about which [retail] brand will provide them the best value."
Among those discount store brands, Wal-Mart remained the most popular, with 70% of consumers citing the store as a preferred store (up 10% from 2008). Half cited Target (about the same as last year), while 40% cited Kmart, down 5% from a year ago.)
Among department stores, Kohl's led among consumer preference with 40% (up 15% from last year), while 35% cited Macy's (down 5% from last year) and Dillard's (about the same). Nearly a third -- 30% -- cited Sears as a preferred retailer (up 5%), while 15% said Sears was a preferred retailer (down 5%).
"Wal-Mart has spent the past decade getting the brand right for themselves," Passikoff says of consumers' continued preference for the retailer. "And they have broader merchandise offerings than they have had before. With all the companies outsourcing production to the same places, the quality is about the same, and Wal-Mart has been able to capitalize on that."
Ultimately, as the recession eases, consumers will still be looking for value, and may have decided that some products will not be worth the extra expense at some retailers. The answer, Passikoff says, will be to have a greater brand definition, both for the merchandisers and the manufacturers. "Consumers are going to be looking for brands that have a resonating meaning and differentiation," Passikoff says. "They're going to have to stand for something more than being a placeholder."
Brand Keys, Inc. partner of
Brand Lounge in the Middle East and North Africa
Monday, August 10, 2009
Starbucks Goes Back to Its Roots With Cafe Concept 'Inspired by Starbucks' Coffeehouses to Serve Alcohol, New Food Choices and Live Entertainment
CHICAGO (AdAge.com) -- Starbucks is going back to its premium-coffeehouse roots -- by building premium coffeehouses. The chain, in the latest attempt to negotiate its turnaround, is focusing on stores with smaller-batch coffee, community involvement and entertainment.
Starbucks will remodel three Seattle cafes as part of the initial test.
The first location, opening next week, will be named "Fifteenth Avenue Coffee and Tea, Inspired by Starbucks." Evening revelers can find beer, wine, new food choices, the occasional film screening and a variety of live entertainment, including music, acting and poetry reading. Bleary-eyed,
breakfast-time folks can get a cup of coffee they may not be able to find anywhere else in Seattle.
"It feels like the first time they've done something right in a long time," said Robert Passikoff, president of Brand Keys. "This has the opportunity of being the next evolution in coffee." He added that while coffee shop as night-time hangout isn't new, Starbucks can offer more by way of community involvement, environmental commitment and friendly baristas without visible tattoos.
This is also the latest in a string of long-closeted ideas that are seeing the light of day. The café concept dates back about 15 years. In February, Starbucks began testing Via, an instant-coffee product more than 20 years in the making.
Major Cohen, a senior project manager with Starbucks, said he's been working on this café concept for nearly 15 years. The idea came from thinking about the "good old days" when they could roast coffee in the morning and have it in a local store by that afternoon. The first three cafés will be in
Seattle, near one of its roasting plants, so they'll be able to offer smaller-batch coffees from far-flung locales such as Thailand, and loose-leaf Tazo teas from places such as India and Japan.
"We clearly want to present ourselves in a different way," Mr. Cohen said. "What we're really trying to do is build on 38 years of experience with great coffee and somehow extend that vision." He acknowledged that "some of us think as grandfathers of the coffee world." But he said, "I think people
know that we're often innovative and we innovate through products."
Changing the Starbucks experience
This project is different in that it's tweaking the Starbucks experience. But don't expect to find these cafés across the street from each other. While the number of "Inspired by Starbucks" locations is likely to grow if the test is successful, not every store is appropriate for a stage, night-time crowd and
alcoholic beverages. So it will be a boutique concept by definition.
Scott Bedbury, founder of Brandstream and former Starbucks marketing chief, noted that one of the primary benefits of such a concept is maximizing profitability per square foot. Starbucks has been known for its real-estate savvy since day one, but locations generally go dormant after dark. Adding an evening occasion is likely to boost profitability for appropriate locations, particularly if they serve alcohol. He said the concept could be Starbucks' next Frappuccino. "It was a godsend because it gave people a reason to come in hot months," Mr. Bedbury said about the frozen beverage. "And it brought in a whole different group of people who didn't even like coffee, which got us into ice cream." The café concept would keep stores open longer, "but you're using that square footage to get more out of it." It also combats Starbucks' critical saturation issue, particularly in the United States. "God knew they didn't want to open more stores, they want to do more with what they have," he said.
Technomic President Ron Paul cheered the move, and said he felt confident the test would be quite successful. However, he predicts the concept will look much different if rolled out on a national stage.
"I still think it's more a of test lab than something they're more serious about rolling out," he said. "That's not a national strategy."
Dennis Lombardi, executive VP-food service at WD Partners, praised the chain's risk-taking moxie. "I love chains that experiment," he said. "But if you're going to experiment, you've got to be wiling to fail fast if it doesn't work." That's why Mr. Bedbury said it's a good idea to start small, and with a different concept. "I think they're smart to walk before they run and not embed it in the consumer-facing brand they have today," he said.
Brand Keys, Inc. partner of
Brand Lounge in the Middle East and North Africa
Starbucks will remodel three Seattle cafes as part of the initial test.
The first location, opening next week, will be named "Fifteenth Avenue Coffee and Tea, Inspired by Starbucks." Evening revelers can find beer, wine, new food choices, the occasional film screening and a variety of live entertainment, including music, acting and poetry reading. Bleary-eyed,
breakfast-time folks can get a cup of coffee they may not be able to find anywhere else in Seattle.
"It feels like the first time they've done something right in a long time," said Robert Passikoff, president of Brand Keys. "This has the opportunity of being the next evolution in coffee." He added that while coffee shop as night-time hangout isn't new, Starbucks can offer more by way of community involvement, environmental commitment and friendly baristas without visible tattoos.
This is also the latest in a string of long-closeted ideas that are seeing the light of day. The café concept dates back about 15 years. In February, Starbucks began testing Via, an instant-coffee product more than 20 years in the making.
Major Cohen, a senior project manager with Starbucks, said he's been working on this café concept for nearly 15 years. The idea came from thinking about the "good old days" when they could roast coffee in the morning and have it in a local store by that afternoon. The first three cafés will be in
Seattle, near one of its roasting plants, so they'll be able to offer smaller-batch coffees from far-flung locales such as Thailand, and loose-leaf Tazo teas from places such as India and Japan.
"We clearly want to present ourselves in a different way," Mr. Cohen said. "What we're really trying to do is build on 38 years of experience with great coffee and somehow extend that vision." He acknowledged that "some of us think as grandfathers of the coffee world." But he said, "I think people
know that we're often innovative and we innovate through products."
Changing the Starbucks experience
This project is different in that it's tweaking the Starbucks experience. But don't expect to find these cafés across the street from each other. While the number of "Inspired by Starbucks" locations is likely to grow if the test is successful, not every store is appropriate for a stage, night-time crowd and
alcoholic beverages. So it will be a boutique concept by definition.
Scott Bedbury, founder of Brandstream and former Starbucks marketing chief, noted that one of the primary benefits of such a concept is maximizing profitability per square foot. Starbucks has been known for its real-estate savvy since day one, but locations generally go dormant after dark. Adding an evening occasion is likely to boost profitability for appropriate locations, particularly if they serve alcohol. He said the concept could be Starbucks' next Frappuccino. "It was a godsend because it gave people a reason to come in hot months," Mr. Bedbury said about the frozen beverage. "And it brought in a whole different group of people who didn't even like coffee, which got us into ice cream." The café concept would keep stores open longer, "but you're using that square footage to get more out of it." It also combats Starbucks' critical saturation issue, particularly in the United States. "God knew they didn't want to open more stores, they want to do more with what they have," he said.
Technomic President Ron Paul cheered the move, and said he felt confident the test would be quite successful. However, he predicts the concept will look much different if rolled out on a national stage.
"I still think it's more a of test lab than something they're more serious about rolling out," he said. "That's not a national strategy."
Dennis Lombardi, executive VP-food service at WD Partners, praised the chain's risk-taking moxie. "I love chains that experiment," he said. "But if you're going to experiment, you've got to be wiling to fail fast if it doesn't work." That's why Mr. Bedbury said it's a good idea to start small, and with a different concept. "I think they're smart to walk before they run and not embed it in the consumer-facing brand they have today," he said.
Brand Keys, Inc. partner of
Brand Lounge in the Middle East and North Africa
Thursday, July 16, 2009
Espresso Yourself!
Guess Who's Skating Into Town?
Robert Passikoff, Jul 14, 2009 03:02 PM
Tim Hortons Inc., the company founded in 1964 by NHL hall-of-famer Tim Horton, former hockey player for the Toronto Maple Leafs, the New York Rangers and the Buffalo Sabres, just started serving its premium coffee and fresh baked goods for the first time in New York City. It's entering the New York City market with 12 new locations, including 10 in Manhattan.
Tim Hortons has more than 500 locations in the U.S. and sells about 2 billion cups of coffee annually. With 3,000 stores in Canada, it accounts for more than seven of every 10 cups of quick serve coffee sold in Canada, but Manhattan poses a challenge with an already over- caffeinated market. Both Dunkin Donuts and McDonald's have more than 100 locations within five miles of each other, while Starbucks has more than 80.
But it's not all about the real estate. Something else drives customers, more than convenient locations. It's the "something else" that showed up in our metrics three years ago, allowing us to predict the decline of Starbuck's before anyone would believe it. Let's just say here that it's a lot
more centered on customer experience than it is what corner you're standing on. This is how the brands currently rank in the annual Brand Keys Customer Loyalty Engagement
Index:
1. Dunkin' Donuts
2. McDonald's
3. Starbucks
4. Krispy Kreme
Should the new team worry current players? Well, for the six months that ended in February, Dunkin' had posted a 9% growth in system-wide sales and a 4% increase in U.S. same-store sales.
For that same period, Dunkin' Donuts had total sales of $1.55 billion, and offered such new items as caramel iced coffee and an expanded rollout of scones. But McDonald's is expanding the coffee portion of its business in the U.S. and Canada too, and has installed McCafé mini-coffee shops featuring recreational coffee beverages at more than 10,000 U.S. restaurants It will test its in-store McCafé coffee shop concept in Canadian locations later this
year. McDonald's also recently launched a promotion for its Premium Roast coffee in Canada and, this week, McDonald's began a U.S. summer promotion called Mocha Mondays that gives customers a free iced or hot mocha beverage at participating stores.
Meanwhile, Starbucks, once first in our rankings, reported reductions in net revenues, comparable store sales, operating income, operating margin, and net earnings during Q2 2009, and is continuing with plans to close about 800 company-owned stores in the U.S. this year. But it's offering ice cream now, and via Facebook is promoting its ice cream by offering 20,000 pints of it free each day, at a rate of 800 per hour. This offer ends on Sunday.
Krispy Kreme isn't faring a whole lot better. It slipped slightly for the entire system, of which company-owned stores account for 29%, and same-store sales are down 2.4% for combined company-owned and non- company-owned -- and that's after closing what supposedly were its
"bad" stores. At the company's annual meeting, Krispy Kreme says it's planning to test "proprietary" ice cream in stores in cones, cups and shakes. And a doughnut sundae.
Advice for Tim Hortons? Well, hockey great Wayne Gretzky once noted, "Some people skate to the puck. I skate to where the puck is going to be," and the same is true about engendering loyalty. If you have predictive consumer metrics, you always know where consumer values are going to end
up. And winning and keeping customers is a goal to which every brand should aspire.
Dr. Robert Passikoff
Founder & President - Brand Keys, Inc. partner of
Brand Lounge in the Middle East and North Africa
Robert Passikoff, Jul 14, 2009 03:02 PM
Tim Hortons Inc., the company founded in 1964 by NHL hall-of-famer Tim Horton, former hockey player for the Toronto Maple Leafs, the New York Rangers and the Buffalo Sabres, just started serving its premium coffee and fresh baked goods for the first time in New York City. It's entering the New York City market with 12 new locations, including 10 in Manhattan.
Tim Hortons has more than 500 locations in the U.S. and sells about 2 billion cups of coffee annually. With 3,000 stores in Canada, it accounts for more than seven of every 10 cups of quick serve coffee sold in Canada, but Manhattan poses a challenge with an already over- caffeinated market. Both Dunkin Donuts and McDonald's have more than 100 locations within five miles of each other, while Starbucks has more than 80.
But it's not all about the real estate. Something else drives customers, more than convenient locations. It's the "something else" that showed up in our metrics three years ago, allowing us to predict the decline of Starbuck's before anyone would believe it. Let's just say here that it's a lot
more centered on customer experience than it is what corner you're standing on. This is how the brands currently rank in the annual Brand Keys Customer Loyalty Engagement
Index:
1. Dunkin' Donuts
2. McDonald's
3. Starbucks
4. Krispy Kreme
Should the new team worry current players? Well, for the six months that ended in February, Dunkin' had posted a 9% growth in system-wide sales and a 4% increase in U.S. same-store sales.
For that same period, Dunkin' Donuts had total sales of $1.55 billion, and offered such new items as caramel iced coffee and an expanded rollout of scones. But McDonald's is expanding the coffee portion of its business in the U.S. and Canada too, and has installed McCafé mini-coffee shops featuring recreational coffee beverages at more than 10,000 U.S. restaurants It will test its in-store McCafé coffee shop concept in Canadian locations later this
year. McDonald's also recently launched a promotion for its Premium Roast coffee in Canada and, this week, McDonald's began a U.S. summer promotion called Mocha Mondays that gives customers a free iced or hot mocha beverage at participating stores.
Meanwhile, Starbucks, once first in our rankings, reported reductions in net revenues, comparable store sales, operating income, operating margin, and net earnings during Q2 2009, and is continuing with plans to close about 800 company-owned stores in the U.S. this year. But it's offering ice cream now, and via Facebook is promoting its ice cream by offering 20,000 pints of it free each day, at a rate of 800 per hour. This offer ends on Sunday.
Krispy Kreme isn't faring a whole lot better. It slipped slightly for the entire system, of which company-owned stores account for 29%, and same-store sales are down 2.4% for combined company-owned and non- company-owned -- and that's after closing what supposedly were its
"bad" stores. At the company's annual meeting, Krispy Kreme says it's planning to test "proprietary" ice cream in stores in cones, cups and shakes. And a doughnut sundae.
Advice for Tim Hortons? Well, hockey great Wayne Gretzky once noted, "Some people skate to the puck. I skate to where the puck is going to be," and the same is true about engendering loyalty. If you have predictive consumer metrics, you always know where consumer values are going to end
up. And winning and keeping customers is a goal to which every brand should aspire.
Dr. Robert Passikoff
Founder & President - Brand Keys, Inc. partner of
Brand Lounge in the Middle East and North Africa
Thursday, July 2, 2009
Differentiate Or Die
Differentiate or Die
Jack Trout, President & Founder Trout & Partners Ltd.
posted by Hasan Fadlallah, Managing Director Brand Lounge
What has changed in business over recent decades is the amazing proliferation of product choices in just about every category. Its been estimated that there are 1,000,000 SKU’s (Standard Stocking Units) out there in America. An average supermarket has 40,000 SKU’s. Now for the stunner. An average family gets 80 to 85% of their needs from 150 SKU’s. That means there’s a good chance we’ll ignore 39,850 items in that store.
The dictionary defines “tyranny” as absolute power that often is harsh or cruel.
So it is with choice. With the enormous competition, markets today are driven by choice. The customer has so many good alternatives that you pay dearly for your mistakes. Your competitors get your business and you don’t get it back very easily. Companies that don’t understand this will not survive. (Now that’s cruel.)
Just look at some of the names on the headstones in the brand graveyard: American Motors, Burger Chef, Carte Blanc, Eastern Airlines, Gainesburgers, Gimbels, Hathaway Shirts, Horn & Hardart, Mr. Salty Pretzels, Philco, Trump Shuttle, VisiCalc, Woolworth’s.
And this is only a short list of names that are no longer with us.
In this global killer economy you have to find a way to differentiate yourself or you better have a very low price. To do this, here are the steps you must follow:
Step one. The context.
Arguments are never made in a vacuum. There are always surrounding competitors trying to make arguments of their own. Your message has to make sense in the context of the category. It has to start with what the marketplace has heard and registered from your competition.
The context also includes what’s happening in the market. Is the timing for your idea right?
Nordstrom’s differentiating idea of “better service” played perfectly into the context of a department store world which was reducing its people and service as a way to cut costs.
Lotus launched the first successful network on “groupware software” called Notes just as Corporate America was networking its PC’s. (IBM ended up buying Lotus and Notes for 2.5 billion dollars.)
It’s like riding a wave. If you’re too early or late you’ll go nowhere. Catch it just right and you’ll get a long and profitable ride for your difference.
Step two. The differentiating idea.
To be different is to be not the same. To be unique is to be one of its kind.
So you’re looking for something that separates you from your competitors. The secret to this is understanding that your differentness does not have to be product related.
Consider a horse. Yes, horses are quickly differentiated by their type. There are race horses, jumpers, ranch horses, wild horses and on and on. But, in racehorses you can differentiate them by breeding, by performance, by stable, by trainer and on and on.
A product or service can be differentiated by feature, leadership, preference, heritage, specialty, how it’s made and on and on. ( I wrote a book on this subject if you want more ways to differentiate your brand.)
Step three. The credentials.
To build a logical argument for your difference, you must have the credentials to support your differentiating idea. To make it real and believable.
If you have a product difference, then you should be able to demonstrate that difference. The demonstration, in turn, becomes your credentials. If you have a leak-proof valve, then you should be able to have a direct comparison with valves that can leak.
Claims of difference without proof are really just claims. For example, a “wide-track” Pontiac must be wider than other cars. British Air as the “world’s favorite airline” should fly more people than any other airline. Coca-Cola as the “real thing” has to have invented colas. When it’s “Hertz and not exactly” there should be some unique services that the others don’t offer.
You can’t differentiate with smoke and mirrors. Consumers are skeptical. They’re thinking, “Oh yeah, Mr. Advertiser? Prove it!” You must be able to support your argument.
Step four. Communicate your difference.
Just as you can’t keep your light under a basket, you can’t keep your difference under wraps.
If you build a differentiated product, the world will not automatically beat a path to your door. Better products don’t win. Better perceptions tend to be the winners. Truth will not out unless it has some help along the way.
Every aspect of your communications should reflect your difference. Your advertising. Your brochures. Your website. Your sales presentations.
In marketing, the rich often get richer because they have the resources to drive their ideas into the mind. Their problem is separating the good ideas from the bad ones, and avoiding spending money on too many products and too many programs.
Unfortunately, without the proper resources, even the best differentiating idea won’t get off the ground. Look what happened to AT&T in recent years. They failed to differentiate themselves from Sprint and MCI. The result: A price war which ended in the ignominy of being bought by a Baby Bell.
As I said, Differentiate or Die.
With more than 40 years of experience in advertising and marketing, Jack Trout is the acclaimed author of many marketing classics, including Positioning: The Battle for Your Mind, Marketing Warfare, The 22 Immutable Laws of Marketing, Differentiate or Die, Big Brands, Big Trouble, A Genie's Wisdom and his latest, Trout on Strategy. He is president of marketing consultancy Trout & Partners and has consulted for such companies as AT&T, IBM, Southwest Airlines, Merck, Procter & Gamble and others. Recognized as one of the world's foremost marketing strategists, Trout is the originator of "Positioning" and other important concepts in marketing strategy.With more than 40 years of experience in advertising and marketing, Jack Trout is the acclaimed author of many marketing classics, including Positioning: The Battle for Your Mind, Marketing Warfare, The 22 Immutable Laws of Marketing, Differentiate or Die, Big Brands, Big Trouble, A Genie's Wisdom and his latest, Trout on Strategy. He is president of marketing consultancy Trout & Partners and has consulted for such companies as AT&T, IBM, Southwest Airlines, Merck, Procter & Gamble and others. Recognized as one of the world's foremost marketing strategists, Trout is the originator of "Positioning" and other important concepts in marketing strategy.
Jack Trout, President & Founder Trout & Partners Ltd.
posted by Hasan Fadlallah, Managing Director Brand Lounge
What has changed in business over recent decades is the amazing proliferation of product choices in just about every category. Its been estimated that there are 1,000,000 SKU’s (Standard Stocking Units) out there in America. An average supermarket has 40,000 SKU’s. Now for the stunner. An average family gets 80 to 85% of their needs from 150 SKU’s. That means there’s a good chance we’ll ignore 39,850 items in that store.
The dictionary defines “tyranny” as absolute power that often is harsh or cruel.
So it is with choice. With the enormous competition, markets today are driven by choice. The customer has so many good alternatives that you pay dearly for your mistakes. Your competitors get your business and you don’t get it back very easily. Companies that don’t understand this will not survive. (Now that’s cruel.)
Just look at some of the names on the headstones in the brand graveyard: American Motors, Burger Chef, Carte Blanc, Eastern Airlines, Gainesburgers, Gimbels, Hathaway Shirts, Horn & Hardart, Mr. Salty Pretzels, Philco, Trump Shuttle, VisiCalc, Woolworth’s.
And this is only a short list of names that are no longer with us.
In this global killer economy you have to find a way to differentiate yourself or you better have a very low price. To do this, here are the steps you must follow:
Step one. The context.
Arguments are never made in a vacuum. There are always surrounding competitors trying to make arguments of their own. Your message has to make sense in the context of the category. It has to start with what the marketplace has heard and registered from your competition.
The context also includes what’s happening in the market. Is the timing for your idea right?
Nordstrom’s differentiating idea of “better service” played perfectly into the context of a department store world which was reducing its people and service as a way to cut costs.
Lotus launched the first successful network on “groupware software” called Notes just as Corporate America was networking its PC’s. (IBM ended up buying Lotus and Notes for 2.5 billion dollars.)
It’s like riding a wave. If you’re too early or late you’ll go nowhere. Catch it just right and you’ll get a long and profitable ride for your difference.
Step two. The differentiating idea.
To be different is to be not the same. To be unique is to be one of its kind.
So you’re looking for something that separates you from your competitors. The secret to this is understanding that your differentness does not have to be product related.
Consider a horse. Yes, horses are quickly differentiated by their type. There are race horses, jumpers, ranch horses, wild horses and on and on. But, in racehorses you can differentiate them by breeding, by performance, by stable, by trainer and on and on.
A product or service can be differentiated by feature, leadership, preference, heritage, specialty, how it’s made and on and on. ( I wrote a book on this subject if you want more ways to differentiate your brand.)
Step three. The credentials.
To build a logical argument for your difference, you must have the credentials to support your differentiating idea. To make it real and believable.
If you have a product difference, then you should be able to demonstrate that difference. The demonstration, in turn, becomes your credentials. If you have a leak-proof valve, then you should be able to have a direct comparison with valves that can leak.
Claims of difference without proof are really just claims. For example, a “wide-track” Pontiac must be wider than other cars. British Air as the “world’s favorite airline” should fly more people than any other airline. Coca-Cola as the “real thing” has to have invented colas. When it’s “Hertz and not exactly” there should be some unique services that the others don’t offer.
You can’t differentiate with smoke and mirrors. Consumers are skeptical. They’re thinking, “Oh yeah, Mr. Advertiser? Prove it!” You must be able to support your argument.
Step four. Communicate your difference.
Just as you can’t keep your light under a basket, you can’t keep your difference under wraps.
If you build a differentiated product, the world will not automatically beat a path to your door. Better products don’t win. Better perceptions tend to be the winners. Truth will not out unless it has some help along the way.
Every aspect of your communications should reflect your difference. Your advertising. Your brochures. Your website. Your sales presentations.
In marketing, the rich often get richer because they have the resources to drive their ideas into the mind. Their problem is separating the good ideas from the bad ones, and avoiding spending money on too many products and too many programs.
Unfortunately, without the proper resources, even the best differentiating idea won’t get off the ground. Look what happened to AT&T in recent years. They failed to differentiate themselves from Sprint and MCI. The result: A price war which ended in the ignominy of being bought by a Baby Bell.
As I said, Differentiate or Die.
With more than 40 years of experience in advertising and marketing, Jack Trout is the acclaimed author of many marketing classics, including Positioning: The Battle for Your Mind, Marketing Warfare, The 22 Immutable Laws of Marketing, Differentiate or Die, Big Brands, Big Trouble, A Genie's Wisdom and his latest, Trout on Strategy. He is president of marketing consultancy Trout & Partners and has consulted for such companies as AT&T, IBM, Southwest Airlines, Merck, Procter & Gamble and others. Recognized as one of the world's foremost marketing strategists, Trout is the originator of "Positioning" and other important concepts in marketing strategy.With more than 40 years of experience in advertising and marketing, Jack Trout is the acclaimed author of many marketing classics, including Positioning: The Battle for Your Mind, Marketing Warfare, The 22 Immutable Laws of Marketing, Differentiate or Die, Big Brands, Big Trouble, A Genie's Wisdom and his latest, Trout on Strategy. He is president of marketing consultancy Trout & Partners and has consulted for such companies as AT&T, IBM, Southwest Airlines, Merck, Procter & Gamble and others. Recognized as one of the world's foremost marketing strategists, Trout is the originator of "Positioning" and other important concepts in marketing strategy.
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