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.

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. 

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.

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.

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.