The Resurgence of Brand Equity: It May Be 1988 All Over Again

Something interesting is happening in brand management. Increasingly, we read about brand-businesses that are focusing on Brand Equity. It has been decades since the topic of Brand Equity was mentioned in press releases and earnings calls. Brand Equity is more than a phrase; it is an investment in enduring profitable growth of the brand-business.

That is not to say that many research firms have been making money on measuring Brand Equity for decades. However, as a brand-business driving goal, Brand Equity has been supplanted by the goals of financial engineers and private equity firms. With the quick profits from financial engineering, Wall Street has not been focused on Brand Equity since 1988 when a flurry of brand-business mega-deals were all the rage.  Kohlberg Kravis Roberts paid $25 billion for RJR Nabisco (more than double its book value); Philip Morris bought Kraft for $12.9 billion (four times book value) and Nestlé spent $4.5 billion for Rowntree (five times book value), according to The Economist. 

In 1988, Brand Equity was the driver for these acquisitions. Brand Equity is simply the customer’s perception of the financial worth of the brand identity. Brand Equity is the difference in the financial value of a branded good or service compared to an equivalent good or service without the brand identity.

A brand’s Brand Equity could be segued to a corporate balance sheet as Goodwill. In accounting, Goodwill is an asset defined as the excess of the price paid for a brand over its fair market value. A strong brand has increased Goodwill. And, that is what occurred.

And so, the brand-business world was all good. All good, until 1993. 1993 was the year that brand-business owners began to fear for their brand-businesses and their Brand Equity.

1993 was the year of Marlboro Friday. Marlboro Friday, April 2, 1993, was the day that Phillip Morris, the tobacco company, announced a drastic cut in the price of Marlboro cigarettes to fight off the generic brands that were eating into its market share. As a result, the company’s stock tanked, wiping out $13.4 billion off Philip Morris’s stock market value in a single day.  Investors also dumped shares in other consumer-goods firms. RJR, P&G, Coca-Cola, PepsiCo, Quaker Oats and Gillette were all affected as Wall Street became convinced that the extraordinary profit growth once delivered by brand-businesses was a thing of the past. All that Goodwill was wiped away from those balance sheets.

Marlboro, a cigarette brand reflecting American West individualism, freedom and pride, supported by advertising featuring the Marlboro cowboy, took such a financial hit that Wall Street said “… the Marlboro man fell off his horse.” It may be difficult to believe now, putting the negative health effects of smoking aside, but Marlboro was not only a great brand-business, its image with its associated values was extremely appealing. 

At the time, Marlboro epitomized the crisis brand-businesses were undergoing due to high prices, an economic downturn and retail own-brands. Shoppers became more skeptical. And, increasingly, shoppers saw little differentiation between name brands and retail generics.

Brand-businesses did bounce back. It took only two years for Marlboro to completely recoup its Marlboro Friday losses.  Observers indicated this recovery was to the strength of Philip Morris’ brands and its customers’ brand loyalty. Additionally, the cost of manufacturing a cigarette is miniscule relative to the cost of the purchase. Philip Morris was able to survive. Packaged goods brand-businesses started to focus on building the brand rather than deals.

Prior to the COVID-19 crisis, brand-businesses were battered by financial engineers who favored short-term profits to satisfy investors and Wall Street. Financial engineering, the catchall phrase for extreme cost cutting including job losses, debt accumulation, share buy-backs, increased dividends, forced spinoffs, and money siphoned into the pockets of investors rather than invested into businesses, can damage brands. Kraft Heinz with its stable of cherished icons (Heinz ketchup, Kraft macaroni and cheese, Oscar Meyer hot dogs); British Airways; Toys R’ Us, Sears and others have focused on one priority: build shareholder value at the expense of customer value. 

Financial engineers see strong Brand Equity as an opportunity to extract value rather than extend brand strength.  This is a form of brand extortion. Proponents of financial engineering take brand loyalty for granted. Investments in continuous improvement and innovation are decreased as dividends and share buybacks are increased. Monies are siphoned from R&D, customer insight research, service and increased. Monies are siphoned from R&D, customer insight research, service and support and marketing resources.

Remarkably, there is a noticeable positive trend underway. The trend is brand-business owners realizing the financial benefits of building Brand Equity rather than focusing on short-term detrimental actions of financial engineers, A recent search on Nexis for just one week of reporting turned up 645 mentions of Brand Equity.

One example is Olive Garden. A recent review of Olive Garden’s success mentions the brand-business’ focus on reducing price promotions while investing in brand equity. Olive Garden owner, Darden Restaurants’ CEO and president said, “Whatever we do is going to elevate brand equity. We’re not going to do things that are going to impact us in the long-term just for the short-term. We are focused on providing great value to our guests, but doing so in a way that drives profitable sales growth.”

Another example is Constellation Brands’ Modelo beer. Observers recognize that Modelo has been extremely “patient” with brand building efforts over many years giving Modelo a differentiated brand equity.

In Wayfair’s recent earnings call, its CEO made it clear that Wayfair’s long-term focus on building brand loyalty has been paying off. Brand loyal customers are extremely valuable.

Smucker just bought Hostess for billions of dollars after its private equity owners spent years reviving the Hostess Brand Equity.

Wall Street seems to want streaming services to focus on customer loyalty rather than behaving like scavengers for new customers. Constant chasing of new customers at the expense of current customers has not been profitable.

On the other hand, brand-business H&M, the fast-fashion retailer currently pursues a strategy of cost-cutting and buybacks.

Brand-businesses have cycled through some bad times. Financial engineering destroyed some of our most iconic brands. COVID-19 took out a few more, like Bed, Bath & Beyond. Generating high quality revenue growth leading to enduring profitable growth must always be the goal. A renewed focus on building Brand Equity is welcome. Let’s hope that brand leadership continues the trend and that Wall Street rewards those brand-businesses that choose Brand Equity building.

Cracker Barrel And Making Demographics Matter

Cracker Barrel And Making Demographics Matter

Not even COVID-19 changed the trajectory of demographics. And, although data in The New York Times indicates that global population growth may end in 2080’s, we are currently living in a world that is getting older and younger at the same time. Demographics are a marketing reality. And, brands, such as iconic Southern fare restaurant Cracker Barrel, now face a strategic conundrum. 

The older and younger dichotomy is due to the longevity of Boomers (born between 1946 and 1964) at one end of the spectrum and the cohort of Millennials (born between 1982 and 1996) and Gen Z (born between 1997 and 2012) at the other. It used to be that the demographic charts had one big bulge: the Boomers. This bulge just moved up the age range as it matured. Now, with the addition of the Millennials, the demographic charts look like a two-humped camel—a two-humped camel that will be with us for decades. The Boomer generation has longevity. The Millennial generation is just as big. Younger Gen Z already has impact. 

It is popular in the current marketing environment to focus primarily on Millennials and Gen Z and the even younger demographic groups (Gen Alpha born starting in 2010s). For example, this is what Meta is doing with its AI bots. That said, network television is seeing gold in the silver-haired market. But, for many marketers, over the next decade, brands will need to be relevant to two huge groups of people who have different values and view the world through different lenses. 

The current two-humped demographic reality – lots of older people and lots of younger people – presents opportunities for brands. Boomers have discretionary income. Millennials and subsequent younger cohorts rule the social media environment. These two demographic forces not only change the way we communicate and relate to one another. The older-younger landscape changes the ways in which brand-businesses must operate.

Two massive age cohorts with different worldviews, different values and different complexities pose an interesting conundrum for brands: which of these age groups should be targeted? What will a brand need to do differently? How can we attract and maintain both cohorts? These are interesting challenges not just in terms of product, service, store design and utility, but also in terms of communications, including language and package design. 

Because the world is getting older and younger at the same time, brand-businesses must decide what their strategies will be to address these two cohorts. 

This is the conundrum that Cracker Barrel must solve.

Cracker Barrel, born in 1969, is known for its Southern country store theme and menu. Its advertising communicates freshly made food at a fair price with a touch of care. This refers to over 20 meals for under $12. Its tag line is Take care now

Cracker Barrel describes itself as: “Cracker Barrel Old Country Store provides a friendly home-away-from-home in its old country stores and restaurants. Guests are cared for like family while relaxing and enjoying real home-style food and shopping that’s surprisingly unique, genuinely fun and reminiscent of America’s country heritage…all at a fair price. The restaurant serves up delicious, home-style country food such as meatloaf and homemade chicken n’ dumplins (sic) as well as its made from scratch biscuits using an old family recipe. The authentic old country retail store is fun to shop and offers unique gifts and self-indulgences.”

Originally, Cracker Barrell was seen as a way to sell gasoline, as its founder worked with Shell Oil. Over time, Cracker Barrell opened stores without gasoline pumps. The menu broadened. And, so did its array of “gifts.”

According to The Wall Street Journal, “Cracker Barrel Is Stuck in a Generational Gap.”  Apparently, Cracker Barrel’s core customers make it difficult for Cracker Barrel to attract younger guests. This will need to change.

About 43% of Cracker Barrell guests are 55 years old or older. A lot of the sales within this core group are “tchotchkes” such as wooden puzzles (approximately 300,000 a year) and rocking chairs (approximately 70,000 a year).

Efforts to make inroads with younger customers have strained Cracker Barrel results, affecting comparable store sales and the brand-business’ stock price (down at least a third in the past half year).

Many casual dining establishments have a laser-focus on younger consumers. But, for Cracker Barrel that is probably not the best path to high quality revenue growth. Cracker Barrel needs to design a strategy that maintains its bonds with core customers while is attractive to new customers.

From a brand-business standpoint, there are two important factors.

First, it is possible to address more than one target audience without alienating another.

During the 2004 McDonald’s turnaround, McDonald’s adopted multi-segment, multi-dimensional marketing identifying three targets with different needs:

  • Great tasting food and fun for kids
  • Healthful eating for young adult moms
  • Satisfying food for young adult males

The beer brand Modelo uses multi-segment marketing. In a report from The Wall Street Journal, Modelo focuses on its Hispanic core base and a non-Hispanic audience. “The brand strives to ensure its marketing appeals to both its core Hispanic and growing non-Hispanic customer bases, rigorously testing its ads with both groups to avoid alienating either one…. And, it (Modelo) spends heavily to run those winning ads.” 

A brand like Cracker Barrel can address multiple segments of customers. Cracker Barrel can be a multi-segment brand. It is critical to recognize that people are multi-dimensional, not uni-dimensional. To be relevant, Cracker Barrel must be also be multidimensional rather than uni-dimensional.

A multi-segmented, multi-dimensional approach has important strategic implications for communications, media, product development, pricing, promotion, restaurant design, packaging and so on. For example, the increased use of non-traditional media to communicate multi-dimensional brand messages to our multi-segmented markets.

Therefore, second, Cracker Barrell should employ a Brand Journalism approach when communicating with its segments. A multi-segmented, multi-dimensional approach has important strategic implications for communications, media, product development, pricing, promotion, restaurant design, packaging, and so on. For example, we are using non-traditional media more and more to communicate our multi-dimensional brand message to our multi-segmented markets.

Brand Journalism means telling the many facets of the Cracker Barrel brand story … and yet you know it is Cracker Barrel.

No single communication alone tells the whole Cracker Barrel brand story. Each communication provides a different insight into the Cracker Barrel brand-business. 

Modelo manages messaging to multiple audiences using advertising that appeals to both segments. Attracting and maintaining both Hispanic and non-Hispanic customers are key to Modelo brand-business-building. Modelo shows its advertising to its Hispanic core “… to confirm that none of its messaging was straying away from the people who had made it (Modelo) what it was.” 

With Brand Journalism, communications create a brand magazine, with each article a different story. Each edition is different: different subjects, different topics, different messages, all coming together in a dynamic, interesting, relevant; ever-evolving Cracker Barrel brand-business magazine.

Brand leaders are the editors of this brand magazine. As editors, brand leaders look not only at the subject matter, but also the style. For example, an article on Bruce Springsteen for the New Yorker must be written in a very different style than if it were written for Rolling Stone.

Cracker Barrell does not have to abandon its core customer group. And, Cracker Barrell should not do this anyway: core customers are valuable. Cracker Barrel must continue to adore its core. This does not mean that Cracker Barrel cannot focus on new customers as well. Every brand must both keep customers and attract new customers, just not at the sake of alienating the core base. Multi-segment marketing using a Brand Journalism approach to communications is a good place to start.

Smucker, Hostess And Occasion Segmentation

Market segmentation is fundamental to marketing. Segmentation is evergreen when it comes to building and managing brands.

J.M. Smucker, purveyor of jams, jellies, Jif peanut butter, Folgers coffee, Uncrustables, Carnation evaporated milk and pet food items including Milk Bone dog biscuits and Meow Mix, has just purchase Hostess brand snack foods. Hostess makes Twinkies, Ding Dongs, Ho Hos and Donettes.  

Wall Street does not appear to be happy with this purchase, as Smucker shares dropped 7% after the announcement. Wall Street frets that the frenzy around new weight loss drugs and the ongoing focus on “healthy” snacks makes the Smucker purchase questionable, especially at the price paid: $5.6 billion according to Bloomberg/$4.6 billion according to The Wall Street Journal with the assumption of $900 million of debt. Additionally, Wall Street worries that the Hostess portfolio of brands is “mature” and only sold domestically.

There are also the two Hostess bankruptcies – 2004 and 2012. Although Hostess revitalized around the iconic Twinkies brand, there are concerns about Hostess vibrancy.

Smucker, like Campbell Soup Company (owner of Pepperidge Farm and Snyder of Hanover snack brands), sees a rosy future in sweet snack food items. Data show “indulgent snacking” saw a 20% faster growth than healthy, snack-food alternatives. Smucker also believes that the Hostess purchase will “strengthen” Smucker’s power in grocery store center aisles. Observers agree that people are snacking more often. The Wall Street Journal points out that 70% of consumers eat at least two snacks a day. 

While the jury is out on how Smucker will leverage the synergies of Hostess with the existing Smucker portfolio, there is an important factor that the business press is glossing over. If Smucker can optimize this factor, the future of the Hostess purchase may, in fact, twinkle.  That factor is occasion segmentation.

Occasion segmentation recognizes that people have different needs in different occasions. As situations change, sometimes so do the benefits desired by consumers. A simple occasion segmentation is by daypart. Fast food chains see differences by breakfast, lunch, dinner, late night and all night. Beverages may segment by occasions such as start the day, between meals, with meals, alone, with kids, with friends, with business associates and in the evening.

For example, you might drink one type of beer at a sporting event and another type of beer when you are dining with a client and another type of beer when you are at home hanging out with friends. The original Starbucks segmentation focused on four occasions: Emergency (as in “I must have this coffee right now to wake up.”), At home, Coffee Break and Café Society.

Levi Strauss ran into trouble because it did not move fast enough when the yoga clothes craze began. People wanted comfortable, stylish clothes for yoga but also wanted comfortable, body-revealing stylish outfits for wearing to the yoga class, after the yoga class and on weekends doing errands. Levi Strauss discovered that casual, chic, colorful yoga clothes were relevant wear for more occasions than yoga class. Yoga clothes were relevant for going to the bank, driving the car-pool car, having lunch with friends, taking strolls with family and participating in gym classes. Most of these occasions had been blue jeans occasions. 

With snack foods, there are multiple eating occasions, including new dayparts as the lines between main meals and snacks blur. Barron’s, the financial newspaper, commenting on the Hostess purchase, wrote, “Consumers’ hunger for snacks is boosting cookie and candy makers as younger generations use them to substitute for full meals, according to research firm Circana Group. Snack sales were up 11% last year to $181 billion, the firm said.”

Grazing occasions have changed the way we eat as well. As has the shifting line between work and leisure, especially with work-from-home situations. 

Carried food occasions such as bringing lunch to work, lunchboxes at schools or hand-held snack foods such as granola and energy bars or confectionary have also made occasions more dynamic. In fact, according to an in-depth account of the Smucker purchase of Hostess, The Wall Street Journal points out that many Hostess snack foods are designed to be “eaten on the go” or “to squeeze into a lunchbox.”

What we eat at home relative to what we eat out of home are different. For example, putting Halloween aside, confectionary items for at home-consumption tend to be bought as bagged rather than individual. 

Smucker CEO, Mark Smucker agrees with the expansion of occasions. Mr. Smucker indicated that having Hostess in the Smucker portfolio would help Smucker reach people during new dayparts “beyond when they might reach for Uncrustables or Jif squeeze peanut butter.” Hostess recognizes that sometimes customer want a health snack for a specific dietary occasion. But, there are many times that customers want a snack that is designed for a treat occasion. Hostess data indicate that customers increasingly integrate healthier snacks and sweet, indulgent treats into their diets.

Mr. Smucker is not alone. Occasion segmentation is on the mind of Popeye’s president of US and Canada. In a discussion with Bloomberg, Sami Siddiqui stated that the average Popeye’s customer stopped by a Popeye’s restaurant only 3 times a year. At McDonald’s the average customer stops by 18 times a year. Mr. Siddiqui said that people talk about Popeye’s as a special treat occasion. In fast food, special treat can be a problem. The goal for Popeye’s is to become “an everyday occasion.”

Signet, the owner of Zale’s, Kay’s and Jared’s jewelry stores, is also facing issues with changing variations of occasion segmentation. Apparently, Valentine’s Day and anniversaries are now not as significant in jewelry purchasing occasions as are experiences, homemade items or dinners. According to Bloomberg, occasions such as receiving a raise or a promotion or a bonus leading to a jewelry purchase have increased. How people shop in bridal occasions has changed as well. Bridal is no longer a solely in-store experience. Shopping online for engagement rings and other bridal jewelry is growing. Signet told investors that it tracks “45 milestone occasions” in a couple’s life, each one of which is potentially a jewelry-buying occasion. 

In its IPO filing, Instacart indicates that it is pursuing an array of occasions other than home delivery of groceries. Apparently, Instacart is looking into catering, stocking food for small- and midsize businesses like preschools and corporate offices and delivering food and nutritional programs through hospitals, medical providers and insurers.

Of course, knowing who is the customer and what are the customer’s needs in a given occasion are critically important. But, occasion-driven segmentation will be key for snack food innovation and growth. Wall Street should understand the marketing implications. Smucker understands. 

Swatch And Budget Luxury: Blancpain x Swatch

Swatch And Budget Luxury: Blancpain x Swatch

Recently, Ian Schrager, entrepreneur, hotelier and co-founder of famed Studio 54, decided to create hotels that are luxury but without the services and amenities. Mr. Schrager’s hotel vision is luxurious experiences that do not depend on multiple on-site staffers and niceties. His vision is a segment he calls Economy Luxury.

According to Mr. Schrager, the idea for an Economy Luxury segment stems from his observation that “… luxury has a new and different meaning today. Luxury right now is having freedom – freedom from hassles to make everything easy, freedom of time, freedom to devote your personal time to the things that matter to you.”

Always an astute observer of cultural changes, Mr. Schrager is clearly on to something. Look at watches.

Swatch Group, the watch group that owns Swatch and other brands, including Blancpain BreguetCertinaETAGlashütte OriginalHamilton, Harry Winston, Longines, Rado, Omega and Tissot, has a similar vision about the evolving nature of luxury. 

Last year, in order to generate renewed interest in the affordable Swatch brand, Swatch joined with its sibling brand, Omega, to create the MoonSwatch. According to observers, the MoonSwatch created an offering called Budget Luxury. The customer buys heritage, status, authenticity and exclusivity as well as savvy, one-of-a-kind, in-the-know fun at an affordable price.

The March 2022, Swatch launch of the Omega x Swatch Speedmaster at US $260 was a massive hit. The Omega x Swatch MoonSwatch design resembled the iconic Speedmaster known as the Moon Watch, worn by US astronauts. At its release, the MoonSwatch generated such enthusiasm that crowds surrounded Swatch stores around the world. Bloomberg BusinessWeek reported that in Geneva, hundreds of buyers “snaked around the block” and there was police presence to ensure safety. 

The response to MoonSwatch was so extraordinary that Swatch Group released a limited edition of the “most desired” MoonSwatch, the Mission to Neptune. Mission to Neptune became a collector’s item after its original release.

Now, following the success of MoonSwatch, Swatch Group just dropped the 5-watch series Blancpain x Swatch Scuba Fifty Fathoms Collection. Each Blancpain x Swatch Scuba Fifty Fathoms watch reflects the ethos of one of the world’s five oceans. Prices start at US $400. The average price of a Blancpain is US $12,000. The original Blancpain Scuba Fifty Fathoms, a 70-year-old watch, designed for divers, was featured on the wrists of oceanographer Jacques Cousteau’s team for the filming of the Oscar-winning documentary The Silent World. Its list price was US $14,000 but can sell for as much as US $21,000.

On September 7, 2023, there was a Blancpain x Swatch Scuba Fifty Fathoms 5-page advertisement in The New York Times featuring each of the 5 styles, designs and colors: Artic Ocean, Atlantic Ocean, Indian Ocean, Pacific Ocean and Antarctic Ocean.

The Blancpain x Swatch Budget Luxury approach is similar to Ian Schrager’ idea: the concept of attainable luxury for those in the know. The concept of affordable luxury seems to be increasing. People want obtainable opulence. People want the paradox brand promise of economical extravagance. And, brands are offering inexpensive indulgences to satisfy this want.

For example, H&M partnered with Karl Lagerfeld. And, as reported in The Wall Street Journal, Barney’s, the iconic New York City fashion emporium is partnering with affordable teen fashion store Forever 21. Just last week, Forever 21 launched a Barney’s New York collection of “… suiting blazers and trousers, oxford button-downs and turtlenecks, denim jackets and pants, leather and faux-cashmere outerwear.” Missoni, the luxury Italian fashion house, teamed with Target and the clothing items sold out immediately. 

And, just recently, Skechers, the California lifestyle and performance footwear brand, dropped the Skechers x Snoop Dogg, described as “high on style.” Ad advertisement appeared in The New York Times Style Magazine.

In the 1960’s Howard Johnson’s restaurants, the ubiquitous roadside eateries, amped up their menu with food created by chefs from Le Pavillion in New York City and enhanced the dining experience with waitresses dressed in Dior-designed uniforms. Howard Johnson’s was considered “affordable glamour.”

The French branding expert, Jean-Noël Kapferer, coined the concept of Abundant Rarity. Abundant Rarity refers to the upmarket trend of luxury items being available but exclusive. Abundant Rarity is a challenging balancing act for luxury brand owners. There are those who believe that the idea of being available everywhere, even if exclusive, makes the brand not luxury. These observers believe that once a luxury brand becomes ubiquitous, it becomes less exclusive. And, being exclusive is considered a critical element of luxury.

Budget Luxury takes a slightly different approach. First of all, Budget Luxury does not indicate that the offering will have major availability. Exclusivity, yes; but not necessarily availability. In fact, many of these budget luxury brands are limited editions. Second, the co-branding brand architecture policy changes the exclusivity dynamic.

Co-branding is a fast way to create a brand. It requires borrowing benefits from each brand. Using co-branding, the watches Omega x Swatch and Blancpain x Swatch maintain exclusivity by virtue of the luxury brand heritage. The watches have luxury authenticity but are offered at Swatch prices. With co-branding, the co-branded brand shares in the brand promises of both brands, in these cases Omega and Swatch and Blancpain and Swatch. The brand benefits of the three brands remain. Omega and Blancpain are not demoted or sullied by the co-branding policy. Both have their original portfolios of ultra-luxury offerings at ultra-luxury prices. The co-branding adds the modernity, hipness and fun of Swatch to Omega and Blancpain. At the same time, the co-branding adds authenticity, prestige and elegance to Swatch.

For the majority of the Budget Luxury brands, the brand architecture that uses the co-branding approach allows the offerings to be considered “small luxuries” that satisfy a want not a need. The symbiotic relationship of two contradictory brands together provides the reason to believe in both luxury and affordability with in-the-know status. There is unique social currency associated with Omega x Swatch and Blancpain x Swatch.

The paradox of these Budget Luxury brands is appealing to consumers, as the crowds outside of the Swatch stores demonstrate. Having an understanding of brand policy is critical. Creating policy on how brands in a portfolio relate to each other is an under-appreciated strategy. But clearly, a brand architecture policy can lead to enduring profitable growth. 

applebees deal loyalty real loyalty

Deal Loyalty Versus Real Loyalty

This is a brand-business truth. To be considered fair value and not be perceived as cheap, brands must avoid excessive marketing communications that emphasize price as the reason to buy. Excessive emphasis on price builds deal loyalty. 

Building deal loyalty does not build brand loyalty. Deal loyalty is not real loyalty. True brand loyalty cannot be bought with bribes. When you consistently lure customers with incentives, all you do is make the customer loyal to the deal instead of loyal to the brand. If there is a better deal elsewhere, deal-loyal customers are out your door and in through the competitor’s door. If a customer does not prefer your brand’s experience, then making it cheaper and easier will not build brand strength. 

Occasionally reminding people that a brand is affordable is important. But, undue, extreme stress on price alone destroys real loyalty and builds deal loyalty. Instead of the dominant message being price, brand-business communications must emphasize brand-business-relevant differentiation. Tell customers that this is a great brand at a great price rather than just communicating that this is a great deal. 

And yet, even C-suite executives seem to be unclear as to the difference between brand-business-building price promotions and discounting. And, in most cases, to be fair, executives tend to be vague about the distinctions between value and price are synonymous.

For example, here is an exchange that took place during the recent Dine Brands Global Q2 Earnings Call. Dine Brands Global owns Applebee’s, IHOP and Fuzzy’s Tacos. Applebee’s and IHOP are iconic American brands that grew with strong relevant differentiated brand promises. And, Applebee’s and IHOP managed through the COVID era. 

In the Dine Equity Earnings Call Q&A section, one analyst asked this question:

“Mine (my question) is really about the approach to value. And, I think there’s a general concern among the investment community is (sic) that the industry might kind of slip back into deep discounting. And, so, I am wondering how would you characterize the level of value now?  And, I think that the two for $25 with the steak (transcript mis-typed as stake) whatever’s coming on Monday, it’s a bit like deep discounting. And, I’m just wondering how you’d characterize the level of discounting now, what you expect versus kind of some of the pre-COVID levels, which were so margin destructive. I think industrywide, just any comment would be helpful to start.”

The analyst’s question was a fair one to ask. In the Dine Equity’s Earnings Call opening comments, executives referenced declines in restaurant traffic at Applebee’s relative to the consistency of the average check size. In other words, fewer people were visiting Applebee’s but due to higher ticket prices, the amount spent per food stayed the same, on average. Dine Equity stated that when guests come for a promotion, they tend to spend more. On the other hand, Dine Equity did confirm that customers were now cutting back on monies spent at its restaurants such as reverting to pick-up versus delivery, saving money on fees. And, Dine Equity executives did reference that this traffic issue and the cut-back-mentality seemed more applicable to Applebee’s. IHOP was performing marginally better even though with less than stellar performance.

As reported in the Earnings Call transcript, here are the verbatim Dine Equity executives’ responses* to the analyst’s question:

“What’s the value? I think an important thing to keep in mind is that both of our brands work very closely with it, with our franchisees to determine what these value promotions look like or what an LTO (limited time offer) looks like. And, that includes not only the marketing behind it, but the margins behind it as well…”

“… so when our guests are with us, they continue to enjoy the full offerings of both brands – Applebee’s and IHOP – when they’re in the restaurants. So that’s a great data point for us that demonstrates that it’s not discounting but we’re using the value offers to bring in guests in a way that resonates with them. So, they maintain that average check.”

“Value remains incredibly important right now, but honestly, it’s … it remains the same across all economic cycles. Applebee’s is built for the average American, eating good in the neighborhood is more than just a tagline. It means we’re providing good food at an affordable price in an environment where everybody can come and be themselves. That’s value that’s the value that the American consumer is seeking and expects from Applebee’s.”

“An example you mentioned in Q2, we delivered value through affordability through campaigns such as our two for $25, which we ran in June with strong results. It’s compelling and it provides the value again, that the guests are seeking in this environment, which is why we have outpaced our direct competitors from a value attribute perspective. For many years.”

(*It is important to keep in mind that these are real time responses that are most probably unrehearsed.)

Is there a strategic demarcation between brand-business-building promotions and discounting? Is there a clear articulation differentiating price from value?

Look at Applebee’s. For quite some time, Applebee’s has advertised a food offering at a price with music followed by its tagline about eating good in the neighborhood. The Applebee’s communications have been, and still are, “Here are yummy foods at this great price that happen to be at Applebee’s.” Currently, the promotion is wings with 6 sauces at $12.99.

Applebee’s has a relevant differentiated promise. But, that promise has not been articulated to the customer in ages. Applebee’s has spent a lot of money communicating food at a price. So, it may not surprise that traffic is down. Deal customers are loyal to the deal. If a competitor has a better deal, that deal loyal customer is eating at the place with the best deal.

Perhaps Dine Equity assumes that just by stating the eating-good-in-the-neighborhood tag line will be enough to remind customers of Applebee’s promise. However, there may be younger guests who have no idea what eating-good-in-the-neighborhood really means other than good price at a local hub. And, there could be guests who may have known the relevant differentiated promise of Applebee’s but have forgotten. Applebee’s excessive, consistent reliance on price promotions without providing a brand promise may reinforce that Applebee’s is a great place for a deal.

Dine Equity executives are not alone. Many executives buy into the idea that price and value are one and the same. This is a problem. If executives cannot define the difference between deal loyalty rather than real loyalty, there is an overarching strategic challenge. And, if there is a reluctance to separate price and value then the likelihood a promotion is a discount is probably real.

Analysts as well as brand-business owners should not let this confusion pass unaddressed. 

Every consumer has a mental value equation in their head. Value is the numerator divided by the denominator. Value is the brand-business’ total brand experience numerator – the relevant, differentiated functional, emotional and social benefits – relative to the brand-business’ total costs denominator – money, effort and time. 

When the emphasis on is on the denominator of the equation – the costs, specifically money – and there is no mention of the numerator (the total brand experience), the brand-business’ costs overwhelm the experience. In other words, when the denominator is greater than the numerator, then the brand-business is a poor value.. If the numerator is greater than the denominator than the brand-business is a good or great value. 

This means that customers must understand what the numerator – the brand-business’ total brand experience – is all about. The brand-business must remind customers what the brand-business stands for: is this a relevant, differentiated brand-business promise or a deal? Real loyalty builds when brand-businesses emphasize what they deliver to the customer relative to the cost of the customer’s expenditures. 

Additionally, the entire equation is subject to the customer’s assessment of trustworthiness. Trust is a multiplier of the value equation: do I trust the brand-business to deliver up to my expectations? If there is not trust than there is no value. Anything multiplied by zero is zero.

Based on the Dine Equity Earnings Call responses, both Applebee’s and IHOP appear to have a similar approach to value as a “price deal”. Both brands tend to neglect mention of the great benefits each brand has to offer. For example, what is the relevant differentiator at IHOP? Is it a brand with abundant food at a good price? Or is the brand promise about a special brand-business experience? Do the IHOP promotions generate deal loyal or real loyal guests?  

One executive highlighted a crepe roll-out buy-one-get-one-free promotion. The executive phrased this example this way:

“We rolled out brand new crepes. And, when we rolled those out, we did those with a buy one get one promotion. And, while that may seem like a deep discounting, the purpose of that really was to get trial by two people at a time when they came in to try our new menu and try the new crepes. And, it worked to perfection. It not only provided great value for guests coming in, but when the buy one get one promotion went off, crepes sales actually went up, compared level (sic) was when they were coming in and people were getting on for free also.” 

The real success indicator would be how many of those crepe customers came back to IHOP. Were these deal customers or loyal customers? Did the promotion build the brand-business long-term or not?

Financial consultant and author, Adrian J. Slywotzky, wrote that one of the most crucial set of questions for value creation leading to market value focuses on differentiation. “What is my basis for differentiation; my unique value proposition? Why should the customer want to buy from me? Who are my key competitors? How convincing is my differentiation relative to theirs?”

Many brands have price or affordability as part of their brand-business promise. H&M and Zara are known for fast, chic, young- spirited fashion at affordable prices. IKEA provides furniture, bath- room fixtures, kitchen layouts, lamps, and other home accessories at affordable prices; you just need to assemble them yourself. Sam Walton built a retail empire making shopping for every- day needs affordable and available in small town America. Ray Kroc democratized eating out. His vision was a restaurant that made eating out so affordable that more people could eat out more often. Superior availability and affordability were key contributors to the success of McDonald’s. 

Value and price are not the same. Value is much more than a price point. Price is important. But, leaders must remember that although marketers set price, customers set value. Brand-business value decisions must be strategic. What is the customer-perceived trustworthy value for our brand? Are our marketing efforts affecting customer-perceived value? Is price sensitivity increasing or decreasing? 

To increase shareholder value, a brand-business must be the most efficient and productive provider of a branded offer that customers value. Customers need to perceive the brand-business as great value, not merely appreciate the brand’s price point. 

In this increasingly competitive world, excessive emphasis on price incentives – the generator of deal loyalty – may severely damaged brand loyalty and brand value. Brand-business leaders must ensure that the organization clearly understands the difference between value and price. Brand-business leaders must ensure that communications focus on great brand at a great price. Affordability is a feature. This feature supports the benefits of the brand. Leaders have the responsibility to keep a brand-business’ promise top-of-mind with customers while reminding customers of its value.

Gap And The Contradictory Leadership Challenge

Brands face the challenges of optimizing contradictory customer needs. This is because customer do not want to compromise one benefit for another. Leaders face the same challenges. Leaders must figure out ways to maximize seemingly uncompromising views such as focusing on profitability and sustainability. Or focusing on core customers’ views while satisfying other customers’ views.

Another seemingly difficult leadership challenge is being data-driven rather than creative-driven and vice versa. This is the problem that has faced many retailers. Fashion needs data. On the other hand, fashion decisions, are in many cases, creative, gut-driven decisions. And, data-driven versus creative-driven is apparently seen as a challenge that plagues Gap, the once popular, de rigueur clothing establishment.

A creation from 1969, Gap was a store stocked with Levi’s denims. It promised to never be out of stock. The clothing was available in all styles and sizes. An instant hit with the baby boom cohort (the Gap name came from the concept of the generation gap), soon there were stores nationwide. It was not until the 1980’s that a new CEO focused on raising the style level. Gap was great until it was not great. 

In its latest analyst earnings call, Gap signaled a less than encouraging forecast. Reporting indicates that Gap dragged down the overall company (Banana Republic, Athletica, Old Navy and Gap).

One of the problems with brand management and marketing is the mystique of measurement. As business has become more demanding, business has become more defensive. In a world where marketing activities and budgets are being squeezed by limited resources, there is a tendency to over-rely on metrics.  Sometimes, leaders allow the mystical muscle of measurement to take over the role of marketing expertise and experience. Creativity is forced to conform to measures. While there is much that we can measure, there is also much that is not measurable. If the value of marketing and creativity need validation within the organization, then the organization has a bigger problem than can be solved through measurement. 

It is necessary to recognize that data show us what has happened. Data are backward looking. And, in most cases, data do not tell us why customer behavior is what it is, only what it is now and what it was then. 

At Gap, there were CEO’s who leaned towards fixing Gap’s issues by drilling down on what data were showing. Until recently, with the hiring of a creative-style-focused leader, Gap has cycled through executives who, according to The Wall Street Journal, fixed “weak spots here and there but (these) were not the fundamental problem.” Gap’s new CEO is “the first creative-minded leader” in quite a while.

These Gap fixes were important. But, when the enterprise is clothing, creativity is important too. It is possible to maximize creativity and data. All that a brand needs is a leader who is insight-focused acting on informed judgment.

Leadership, regardless of industry, must not allow process to dictate over passion.  Leadership must not sacrifice accountability on the altar of measurement. Leadership must not fear failure. When decisions fail, it is very easy to say, “It is not my fault. The measurement process made me do it.” 

Disciplined research is an important contributor to effective business management. But, research discipline alone cannot be creative; it cannot be innovative. Measurement can evaluate but not create ideas. Creative ideas require creative insight. People provide these insights based on data and judgment.

Real, actionable insight will not come from superior data analysis. Superior analysis provides understanding of where we are and how we got to where we are. Superior analysis does not provide insight into what kind of future we can create. 

Leadership must use their expertise and their judgment. Leadership must use their creativity to make reasoned, informed, and insightful decisions. 

In this increasingly competitive, sometimes frustrating brand-business world, there is a pervasive fear of taking the leap of faith based on informed judgment. Informed judgment is not guesswork. Of course, no one intentionally commits valuable resources to something that is likely to fail.

Informed judgment is critical. The emphasis is on “informed.” Personal judgment can become a hindrance to success. 

In 2011, Ron Johnson, the former star of Apple’s retail stores, took on the CEO role at J.C. Penney. Mr. Johnson had some ideas as to the direction of J.C. Penney. According to the press, most of these ideas went untested. These ideas were not particularly “informed.” The result was a retail debacle.

On the other hand, informed creativity is a formula for success. The Wall Street Journal cites the case of Abercrombie & Fitch. A new CEO made a huge difference using informed creativity. It was clear that Abercrombie & Fitch’s “cool-kids” approach lost its luster. The brand-business’ revitalization changed the target audience and the over-reliance on logos, “to cater to working-age adults who might be searching for tasteful wedding guest outfits.”  This type of rejuvenation relies on creative interpretation of data.

Part of the problem comes from the muddled definitions of information, trends and insights Not only do we tend to use these terms interchangeably but also, we overuse and misuse the word “insight.” 

This matters because there is a relationship between information and trends, and trends and insights. Information happens first. Information leads to the generation of trends, which then lead to the creation of insights. It is a process that sets the context for creativity. 

Information are facts. And, in our data processing world, information are data that are processed, stored and/or communicated. There are massive amounts of data being processed into massive amounts of information. 

A trend is something that is developing or changing. A trend is enduring. A trend is an idea or concept that is happening around us and influencing the way and manner in which we behave.

Trends have implications, of course. And we can generate strategies to address these trends. 

But, trends are not insights.  Trends are valuable because they inform us about the world around us.  But, collecting and analyzing information and turning these into trends are not enough. We must go from information to insight.  

Informed insight is not guesswork. Insight means seeing below the surface of information.  Insight is all about “why?” This necessitates synthesizing rather than only analyzing.  Analysis travels backward. But brand-businesses move forward. Use synthesis. Synthesis means, “the combining of diverse concepts into a new coherent whole.” Analysis leads to understanding what is happening and why.  Synthesis leads to insight into what might happen. 

Trends are general. It is the insight about the trends that is critical.  It means looking under the surface, beyond appearances and seeing ahead. Meaningful insights are more than mere information and trends. 

A consumer insight is not what you always believed. A consumer insight is not driven by what the factory makes. A consumer insight is not just information or facts. A consumer insight is not product attributes. 

An insight needs to meet two criteria: 1) Surprise at what you learned; and, 2) As a result, a change in behavior based on this learning. An insight is a fundamental consumer truth that has the power to open our eyes. It is relevant, recognizable, believable, ownable, adaptable to geographies and capable of building business for the long-term.

Right now, Gap could use some creativity-driven informed insight. The Wall Street Journal indicates that many on Wall Street are pleased with the choice of a creative leader for Gap. As newly appointed CEO, Mr. Richard Dickson stated that it is time to redefine the Gap’s image for consumers. Mr. Dickson also admitted that many problems were self-inflicted. One way to rejuvenate Gap will be to recognize the limits of data-driven only strategies. Data will be key but as a way to inform judgment, allow executives to take that informed leap of faith, and help evaluate ideas. 

Dear Amazon And The FTC: A Market Is Not A Channel

Amazon and the FTC are facing off. Putting any discussions of trust-busting, Prime enrollment issues and “monopoly” aside, the fascinating, underlying discussion is about Amazon’s market. The FTC and Amazon are at odds over how much of the e-commerce market Amazon controls. And, whether Amazon’s market is e-commerce or is online marketplace.

According to Bloomberg Technology, one FTC argument will be that Amazon has enough market share to be called a monopoly. And, as a monopoly, Amazon illegally abuses its market position. Bloomberg Technology states that there will be a contentious disagreement about what is Amazon’s actual market. Amazon will doubtlessly argue that it commands a tiny sliver of global and US retail, online and off. 

Amazon’s argument will be macro. That is, Amazon sees itself as an e-commerce player. Using this definition, Amazon has a 37% market share. The FTC wants, according to Bloomberg Technology, a different definition. The FTC wants to define Amazon as an online marketplace, platforms that allow a variety of sellers to conduct business online. Using the FTC definition, Amazon has a 70% market share.

From a marketing perspective, the Amazon-FTC arguments about market do not reflect how consumers think. Amazon and the FTC are arguing about the world of distribution. E-commerce and online marketplace are channels. E-commerce and online marketplace are how and where a consumer buys something. A channel of any kind is how goods and services are delivered. 

Both Amazon and the FTC do not have the consumer in mind with their arguments. Why? Because a market is a want. Decades ago, Harvard professor Ted Levitt posited that people do not want drills. People want holes. People want the benefits of the drill. The market is for holes.

From a consumer and marketing perspective, a market is not a product category. There is no lip gloss market; there is no mascara market.  But, there are wants for attractiveness, for youthfulness, for status and for elegance. A market is a want.  If there is no want, there is no market.  There is no such thing as the automotive market.  Nor is there such a thing as the cola market or the pet food market. There is no such thing as the granola bar market. There is a market for portable, quick, and easy-to-eat nutrition. There is a market for an afternoon pick-me-up. There is a market for a healthy, attractive and fit body. There is a need for portable protein before or after strenuous activities. There is a need for a non-messy, vitamin-enriched gym bag food. 

A market is not a geography.  There is no such thing as the French market, the Japanese market, the Italian market, the Common Market.  Geographies are where markets exist.  Geographies are how you organize to deliver the brand promise to the market.  

A market is people with a want. If it is a global want, there is a global market.  If it is a growing want, it is a growing market.  If some people in Italy and some people in France and some people in Australia share the same want, then they are in the same market.  It just happens that they live in different places.  If there is no want, there is no market. 

A market is not a distribution channel.  A distribution channel is how you reach the market, not the definition of the market.  There is no such thing as the warehouse store market or the department store market or the supermarket market. Or, in the Amazon-FTC case, an e-commerce market or an online marketplace market. Brands are not specifically designed for channels. Companies design brands for people, people with a want.  

Brands may choose a particular way in which they deliver their experiences. For example, a brand may choose to be online only, such a Blue Apron Or a brand may choose to be a brick-and-mortar brand such as Publix. Or a brand may create a combination of online and brick-and-mortar, such as Walmart or Target. Consumers want the ease of choice when it comes to how brands are bought and delivered. However, it is the brand with its benefits that the consumer purchases.

A market is a specific group of people who share common needs in a common context. Product categories, channels, and price categories are not market segments. 

Many companies, as well as both Amazon and the FTC, compute market share based on geographies and categories and channels and price points.  Category share, geography share, channel share, price point share are not market share.  These reflect what the manufacturer desires, not what the customer desires.  Specific shoppers go to Amazon for specific products that satisfy specific needs. A person may need 8-foot replacement lamp cords. Or a person might want Carhartt thermal pants. It is doubtful that an Amazon shopper says, “I am looking for an e-commerce site or an online marketplace. These are where the goods exist but these channels are not what the goods are good for.

Looking at markets in terms of channels or geography affects how business looks at its data, how business looks at its business and how business is managed.  If a teenager in Paris has the same want as a teenager in New York or in Tokyo then these teenagers are in the same market no matter how the brand is organized or delivered.  But, if two teenagers living next door to each other in Paris have different wants, then these teenagers are in different markets. So, online Shein offers youth clothing that are globally appealing satisfying the consumer want for stylish, inexpensive, fast fashion. It is doubtful that a global teen considers Shein’s benefit as being an online mall. Being online is wonderful. But, online is a distribution channel for wanted items.

The what-is-a-market discussion is not an academic issue. Look at the automotive business. Car companies see markets as product types. Car companies see potential “conquests” as wanting an SUV or a truck, for example. But, in reality, the driver is looking for a vehicle that can carry four people and lots of stuff but looks attractive and feels luxurious on the inside.

The hotel industry defines markets as features at a price point. The markets are mid-scale, upper mid-scale, or upscale, or luxury or economy. No one says to their beloved, “Dear, I made a romantic reservation for this weekend at an upper-midscale hotel.”

Brands are promises of expected relevant, differentiated, trustworthy experiences. Amazon is a brand. Amazon delivers an expected, relevant, differentiated, trustworthy experience. Amazon wants to be the Earth’s most customer-centric company. Of course, operations and price help create customer-centricity. So, Amazon’s fight should be about the want that it satisfies.

Amazon and the FTC are confusing market with marketplace. These two constructs are different. Language is important. But, so is the understanding at the basis of this Amazon-FTC fight. If market is the issue, then recast the arguments into actual markets based on consumer wants. But, if channels are the issue, then be clear, because consumers see channels as how and where they obtain wanted goods and services. A channel is not a market.

Beyond Meat And Its Trust Deficit

On August 8, 2023, Beyond Meat, the company that makes plant-based meat alternatives, tanked. Reporting its second quarter performance, Beyond Meat missed analysts’ expectations. Beyond Meat’s revenue for second quarter was down 30.5% compared to the same quarter in 2022. Many analysts have lost enthusiasm for Beyond Meat with four analyst groups listing Beyond Meat as “Sell” and four listing Beyond Meat as “Hold.”

The poor performance is not a surprise. Almost a year ago, in September 2022, The Wall Street Journal ran an opinion piece “Beyond Meat is Beyond Hope”. The author stated that Beyond Meat’s problem is that there are just too few people who will eat its products. The writer pointed out that the pool of vegetarians and vegans is too small for profitability. Only 5% of Americans say they are vegetarian while 3% identify as vegan. 

However, as The Guardian pointed out, the non-dairy milk category is booming. At the time, The guardian wrote: “Dairy alternatives now make up 15% of the market and are worth $2.5 billion. A third of Americans drink some kind of non-dairy milk weekly.” The prospective people are out there: just give them relevant, differentiated reasons to buy.

There is a lot of Monday morning quarterbacking stating that plant-base food is a fad. On the other hand, there is a significant lobby believing that plant-based protein is a more sustainable, more innovative food system with a lot of growth potential.

Underlying Beyond Meat’s laggard performance is this: Beyond Meat has a trust deficit. Customers and prospective customers are concerned about how the product is made. Beyond Meat products are perceived to be too processed. And, for vegans, vegetarians and organic eaters, processed is a dirty word. Trust is an essential element for a brand.

There are many reasons why Beyond Meat has a trust deficit. Beyond Meat did not appear to build a compelling, relevant, differentiated brand.  Rather, Beyond Meat always seemed to be a company with innovations. Beyond Meat never seemed to communicate its benefits to customers and prospective customers. Beyond Meat products have been and still are priced at a premium to animal proteins. And, these are just a few reasons.

Now, Beyond Meat wants customers and prospective customers to perceive Beyond Meat plant-based products as trustworthy. Beyond Meat wants people to believe that Beyond Meat products are OK to eat; not processed, but created. Beyond Meat is running a communications campaign to address its trustworthiness as a food stuff. But, again, at the moment, there is no discussion of the total brand experience; no addressing of Beyond Meat’s functional, emotional and personal social benefits.

Beyond Meat has a mission. Founder and CEO Ethan Brown stated this at the earning call:

 “As we look to the future, we remain steadfast in our belief that plant-based meat, and Beyond Meat specifically, will play an important part of the global response to a climate crisis that appears to be rapidly intensifying, while also delivering health benefits to the individual consumer.”

Beyond Meat’s mission is laudable. However there are complications. A research study cited in The Guardian shows that even when people learn that huge reductions in meat consumption are essential for climate-change avoidance, people are reluctant to change behaviors when the environment is “the sole beneficiary”. Self-interest overcomes altruism. A different study from Purdue University shows that even when confronted with information about meat’s carbon footprint, people still prefer meat over plant-based alternatives

A food analyst at Mintel, a global market research company, said, “Awareness of the impact of meat on climate change is expected to underpin long-term demand, although products featuring more natural vegetable and vegetarian proteins, such as chickpeas and lentils, were likely to lead growth as consumers sought more transparency and reassurance about the origins of ingredients in vegan ready meals.”

According to the press, Beyond Meat has a marketing campaign with the title, There’s Goodness Here.” This Beyond Meat campaign aims to “demystify” the way in which Beyond Meat’s products are created. For example, did you know that The American Heart Association certified Beyond Meat’s Beyond Steak as a heart-healthy food? Did you know that Beyond Meat’s products are labeled 35% less saturated fat?

One online source describes the ad campaign as follows:

“In the first phase of the campaign, consumers visit Munich, North Dakota to meet a 5th generation farmer and father who grows fava beans for Beyond Meat’s plant-based heart-healthy steak, which was recently certified by the American Heart Association for meeting its exacting nutrition requirements. Fava beans, which naturally enrich the soil with nitrogen, can enable healthier fields without the use of harmful and expensive fertilizers. This benefits farmers, consumers and our big beautiful planet. In addition to fava beans, Beyond Meat sources clean, simple, non-GMO plant-based ingredients like peas, rice and wheat. This farmer’s story and others like it underpin the goodness that is the beginning of Beyond Meat’s product journey which uses wholesome plant-based ingredients and a simple and clean process to create nutritious food options that are also environmentally friendly and kind to animals.”

This idea of taking people behind the scenes is good. It is one of the critical steps necessary to build trust. Openness Is an Opportunity 

Transparency is a key to trust. Transparency requires truth. Truth is not the same as trust. Truth is a fact,; trust is a feeling. To build your brand into a trustmark, you need both truth and trust. To be worthy of a customer’s trust, people need to see the truth and not just read about the truth. By taking customers behind the scenes, Beyond Meat is telling customers, “We have nothing to hide.” “See for yourself.”

In our fast-information-access, knowledge-sharing world, transparency is important. Increased emphasis on transparency affects trustworthiness. It is only a matter of time before the public discovers the facts about any issue. There are no secrets. There is nowhere to hide. Beyond Meat has discovered that people actually do read the labels. And, what the Beyond Meat labels indicate is more process and less made-by-nature.

By relying on a family farm to deliver a message, Beyond Meat is opting for a more convincing messenger. It is easy to rely on traditional advertising to tell someone what a brand stands for. It is more convincing when others tell the story on the brand’s behalf. And it is even more convincing when people can learn the truth for themselves. 

However, there are other essential steps to build trust. Beyond Meat must not simply hang its hat on openness. Beyond Meat must invest in the following trust-building efforts.

You Are What You Do 

Beyond Meat must display trust before Beyond Meat can declare it. Customers must consider Beyond Meat worthy of trust before they commit to trusting it. Saying, “trust me” does not track with today’s customers. 

Beyond Meat must provide iconic tangible, visible evidence that what Beyond Meat claims can be trusted. Iconic products or services are tangible demonstrations of the truth of Beyond Meat’s claim. Labels matter. Looks matter. 

Part of its new campaign is a demonstration of Beyond Meat’s tangible evidence of its “goodness.” Beyond Meat will need more than advertising to showcase its evidence.

Trust is the confidence that a brand will live up to expectations. This means that the promised expectation of the brand can be relied upon. 

Lead the Debate; Do Not Hide from It 

Staying silent when there are big issues at stake is not a signal of leadership. Silence means agreement, and trust is too important for silence. Leaders stand up for what they believe in. 

Beyond Meat stayed silent on the issue of “processing” even when the cattle industry came after Beyond Meat with very easy-to-grasp messages. Getting ahead of the issues is critical. Beyond Meat failed to do so.

For example, years ago, Domino’s could have taken a defensive position when customers complained about the quality and taste of their pizza. Instead, the brand agreed that its offerings were below par and told us so in national television advertising. 

If you are in the food business and you are selling food people think is questionable, fix it. Going on the defensive is the wrong approach. For a brand to be taken seriously, a defensive posture implies that you have something to hide. When you are silent or when you hide, others can create the truths about you. Others, such as the cattle industry, will recast your profile. A brand will have a reputation. The only question is who will have the strongest voice in managing that reputation. It is not in a brand’s interests to let outsiders trample on a brand’s truths. 

Rather than hide from an issue, lead the debate. Take positive action. Tell your story. When you tell your story you win. When you are silent, you lose. Trust leadership is more than just standing out. It requires speaking out. In revitalizing a brand, it is necessary to speak up for your brand if you want your brand to stand out. 

Trustworthy Messages Must Come from a Trustworthy Source 

How you say things is as important as what you say, especially in a world where conversations occur online digitally and through blogs, apps and with a limited number of characters. 

Just as peer testimony is more trustworthy than corporate testimony, the voice of the customer is more trusted than a corporate voice. So, it is helpful that Beyond Meat is showing customers and farmers.

Beyond Meat will also rely on health organizations to deliver the “goodness” message. In a polarized society this may be an iffy approach. True, Beyond Meat’s products are recognized by the American Heart Association, which certified Beyond Steak as a heart-healthy food. Additionally, Beyond Meat will rely on a clinical study from Stanford University (The American Journal of Clinical Nutrition). The study looked at the benefits of replacing animal-based meat with Beyond Meat’s plant-based meat over an 8-week period.  Results showed improvement in key health metrics when participants replaced animal-based meat with Based on the positive outcomes of the study, Beyond Meat created the Plant-Based Diet Initiative at the Stanford University School of Medicine. Beyond Meat also has an agreement with the American Cancer Society to advance research on plant-based meat and cancer prevention.

Providing trustworthy information is critical. The challenge is to become a trustworthy source of information that is helpful, convenient, understandable, and valuable to your customers. Become an open source of information that is understandable, accessible, timely, and trustworthy. 

Beyond Meat has a trust deficit. This trust deficit was self-created. At Beyond Meat, there seemed to be a sense that people would overlook the product-generation because the idea of plant-based meats was so enticing. Consumers are not like that anymore. “Trust me, this is good for you and sustainable” is not a viable message.

Beyond Meat must build trust. Brands live and breathe with trust. Without trust, brands have little value. If trust in the brand is high, then the brand has great value. But, if trust in the brand is low, then the brand has little value. If there is zero trust, there is zero value, as zero times anything is zero. Brand value leads to enduring profitable growth.

Banana Republic, Lifestyle And The Age of I

Banana Republic, Lifestyle And The Age of I

We live in The Age of I. Banana Republic wants to leverage this phenomenon.

The Age of I refers to the tension between two strong human desires: the need to belong (inclusivity) and the need to have a unique identity (individualism). It is an overarching paradox that drives attitudes and behaviors. People want to be seen and respected as individuals with special characteristics. But, people also want to belong to something bigger: a community, a network, a business, a family, an ethnic group, a religious institution, a union or a nation. People want to be independent and interdependent at the same time.  People want to be self-expressive, while at the same time acceptable to a community.  

Trading off between these two desires is uncomfortable and difficult. Data show that the personal self and the social self mutually reinforce each other.

In our increasingly digital, networked, mobile environment, it is easy to be oneself and part of a group at the same time. Ubiquitous technology and online communities allow people to create different social identities depending on the group in which someone participates. 

But, digital is not completely satisfactory. Humans are social animals. People may opt for Spotify but there is nothing like attending a music festival. This desire for individualism and inclusivity in real life is powering one of the major manifestations of The Age of I: the desire of brand-businesses to become lifestyle brands.

Lifestyle brands create communities. Lifestyle brands generate emotional and social values that connect with particular customers, exciting these customers to want affiliation with the brand. At the same time, lifestyle brands are based on the idea that individuals have their own unique identities. These identities reflect customers’ values, hopes, opinions, experiences and wants. The ability to personalize products and services within a real-world physical, emotional and social community is a sought-after experience.

There are many lifestyle brands on the marketing landscape. Ralph Lauren, Anthropologie, Restoration Hardware, Goop (the wellness lifestyle brand-business) and, now, Barbie, are a few.

Anthropologie states the following: 

Anthropologie is a unique, full-lifestyle shopping destination, with a mostly exclusive assortment of clothing, shoes, accessories, beauty, furniture, home décor, garden, bridal and more.  

Our customers are creative people who want to be and look like themselves. They have a sense of adventure about what they wear and take a thoughtful, personal approach to interior décor and the harmony of home. Although personal style is important to them, they’re not governed by trends. We listen to our customers and community for inspiration and feedback – the intention is to exceed their every expectation in unexpected ways.

Ralph Lauren states:

Our Purpose at Ralph Lauren is to inspire the dream of a better life through authenticity and timeless style. Each word is deliberate, deeply rooted in our history and in our culture. Inspiring the dream of a better life is not about material status, but about a life filled with hope, possibility and a sense of realness that never goes out of style.

We do this The Ralph Lauren Way – love what you do, be passionate, work hard, embrace individuality, work together, take risks, stand up for what you believe in and aspire to the best. The Ralph Lauren Way is what built this Company; these values are enduring and will help carry us into the future.

Lifestyle brand-businesses focus on embodying beliefs and behaviors that have meaning for a specific group.  Lifestyle brand-businesses aim to encourage, entice and excite people to want to belong to the community. Lifestyle brand-businesses want their products and services to help define how the customer wants to define their way of life. 

The latest entry into the lifestyle experience is Banana Republic, part of the Gap group. Banana Republic wants to become a lifestyle brand. This means adding home goods to the established clothing line. And, according to Banana Republic, the lifestyle strategy could mean adding hospitality.

According to The New York Times, Banana Republic is selling “… home textiles… having rolled out throw blankets, rugs and bed frames….” Banana Republic CEO, Sandra Stangl, indicated that the inclusion of home décor items gives Banana Republic “a bigger addressable audience.” CEO Stangl also admitted that adding these home-oriented items will help to “stabilize” the bran-business, as the pandemic and changes to work behavior and dressing impacted Banana Republic sales.

Observers are not particularly upbeat about Banana Republic’s lifestyle brand-business strategy. It is not just that the competition is tough. Will Banana Republic be able to capture the values, aspirations, attitudes of its target audience in ways that optimize the paradox of The Age of I? Will Banana Republic be able to satisfy individualism and inclusivity? Can Banana Republic create a world in which people can be self-expressive while wanting to belong in a Banana Republic-defined world?

One issue is how Banana Republic sees its market segment. According to the brand-business’ chief commerce and experience officer, Banana Republic has an opportunity because “… no company has more than 5% of the home market.”

This comment is a red flag. 

A market is a want: a customer want. If there is no want, there is no market.  A market is not a category: there is no home décor market. There is no lifestyle market. For Banana Republic to be successful, the brand-business needs to focus on the “want” for its lifestyle brand: who are the customers, why do they want this brand and what is the context for this brand? The retail lifestyle brand-business landscape is not unidimensional. Which brand-business is Banana Republic’s competitor according to customers?

There are probably many different customer-defined markets for lifestyle brands. Banana Republic does not define the market: customers do. Ralph Lauren or Anthropologie would probably say they are not competitors in the same market as Banana Republic. Nor would Ralph Lauren and Anthropologie agree that each is the other’s competitor.

Banana Republic is not alone in the pursuit of a lifestyle strategy. The Wall Street Journal reported that H&M, the Swedish fast-fashion brand-business is moving towards a lifestyle approach. H&M is adding home décor as well as makeup and brand-name items. And, then, there is Sporty & Rich, highlighted in The New York Times. Once an Instagram account; now, a lifestyle brand-business aiming to be “a younger person’s Goop.” The New York Times labeled Sporty & Rich as “ a brand world.”

Lifestyle brand-businesses are important in The Age of I. But, customers are savvy. Having a bed frame does not make a lifestyle. Banana Republic needs to define its market space, own it and then consistently deliver. What is the driver of Banana Republic’s ability to offer independence and interdependence, or as one professor states, our desire for separability and situatedness? In other words, what is the definition of Banana Republic’s optimization of individuality and inclusivity? Rather than starting with a bed frame, Banana Republic must articulate its promised experience in ways that are both provocative, persuasive and profitable.

Allbirds: Adore the Core

Customers’ needs may alter. Markets may change. New products challenge the status quo. No matter how a brand-business landscape morphs, there are some evergreen brand-business marketing principles that must never be forgotten.

One principle is this: keep the brand-business core strong. A brand-business’ core must be continually re-energized, protected and strengthened. It is the brand-business core that will profitably finance a turnaround, keep a brand-business growing and provide a platform for the future. Ignore what core customers love about your brand-business at your peril.

This is the current situation at Allbirds, the sustainable shoe enterprise. According to The Wall Street Journal, Allbirds, once a Silicon Valley statement footwear brand-business, has “lost its way.” Allbirds lost its way by looking beyond its core base; by coveting others at the expense of Allbirds lovers.

Core customers already know what is great about a brand. When a brand-business expands beyond its core group, the brand risks losing its core group. When this happens, the goal must be to restore and repair core customers’ relationship to the brand-business. It is imperative to reinforce what core customers like about the brand. Encourage core customers to frequent the brand more often.

This is exactly what did not happen at Allbirds. And, now, recognizing the problem, Allbirds is making strategic changes to re-excite its core customer base. This is good. But, how Allbirds goes about its changes needs to be reviewed.

Stop the Bleeding


Allbirds first step is stopping the bleeding by trimming shoe and clothing options, opening fewer stores and creating more compelling footwear. This is a strategic necessity.

More Loyal, More Profitable Customers


Yet, nowhere does the Allbirds strategy say that it will aim at core customer frequency.

Here is a fact: it is easier to get a customer who already uses your brand to come a little more often than it is to attract a new customer who does not use your brand at all. When a brand-business is in trouble, the brand-business’ objective must be to stop the shrinking of the customer base and to increase purchase frequency. A small increase in frequency can make a huge difference to brand health. Coveting customers you do not have is not a pathway to profitability. Furthermore, a focus on tactics and products that might seduce specious segments becomes a major and financial distraction.

Allbirds needs to convince its core customers to buy at least one more time a year. And, perhaps if possible, have these core customers buy just one more item each time they are purchase ready. For example, Allbirds has seasonal footwear as well as athletic footwear
Etsy, the craft website changed its strategy in 2017. Etsy recognized the need to increase frequency among core customers. Etsy stated, “… we disclosed that about half of our buyers only buy once a year on Etsy. And, we really believe there’s an opportunity to bring those buyers, our existing buyers, back to buy more things on Etsy. So making it so that our existing buyers come back more than once, I think, is a big opportunity. Because half of them only come back once.”

There are reams of data showing the value of a core customer. Seminal research from Frederick Reichheld on the lifetime value of a loyal core customer essentially showed that as brand loyalty increases, the likelihood of defection decreases. Mr. Reichheld concluded that reducing defections by 5% could increase profits by 25% and more. Other research indicates that loyal core customers are 8 times as valuable as those who just consider the brand-business.

The reverse is true as well. Losing a small percentage of core customers will account for a disproportionate amount of lost income.

There are data confirming that it costs 3-4 times as much to attract a new customer as it does to keep a customer loyal. And, now that there are so many digital, online options for media, researchers show that these attraction costs may be as high as 6 times more for non-core customers. Focusing on core customers, strengthening their core brand beliefs is an excellent way to build brand loyalty.

Of course, brands must manage attract new customers while creating more brand loyalty among its core customer base. But, when a brand is in trouble, the first priority is to stop the hemorrhaging of the customer base.

Know Your Core Customers


One of Allbirds’ founders told The Wall Street Journal that core customers tend to buy Allbirds’ products because of price, stylishness and comfort. These attributes are features, potentially, functional benefits at best. But, what about the brand-business’ emotional and social rewards? Focusing on features and functional benefits alone does not help in understanding the customer.

Repeatedly, The Wall Street Journal reports an Allbirds focus on the age of the core customer and the age of the desired new customers. Is there a real understanding of the core customer and like-minded others that does not depend on age? Viewing the audience by age alone is dangerous.

Based on the original promise and mission of the brand-business, age was not a factor: personal values and rewards were key drivers. Sure, values and rewards shift as one ages, but not for everyone. And, many younger customers share or adopt values with those who are older.

Love your core customers if you expect them to love you. Ultimately, the brand-business’ aim must be more customers, more often, more brand loyal, more revenues and more profitable. When a brand has lost its way, the first focus must be to shore up the core customer base. In other words, adore the core or your brand is done for.