Bed Bath & Beyond Marketing Branding

Falling Beyond: Turning Around Bed, Bath & Beyond

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Even the best of strategies can take a hit when something unpredictable happens. This is why business leaders must be able to create and implement prearranged, deliberate strategies while being open to and able to evolve when disruptions happen or when crises alter the brand’s landscape. Having strategic dexterity is an imperative.

In April of 2019, Bed, Bath & Beyond hired a new CEO, Mark Tritton. Mr. Tritton inherited a troubled brand. Not only was store traffic down but there were serious concerns about the current CEO who Mr. Tritton was replacing. Mr. Tritton focused on generating and implementing a brand turnaround plan. His turnaround strategy followed the basics of what to do when faced with a troubled-brand challenge: 1) Stop the bleeding, 2) Focus on the Core and 3) Generate SMART objectives. 

 A turnaround strategy – as opposed to a growth strategy – is a business approach for a brand that is going in the wrong direction at an accelerating pace.  It is a plan of thinking and action that immediately moves to stop a deteriorating situation. It is short-term. It focuses on reinforcing brand strengths. What is working? Why?  How can it be improved? What is not working? Why? What do we need to do differently? 

The goal of a turnaround plan is to focus on the immediate requirements of the business. For a troubled brand business, an aggressive turnaround plan is not an option. It is an imperative. It is not a long-term plan. It is a short-term plan for business revival. It has specific short-term objectives. It has specific actions designed to achieve those specific objectives. It has a specific timeline.

Stop the Bleeding

All turnaround experts agree that the most immediate “must-do” action in a turnaround is to “Stop the bleeding.” Stop the financial bleeding and stop the bleeding of the customer base. The immediate goals are business survival and brand revival. Stopping the bleeding requires a set of quick, decisive decisions. One of those decisions is to determine the brand’s purpose and promise.

Stopping the bleeding requires the reallocation of precious resources and the reduction of allocations on expenditures that are not consistent with the redefined brand purpose and promise. Refocus resources behind those programs that pay. Restore positive cash flow.

With the development of an aligning relevant differentiating brand purpose and promise, all employees and stakeholders are aimed in the same direction. Alignment is a critical factor. Developing a purpose and promise requires a deep, clear understanding of who is the customer and what are the customer’s needs and problems.

Focus on the Core

The main core business must be protected and cultivated. Keep the brand heart alive and restore it to health. When the brand heart stops, the business dies.  The main core business is attracting and maintaining loyal customers. Not every customer is a valuable customer. Not every store is a viable store.

SMART Objectives

A brand turnaround plan must have a clear, measurable time-dependent objective. Vague visions, vague goals, vague hopes and vague promises will not accomplish what is needed to do to turn around the brand. Vague promises of vague objectives lead to vague strategies with vague commitment to vague outcomes. 

Be SMART. Identify:

  • Specific purpose and promise
  • Measurable objectives
  • Ambitious and achievable 
  • Relevant, clearly defined action plan 
  • Time-dependent 

The Bed, Bath & Beyond turnaround plan had SMART objectives focused on stopping the bleeding and saving the core.  Mr. Tritton unveiled a three-year $250 million turnaround plan with four critical steps: 1) focus on fewer deals, 2) focus on Bed, Bath & Beyond “own” brands, 3) upgrade technology to provide real-time financial, supply chain, merchandising solutions, and 4) focus on remodeling those stores generating 60% of revenues, selling the non-revenue-generating stores. Additionally, Mr. Tritton instituted a share-buyback program. The brand bought back $225 million shares through February 2021. The plan was to repurchase $675 million shares over the course of the three-year turnaround. 

Based on a review of reporting, the one missing link in Mr. Tritton’s turnaround plan was articulating the relevant, differentiating brand purpose and promise of the brand. This is part of stopping the bleeding. A purpose and a promise generate alignment so everyone is rowing in the same direction. Galvanizing employees and all stakeholders is critical for success especially in a crisis. A purpose and promise also differentiates in the brand a relevant manner from its competitors.

The Bed, Bath & Beyond turnaround plan was in motion and on track until Covid-19 changed everything. Bed, Bath & Beyond fell behind.

Fewer Deals

One way to stop the bleeding is to rein in costs. In 2021, Bed, Bath & Beyond decided to stop a lot of the print circulars that generated store traffic. Similar to the switch to everyday low prices instituted at J. C Penney during the tumultuous tenure of ex-Apple store maven, Ron Johnson, Bed, Bath & Beyond stopped coupon-generated and flyer-generated deals. The idea was to become less dependent on dollars-off shopping.  Mr. Tritton also wanted price parity with its competitors. 

Retracting circulars was a minor disaster. Knowing the customer base could have avoided this kind of crisis. Print circulars and mailers have been mainstays of the brand for decades. Customers missed the circulars; store traffic dropped. When Mr. Tritton’s team recognized that circulars needed to be reinstated, Covid-19 paper supply issues along with labor constraints meant the brand could not print the circulars fast enough.

Own Brands

Although an initial expense, private label brands are money-makers if handled properly. The Wall Street Journal recently pointed out that private label brands, “… are no longer the cheap knock-offs you keep hidden in the back of the cupboard, but quite possibly the tastiest deals on the shelf.” Referring to Whole Foods’ reincarnation of the 365 brand and Target’s innovative private label creations, The Wall Street Journal stated private label brands are “… casting off their bland reputation and transforming themselves from dull to desirable.”

Mr. Tritton comes from Target where own brands are an essential, profitable revenue source. Adding more private label brands became a priority for the Bath & Beyond brand. In addition, Bed, Bath & Beyond created a partnership with Kroger Co. whereby Kroger will sell some of the Bed, Bath & Beyond private label offerings.

Mr. Tritton indicated that the own brand portfolios would consist of products in home décor, laundry, bathroom and kitchen, according to Bloomberg BusinessWeek. 

Own brands require manufacturing and supply. Manufacturing and supply have been hard hit by coronavirus.

Upgraded Technology

From the standpoint of both staunching the hemorrhaging of cash and making life easier for customers, new technologies is a winning issue. 

According to retailtouchpoints.com, Bed, Bath & Beyond’s technology upgrade program is designed to “… support improvements in merchandising and inventory management, product lifecycle management, retail space planning and optimization, the launch of additional private-label brands and real-time tracking of merchandise fulfillment with the supply chain.” The technology changes are also designed to make shopping easier for customers.

One of the lessons of Covid-19’s supply chain problems is that real-time inventory practices create empty shelves and deficits in other critical items necessary for manufacturing. In its most recent earnings call, Bed, Bath & Beyond admitted that its poor quarterly performance was due to a “… compromised customer experience” when customers could not find what they wanted on its shelves. As Mr. Tritton said, there was demand but limited availability.

Bed, Bath & Beyond stated that the supply chain issues cost the brand $100 million at the November 2021 end of quarter. The December results were equally bad.

Focus on the Core

Keeping core customers happy and loyal is essential in a turnaround. But, not all stores are magnets for customers. Bed, Bath & Beyond had a lot of stores. It turns out, however, that not all of these stores were profitable. The brand has shut, and continues to shut, stores. Bed, Bath & Beyond stated that it would focus on remodeling the stores that generate about 60% of revenue. 

In May 2020, according to USA Today, Bed, Bath and Beyond had 955 namesake stores in the US. Closing 200 stores is expected to save the brand anywhere from $250 and $350 million annually.

Upgraded technology has focused on pandemic-fueled customer needs such as e-commerce, curbside services, in-store pick-up and same-day shipping. Of course, if there is limited product availability, these services become moot.

Buybacks

As for the share buyback program, Mr. Tritton said it would end by March 2022, two years ahead of schedule. The brand’s share price has been turbulent. Bed, Bath & Beyond was one of the brands caught up in the Reddit-meme frenzy in 2021. This coincided with a significant round of share buybacks: Bed, Bath & Beyond said that it paid double for its shares during this period. With the buyback program ending, The Wall Street Journal opined that with shares “back to Earth,” the brand can now focus on store shuttering, store remodeling and marketing.

Bed, Bath & Beyond is not the only brand to be hit by supply chain issues. It is just that Bed, Bath & Beyond was fairly frail for several years. And, the executive team may not have been as flexible as necessary for the ravages of the pandemic. Mr. Tritton has said that the turnaround plan changes have been “difficult” to implement with coronavirus still rampant. Some analysts point out that the turnaround troubles at Bed, Bath & Beyond are of its own making.

Bed, Bath & Beyond has a challenging set of competitors. Target, Walmart, Amazon, HomeGoods and its parent T.J. Maxx. This is why Bed Bath & Beyond needs to figure out what will be the relevant differentiating brand promise. Having a relevant differentiating purpose and promise are drivers of any coherent turnaround strategy. 

The Bed, Bath & Beyond turnaround plan had most of the elements necessary for success. Being able to alter pieces of the plan to demonstrate dexterity in times of crisis might help. Let’s hope we do not lose another retail icon.

Niche to Normal: Quick Service Chains Address Meatless Meals

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Buckets of the Colonel’s chicken-less chicken? Signature Chipotle Bowls with pork-less pork? Yes, these two behemoth quick service restaurant brands are leading the way to meatless.

It has been 50 years since the publication of Frances Moore Lappé’s seminal food bible, Diet For a Small Planet. Ms. Lappé’s book was a consciously and conscientiously coherent treatise about the negative environmental, health and social implications of meat-based diets. Filled with facts and data, the myth-busting Diet for a Small Planet was a revolutionary book in terms of refocusing the minds of a generation of young people. 

Diet for a Small Planet did not espouse the punishing minimalist rules of macrobiotic diets. Nor did it function as an advertisement for the dreariness of local health food stores with barrels of grains, thick, greasy peanut butter and ugly carrots. The book did not propose cutting out all meat. It did propose plant-based meals as viable substitutes. Diet for a Small Planet introduced the idea that plant proteins were better for you and better for the world.

Although none of the accompanying recipes contained meat, Ms. Lappé focused on the benefits of eating plant proteins relative to the sustainability issues around industrial husbandry and agriculture.

Ms. Lappé proposed meatless eating not as a strict regimen to shed pounds or avoid a stroke. Instead, she viewed diet as “a way of life” – the actual meaning of the word “diet” from the ancient Greek diaita – to keep our planet and ourselves alive and living. 

The plant protein diet has taken its time, but we are now at a tipping point. Surprisingly, some of the leaders of promoting meatless meals are the some of the biggest meat-focused quick-service chain brands.  

Sensitive to changing customer needs, values, attitudes and behaviors, quick service restaurant brands are taking a stand on the forefront of a food revolution. These brands see the impact of plant protein as a necessary direction in order to be competitive. In fact, a consumer foods analyst told Bloomberg BusinessWeek that quick-service food restaurants “… must have at least one plant-based product on their menus” to be competitive in the marketplace. Burger King has been (quietly) offering a plant-based burger for some time. So has Starbuck’s with a breakfast entry. Some of the more upscale burger joints have also had plant-based burgers on their menus as have some fine dining establishments.

Beef and methane-producing cattle were Ms. Lappé’s target in 1971. But, Ms. Lappé also pointed out fifty years ago that chicken and pork were culprits in negative ecological impact. Fifty years later, two purveyors of chicken and pork have stepped up to the plate, as it were. KFC and Chipotle are selling plant-based versions of chicken and pork.

These new entries from KFC and Chipotle address head-on customers’ changing needs, behaviors and values. It is no longer enough to have a plant-based alternative on the menu as an outlier offering. These new meatless entries are an admission that the desire for non-meat products is increasingly a driver of visits.

You can now buy a bucket of The Colonel’s chicken that is not chicken. Working with Beyond Meat, KFC has a plant-based chicken nugget tasty enough to carry The Colonel’s imprimatur. According to KFC’s US president, the new chicken-alternative nugget satisfies a growing customer need: wanting to eat less animal protein while not giving up comfort (i.e., fried) food. At the same time, the new product caters to current customer behaviors: people who have not become vegetarian or vegan but sometimes want to eat that way. The plant-based nugget also focuses on changing customer values when it comes to food: eating for health and eating for sustainability. Many data sets show that younger generations are especially concerned about the environment and animal welfare. Eating fewer meats is way of demonstrating commitment to these two important principles.

Chipotle is also addressing the sustainability issues that are part of the brand’s core essence, Food With Integrity. Chipotle decided to create its own plant-based alternative chorizo because the sausages from the meat-alternative brands had too many “unhealthy” ingredients. The new offering is made from ingredients “grown on a farm… not in a lab” according to Chipotle’s vp of culinary. He added, “… the plant-based chorizo recipe “… is uniquely Chipotle and aligns with the brand’s industry-leading Food with Integrity standards.” The Chipotle plant-based chorizo has no artificial colors, no artificial flavors, no preservatives, no grains, no gluten and no soy. Its protein is pea protein. 

Chipotle’s CMO said in a statement that the new plant-based chorizo is their best-ever chorizo “… and proves that you don’t have to sacrifice flavor to enjoy a vegan or vegetarian protein.”

At the 20th anniversary of Diet for a Small Planet, in 1991, Ms. Lappé wrote that in 1971 the idea of going meatless was “heretical”. But things had changed in 20 years. Ms. Lappé pointed out at that after 20 years, there was consensus that “eating low on the food chain” is actually healthy. Additionally, she acknowledged that in 1971 it was wrong to question the cattle industry and its rules. Now, in 1991, there is recognition that the cattle industry is a large contributor to methane in the atmosphere. Further, she wrote that saying negative things about “industrial agriculture” defined you as some commune-loving, “back-to-the lander” hippy. Twenty years later, even the National Academy of Sciences was concerned about the chemicals in soil and the demise of small farms.

So, here we are at the 50-year mark. Meatless eating is not heretical. It is not wrong to question industrial husbandry and farming practices. And, going vegan or vegetarian is no longer a marker of counter-culture. Consider the 4-page color short treatise in The New York Times promoting plant-based chicken from Daring Foods. You might as well be reading Diet For a Small Planet. Under the headline, chicken is broken, “We’re not knocking how chicken tastes. In fact, we absolutely love how chicken tastes. We’re talking about unsustainable carbon footprint problems. Toxic runoff and groundwater pollution problems. And unethical factory farming problems.”

It is a tipping point when KFC offers plant-based chicken from Colonel Sanders whose chicken cooking pressure-cooker is ensconced in his museum in Louisville. It is a tipping point when Chipotle, the brand that put meats from Neiman Ranch on the map, offers plant-based pork sausage under the aegis of Food With Integrity.

This tipping point appears to be the convergence of sustainability and healthfulness as a significant driver for younger generations. Sure, there is a profit motive: these brands are not completely altruistic. However, what we are seeing is nothing short of a food revolution. And, it is being led not by small, niche trendsetting brands, but by the big brands in quick-service chain establishments. All food brands need to take note. Meatless is not the same as other food diets because meatless today is a reflection of  ecological eating.

Brands like Beyond Meat and Impossible Foods created the openings with their offerings. But, KFC, Chipotle and the other quick service brands with meatless entries are making foods considered niche normal. 

2021 Has Ended: It Is 2022. Wouldn’t It Be Great If…?

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Rather than make a list of 2022 predictions, here are five brand opportunities for brand leaders. Think of this as a list of “Wouldn’t it be great if…” scenarios.

  1. Wouldn’t It Be Great if There Were A Brand Offering Accessible Luxury Jewelry Again?

According to The Wall Street Journal, Tiffany’s French owner, LVMH, wants to steer the Tiffany brand up-market abandoning its position as an American affordable luxury experience. LVMH wants Tiffany to compete with Chanel and Hermes. Although Tiffany’s has always sold expensive jewelry, its line of silver jewelry made the brand accessible too many.

The American jewelry marketplace is particularly bifurcated with high end foreign brands such as Cartier, Van Cleef & Arpels and Swarovski on one end and mass market alternatives such as Zales, Kay’s and Jared’s on the other end.  Tiffany’s, with its iconic blue boxes, gave many people an opportunity to share in the luxe of high end brands while not blowing their life-savings. 

There is a concern that a brand cannot be both luxury while being accessible. Being a luxury brand means that the brand must be exclusive and rare.  In fact, a professor holding the LVMH-ESSEC Chair at ESSEC Business School wrote about the fine line between maximizing accessibility and rarity. Tiffany had, in certain ways, become democratized while still claiming a luxury image. This position of accessible luxury does not appear to be LVMH’s vision for Tiffany. The new focus of the brand, according to the press, is going to be more towards the classic definition of luxury, “an inessential, desirable item that is expensive and difficult to obtain.”

Now, there is marketing hole – opportunity – where Tiffany’s stood. 

Wouldn’t it be great if there were another brand that could step into Tiffany’s space? Wouldn’t it be great if there were another brand that could capture and promote accessible luxury?

  1. Wouldn’t it Be Great If Charging Stations Were As Ubiquitous As Gas Stations?

Car companies are focused on manufacturing electric vehicles. This is great. But, why is it that the only charging station near me is at the Whole Foods Market five miles away?  Yet, on every intersections’ corners, there are at least two gas stations. If I wanted an EV, I would not be able to charge it for my commute. Bummer.

What if the big oil companies – all of which have made commitments to become “greener” – decided to turn half of their gas stations into charging stations? If these behemoths want to be perceived as credible eco-conscious entities, focusing on helping us be EV drivers would be fabulous.

This would require a huge re-alignment of resources. But, with all of their resources and R&D, imagine what could happen. What if these brands re-directed some of their innovation to electric vehicles? Instead of seeing themselves as purveyors of gas and oil, what if they reimagined themselves as purveyors of energy?

Online news brand Newstex information indicates that the legacy oil companies are investing in charging stations, but it is not a priority. Why? The fear of cannibalizing the core business. A charging station manufacturer executive said that even if an oil company were to massively invest in charging stations, “… the cost of lost revenue and shareholder value” would overwhelm any monetary benefits from electrifying. 

There are some bright spots outside of the legacy oil companies. In Colorado, three oil and gas companies merged to create an entity that focused on solar and renewable energies. This entity is thinking about local charging stations as well.

The bigger news is that European oil companies such as BP, Shell and Total are already investing in charging stations. These moves are not altruistic, though: European governments are determined to eliminate gas- and diesel fueled-vehicles. 

Shell acquired an American charging station company, installing its first US charging station at Boston’s Logan Airport. Chevron installed charging stations at five gas stations in California. But, according to reporting in The Arizona Sun, ExxonMobil, the biggest US oil and gas company, is not particularly interested in charging stations. Its CEO stated publicly that he just does not “get it” as charging stations use coal-generated electricity.

Wouldn’t it be great if half of our gas stations became charging stations?

  1. Wouldn’t It Be Great if Automotive Brands Recognized That It May Not Be The Dealership Showroom That Is The Problem?

The New York Times reports automotive luxury brands are creating “experience centers”. The hope is that changing the space where you buy a car will change your mind about buying a car in person. Online car buying from brands such as Carvana are eating away at dealership sales. As The New York Times cites from Kelley Blue Book, “…consumer satisfaction with car shopping has reached an all-time high in recent years, as the pandemic shifted more of the experience away from dealerships, digitally or elsewhere”.

Turning the luxury brand into a positive place to hang out is not a new idea. Many automotive companies took the Pine and Gilmore 1988 article to heart. Mr. Pine and Mr. Gilmore wrote a seminal Harvard Business Review article called “Welcome to the Experience Economy”. Its basic premise was that customers want to be immersed in the total brand experience through both sensory and functional benefits.

Changing the atmosphere in which customers buy cars is needed. Dealership experiences can be dreary even for luxury brands. Automotive brands hope customers will immerse themselves in the brand’s total brand experience. (Apparently, these experience centers are ways in which the brand can control the brand experience from afar rather than leaving the brand experience up to the dealership.)

If you are in the market for a non-luxury vehicle you will still be taking your chances at the dealership. At the dealership, the comparison with online auto shopping is stark. Buying and selling a vehicle on Carvana is painless. Financing is painless. Charges that dealership customers pay are not an issue. Everything is taken care of including registration and license plate, even if you are keeping your previous plate.

Will experience centers work? Cadillac tried one in 2016. This was when Cadillac moved to New York City, abandoning Detroit. It took just three years for the Cadillac experience center to close down with a lot of embarrassing Monday morning quarterbacking. General Motors moved Cadillac back to Detroit.

Whether you are lolling at the Lamborghini Lounge or participating in a Korean tea ceremony at Genesis House (Hyundai’s luxury brand), it is all still about buying a car, albeit a luxury vehicle. Perhaps luxury car purchasers are a different breed of car buyer. 

Experiences are magnetic. The question is whether a lack of the car’s experiential essence is the reason people have problems with buying a car in person rather than online. Buying a car on Carvana is painless. 

Wouldn’t it be great if the automotive companies recognized that it may not be the place in which the car is sold that is the driving problem with dealership sales? Wouldn’t it be great if the automotive companies understood that, rather than place, it is the process, the pressures and the practices that are the problems?

  1. Wouldn’t It Be Great If Brands Recognized The CMO As The Voice of The Customer?

The CMO is an endangered species. You can see this in the way enterprises shunned the title CMO. Many organizations changed the name CMO to new titles such as CSO (Chief Synthesis Officer) or CCO (Chief Customer Officer) or CBO (Chief Brands Officer). 

CMOs have themselves to blame for the declining reputation and respect for their CMO role. The CMO role devolved into focusing on marketing communication tactics instead of focusing on developing marketing-driven business strategies. It is no surprise then that some wonder if the CCO is simply the CMO in disguise.  Did changing the title fix the inherent problems that stem from fascination with managing the fractionalization of media channels? Changing the job title was never the correct answer. 

Surprise: companies are ditching the CCO title. Apparently, the CCO title affected short-term issues but did not address the long-term issues that are critical to brand survival. One of these is being the Voice of the Customer. 

The CMO’s role is to be the Voice of the Customer. It always has been. The CMO represents an objective, unbiased view of the customer to the organization. The CMO provides a single, corporate-wide center to collect, disseminate, and synthesize customer knowledge and requirements, while facilitating corporate-wide learning. The CMO is responsible for influencing the development and implementation of customer-driven brand-business strategies. The CMO’s responsibility is to be the leading C-Suite influencer addressing the entire customer experience, not just communications to the customer.

The CMO must be the business leader responsible for generating, supporting and activating a customer-driven focus within the organization.  Brands must revitalize the CMO role so the function:

  • Helps define the strategy for high quality growth
  • Demonstrates contribution to the bottom line
  • Focuses on achieving organizational alignment behind a common brand- business purpose and direction
  • Helps define the Brand-Business priorities
  • Is responsible for building and managing the Brand-Business plan 
  • Knows more about the customer than anyone else in the organization… and is the customer’s advocate
  • Drives true customer-insight-focused growth strategies and innovation
  • Develops and implements a Balanced Brand-Business Scorecard
  • Leads customer-driven innovation through providing insights into customer needs, and problems 
  • Develops the price-value strategy
  • And, takes responsibility for brand communications, internal and external

Brands must re-form and transform the CMO from a marketing communications role to a brand-business leadership role.  Shame on brands when often the first questions for a new CMO are, “What will the new advertising be? Will there be a new slogan? Will there be a new advertising agency? What is our new digital strategy?”

Changing the CMO title was not the solution. Changing the role is the challenge. It is not enough to be “at the C-suite table.” It is important to revitalize the role when at the table. 

Wouldn’t it be great if 2022 were the year brands revitalized the CMO role, reasserting the CMO as the Voice of the Customer? 

  1. Wouldn’t It Be Great If Brands Doubled Down on Building Brand Loyalty?

Coronavirus upended customer shopping behaviors and attitudes. Key to these changes are supply chain issues. Shortages of favorite brands directed customers to alternative brands. A survey from Bazaarvoice indicates that 39% of those interviewed said they were forced to switch to an available brand. Eighty-three percent (83%) of these customers said they intended to stick with the new brand.

This does not mean that brand loyalty is dead. What this means is that brands need to be more flexible and focused on satisfying their customers.  Many cite Chipotle’s ability to immediately leverage its digital platforms for ordering and marketing as a terrific example of adaptation in action that enhanced customers attachment to the brand.

Coronavirus made brand loyalty more vulnerable while at the same time more secure. Brands that were out-of-stock or unresponsive to customer problems and needs became vulnerable brands. Brands investing in knowing their customers brands and going out their way to be pandemic lifelines for customers became favorites. Brands providing data-driven personalization and interactions were able to generate and/or maintain brand loyalty. 

In an interview, one of Groupon’s co-founders said brands must continue to both acquire customers and “… engage them… building brand loyalty.” He added: “I think businesses are going to be able to weather the storm because of the support they’re getting (referring to stimulus packages). But, the ones that are not thinking about the long-term relationships are just going to burn through any financial support they can get and they’re going to burn out as a brand regardless.”

Brand loyalty takes time. It is easy to lose. But, it is difficult to rebuild. Building brand loyalty is not an “in-the-year, for-the-year” action. Brand loyalty is not like Amazon Prime. Brand loyalty does not happen overnight. Building brand loyalty is long term. It takes time. This means brands must continue to invest in building brand loyalty even during these difficult times.

Brand loyalty is alive and well. Over the past two years, people switched brands but have become attached to the new brand. Wouldn’t it be great if brands invested heavily in building and maintaining brand loyalty?

Happy New Year!

Real Change Requires a Challenger Mindset

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It is the end of year 2021. 

Time Magazine and Financial Times both selected Elon Musk as person of the year. There is a lot to be said for Mr. Musk’s selection. After all, he changed the automotive category. His vision and impressive focus created a future in which he wins and all other entries are currently playing by his rules. With the brand he created, Tesla, he has shown that it is possible to break established barriers and trash the entrenched mythology around car-making.

For all of his tweets, texts and hype, one thing is very clear: Elon Musk has a challenger mindset. 

As the paeans in Time and Financial Times describe, Elon Musk has challenged conventional wisdom, challenged accepted definitions, challenged what has worked in the past, challenged the entire, global automotive culture. He has challenged and changed the status quo.

Elon Musk has proved that it is possible to start a successful, new car company from scratch. He has proved that what was does not have to define what will be. And, he has proved that electric vehicles are the future of automotive. Mr. Musk has changed the perspectives of “automotive people” around the world. Now, everyone has electric vehicles in their minds, their line-ups and they have Tesla in their sights.

And, so, this makes Tesla is an extraordinary example of a challenger brand. 

A challenger brand is a brand that dares to makes changes that other brands cannot or will not make. A challenger brand takes on seemingly impossible obstacles.  A challenger brand is provocative in its purpose and promise. A challenger brand disputes current beliefs. A challenger brand opposes the existing states of affairs, the marketplace, landscape or business category in which a brand operates. A challenger brand is competitive, aggressive, confident and exciting.

Founded in 2003, Tesla was, and still is, focused on sustainability, innovation, engineering and a belief that there is a huge segment of drivers who really want electric vehicles that are affordable, stylish and globally good for us. 

The three original US automotive manufacturers, Ford, Chrysler and General Motors, all had their start at the turn of the 20th Century. This makes these enterprises over 100 years old or nearing 100 years old.

If any businesses in the US were entrenched in their ways, it was the US automotive giants. When you think about what Elon Musk has wrought in the almost 19 years of Tesla’s existence, it is a remarkable feat. He has actually altered the operations of these established automotive companies by sheer persistence, insistence and future-driven engineering skill.

Of course, it helped that Tesla’s competition was near-sighted and cumbersome. 

2003, when Tesla began, was when the ground beneath the big three US car companies began to shift ever so imperceptibly. Just a year later, General Motors “retired” Oldsmobile, a storied yet stodgy brand named after its founder Ransom Olds. Oldsmobile was pilloried on an unfortunate tagline. Smashed between Buick and Cadillac, Oldsmobile had lost its way. The brand was no longer seen as “the first step to luxury” but perceived as cars for older people. The ad campaign, which would be a meme today, tried to dispel this aged perspective by announcing that Oldsmobile was not your grandfather’s car. This was tantamount to telling people to ignore the elephant in the room.

When Tesla was a mere seven years old, all three US automotive companies would be troubled brands with trashed visions of greatness. The world was changing and these lumbering giants were losing touch with their drivers and potential drivers. 

One of the major reasons for their troubles in 2010 was the burden of juggling too many brands profitably. Sometime around 1989, the big three US automotive giants had bought into the mantra that being bigger was synonymous for being better. The three big US automotive groups decided to become bigger via acquisitions or by being acquired. They were now struggling.

General Motors (at the time owner of Chevrolet, Buick, Pontiac, Oldsmobile and Cadillac) purchased Saab and, then, US brand Hummer. General Motors had already founded an additional brand, Saturn, in 1985. GMC existed as General Motors’ truck division, which was merged into Pontiac in 1996.

Ford (Ford, Lincoln Mercury) purchased Jaguar and Land Rover and eventually Volvo. 

Chrysler (Chrysler, Jeep and Dodge) was ill-fatefully merged with Daimler (Mercedes Benz). 

After the financial crisis of 2008, the several automotive bankruptcies and the TARP process, the US automotive giants were shells of their former selves.

While Tesla celebrated its seventh year, consistently progressing to its EV vision, the three US car companies were downsizing, streamlining and morphing into new corporate versions of themselves. 

At General Motors, brands were disappeared. Oldsmobile was long gone. Pontiac, Hummer and Saturn were discontinued in 2010. Saab was sold in 2010.

At Ford, Mercury, a brand that could never seem to find its brand promise, was discontinued in December of 2010; a last Mercury rolled off the assembly line the first week of January 2011. Mercury’s positioning as an “entry level luxury brand” left it in a muddled middle between Ford and Lincoln. It also did not help that Mercury cars were simply more expensive re-badged Fords. Mercury’s grilles were the only differentiation. The Mercury Sable was a Ford Taurus. The Mercury Mountaineer was a Ford Explorer. The Mercury Marquis was a Ford LTD. The Mercury Grand Marquis was a Ford Crown Victoria (known for its popularity as police cars) as well as a Lincoln Town Car. Ford made Jaguar suffer this ignominy, too. Subjecting Jaguar to Ford’s aggressive shared platform poisoning, the death knell was a Jaguar model that was a Taurus. The beautiful Jaguar shape was turned into a jelly bean. Jaguar, Land Rover and Volvo were all sold in 2010. 

At Chrysler, after some really good years under Lee Iacocca, including the development of the minivan, the DaimlerChrysler marriage ended ugly in 2007. The culture shock of the German leadership in Detroit was an ongoing experience that made the newspapers on a regular basis. Struggling with its bankruptcy between 2007 and 2009, Chrysler became partly owned by Fiat in 2009. Fiat’s CEO, Sergio Marchionne, bought Chrysler’s remaining shares in 2014.

While Elon Musk was focused on bringing his dream alive, the big three automotive companies were consumed with staying alive. The idea of an electric vehicle would be a distraction while attempting to stop the bleeding and curb expenditures. General Motors did not have an electric entry until The Chevrolet Bolt in 2016. 

So, sure, it helps when your competition is self-immolating. However, the problems with the established US automotive companies must not diminish the extraordinary accomplishments of Tesla and Mr. Musk. In fact, Mr. Musk with Tesla should be credited for showing the US automotive groups what it is like to be entrepreneurial again. 

Let’s remember that each one of these three US automotive organizations were started by visionaries who saw a future that did not include horse-drawn wagons. Each one of these organizations were started by visionaries who saw the mass potential for engine-driven mobility. They saw the social implications. They understood what these vehicles meant for human potential. These turn of the century founders were, in fact, challengers.

And, at one point in time, the US automotive companies were challenger brands founded by people with challenger mindsets. Along the way, those mindsets became buried in bureaucracy, budgeting, bigness and too many brands. 

Now, the automotive brands are focused on producing electric vehicles but not in visionary ways. These companies work within the frameworks of their established operational capabilities and mindsets. This is why GM’s big announcement was not an affordable, planet-conscious car, but the introduction of an electric Hummer with a price tag of $110,295 and weighing 9000 pounds. Hummer’s affordable tiny sibling, the Bolt, is under massive recalls for spontaneous, apparently life-threatening fires.

Ford, Stellantis (Jeep, Dodge, Chrysler, Fiat) and General Motors are going to have to become challengers. Otherwise, they will continue to play on Elon Musk’s playing field governed by his rules, his bats and his gloves. It is just fine that all three automotive incumbents, Ford, Stellantis and GM are making commitments to EV lineups. However, saying that you will have 30 EV models by such-and-such a year, is not challenging the status quo. It is saying that we will do what he does but bigger.

The recent issue of Harvard Business Review includes an article on the strategic advantages of incumbents. The authors show that big companies that have been around for a while do necessarily have to be disrupted out of existence. The authors debunk the mythology that big old beasts cannot be nimble and innovative. One upshot of their research is that incumbent brands that become bold with offensive strategies can be winners. In other words, big brands should employ some challenger brand mindsets and actions in order to win. Incumbents can be challenger brands by challenging their status quo and disputing some of their current beliefs. Big brands can change things for the better by being competitive, aggressive, confident and exciting, instead of being defensive and protective of the old ways of doing business.

Let’s hope that in 2022, Ford, Stellantis and General Motors, as well as the European and Japanese automotive brands move from copying Mr. Musk and Tesla to creating change.

Happy New Year!

Dollar Tree: A Brand Is What You Make It, Not What You Call It

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Brands are dynamic. Great brand leadership evolves brands in order for brands to stay relevant and differentiated in the customer’s mind. Just because a brand evolves to deliver its promise in a more relevant, differentiated manner does not mean the brand must change its name. 

Pizza Hut sells more than pizza. UPS (United Parcel Service) offers more than package delivery. Shake Shack sells more than milk shakes. IBM (International Business Machines) sells more than business machines. Dairy Queen’s menu features more than frozen treats. You can buy burgers, fries, chicken and more. While at Burger King, you can purchase chicken, sides, coffee and sweets. The 7-Eleven near me is open 24/7 rather than 7 AM to 11 PM. None of these brands need to change their names.

At one point in the early 2000’s, KFC management wanted to change the brand’s name to KGC for Kentucky Grilled Chicken, its new non-fried offering. Management desired a new image for KFC that did not rely on “fried”, which they considered to be a dietary negative. Consumers and franchisees did not react positively to changing the beloved brand’s name. People just loved fried chicken more than grilled. Thankfully, the name change did not happen.

Your brand name is not your brand’s destiny. Your brand is what you make it. 

Of course, there are always those who believe the name must match the offerings. For example, some analysts and pundits believe that Dollar Tree, a chain of discount stores where items cost $1, has “shot their brand” and “diluted the brand” by changing the brand’s fixed-$1-pricing. Dollar Tree raised its price from $1 to $1.25 because inflation, supply issues, the pandemic, difficulties integrating Family Dollar stores and other acquisitions have challenged Dollar Tree’s ability to meet its 35% margins at a $1 price-point. 

These observers think the Dollar Tree brand is only about the price point. They think that the name Dollar Tree means the brand must continue to sell at the $1 price point. This is a mistaken marketing mandate. 

The Dollar Tree brand promise is much more than “everything for $1”. Dollar Tree believes in its promise. Dollar Tree believes that even with the $1.25 price the brand will continue to deliver extremely affordable, extraordinarily convenient shopping in a quality manner.

Here is how Dollar Tree describes itself:

Dollar Tree’s mission is to be:

“… a customer-oriented, value-driven variety store. We will operate profitably, empower our associates to share in its opportunities, rewards and successes; and deal with others in an honest and considerate way. The company’s mission will be consistent with measured and profitable growth.”

Dollar Tree’s core values reflect and respect the values of its employees and its customers. 

  • “Whether we are serving customers or working with fellow associates, we are courteous, act responsibly, and carry ourselves with integrity.”
  • “What is best for our customers and what is best for our company and associates are guiding principles in every business decision we make.”
  • “From customer to coworker, Dollar Tree associates treat everyone with whom we interact with the dignity and respect that they deserve.”

Dollar Tree is still Dollar Tree even if its dollar is now $1.25. Dollar Tree’s intent is to provide shoppers with an experience of awesome affordability wrapped up in respectful customer-focused service and convenience. Focusing on its total brand experience is the smart move for Dollar Tree. Focusing on its total brand experience will provide the brand leeway if prices need to change again.

Identifying your brand with a fixed-price position may work for a while. And, clearly can be very profitable and successful, for a while. But, the world changes. Think about Woolworth’s, America’s five and dime. Woolworth’s was founded in 1859 and lasted with five-and-ten-cents-offerings-only until 1932 when a 20 cents line was introduced. By 1935, Woolworth’s had abandoned the fixed-price approach completely. In the late 1960s and early 1970s, Woolworth lost focus on its core offer of abundant affordability. Woolworth’s could not figure out how to deliver its promise without the 5 cents and 10 cents framework. The five and dime idea vanished into the dust bins of branding. Walmart, Costco and Target claimed the discount store mantles.

Price is a feature of a brand. As a feature of a brand, price supports the brand’s promised experience. A brand promise needs to focus on brand benefits rather than focusing solely on a feature.

Dollar Tree does not need to change its name regardless of the booing from the business press sidelines.  This is because of Dollar Tree’s provenance. 

Dollar Tree’s mission and accompanying values do not need a fixed-price promise to be successful. Those who believe that Dollar Tree has maimed or destroyed its brand have not done their homework. Dollar Tree has not maligned its brand by ending its $1 fixed-price approach. Dollar Tree can still excel in its chosen market of customer-oriented, value-driven variety store. Dollar Tree will still provide extremely affordable, extraordinarily convenient shopping in a quality manner.

Customers will be the final arbiters, of course. But, if Dollar Tree delivers the experience that its mission and values describe, the brand will be just fine.

A brand is what you make it. 

When you believe that the brand name makes the brand you are committing marketing malpractice. If Dollar Tree sticks with delivering its brand promise consistently, it will still deliver the convenient affordability that its customers prefer.

sears brand mismanagement

Sears’ Twilight Saga: Tracing Sears’ Downfall to Troubling Brand Management Behaviors

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Unless you live in Illinois, you might have missed the news: the last large Sears department store has closed. Twenty minutes west of Chicago’s O’Hare airport, the Sears at Woodfield Mall in Schaumburg, Illinois took its last breath this November: the property will be redeveloped. This is poignant. Chicago, Illinois was where Mr. Sears and Mr. Roebuck founded the brand in 1892. 

The Sears at Woodfield Mall is just one of thousands of Sears stores shuttered over the past couple of years. Along with its financially-stressed step-sibling Kmart, Sears is no longer a living brand. Some refer to Sears as a zombie brand: no longer alive but lingering on the landscape. 

According to investigative reporting in Retail Dive (a provider of … “in-depth journalism and insight into the most impactful news and trends shaping retail. The newsletters and website cover topics such as brick-and-mortar, retail technology, e-commerce, marketing, payment technology, store operations, omnichannel, and more”), there were about 40 Kmart and 39 full-line Sears stores left as of May 26, 2021. USA Today reported recently (November 14, 2021) that there would be 15 Kmart and 19 Sears stores left after November closings. And, recently CNN reported that there are only 23 full-line Sears stores in the US including Puerto Rico. And, CNN said also that by December 2021, there will only be  12 Kmarts in the US, including the Virgin Islands, Guam and Puerto Rico. Over the past 15 years, Sears and Kmart have shuttered over 3,500 stores eliminating 250,000 jobs.

Business press and retail observers place most of the blame for Sears’ – and Kmart’s demise on Eddie Lampert, the hedge fund magnate. His extraordinary talent for financial engineering and management by cost-cutting, of which he was the beneficiary, put Sears and Kmart into their vicious vortexes of death. Mr. Lampert was chairman, and later, CEO of Sears Holdings.

During 2018, Sears Holdings filed for bankruptcy. In January of 2020, Mr. Lampert bought 400 Sears and Kmart stores out of bankruptcy, placing them in a new company, Transformco (Transform Holdco – a financial entity of Mr. Lampert’s creation.) It was a last minute sale approved by the bankruptcy judge. Sears Holdings, the old Sears, including Kmart, are still in bankruptcy and litigation. Transformco said its intention was to keep the 400 stores open. This has not happened, so there are now 34 stores, approximately.

Although Mr. Lampert’s history with Sears Holdings was unfortunate, to be fair, there was plenty of brand mismanagement prior to Mr. Lampert’s control. Nevertheless, Mr. Lampert did not implement any brand building to right the Sears and Kmart sinking ships.

Rather than reiterate the sad – and litigious – saga of old Sears’ Holdings and new Sears (Transformco), let’s look at the ways in which Sears Holdings’ brand-diminishment behaviors prior to its 2018 bankruptcy led to Sears’ soon-to-end night of the living dead.

Here are four tendencies for trouble that put Sears into zombie mode.

Troubling tendency #1: The arrogance of (great) success

Success is everybody’s aim. Sears had decades of successful retail dominance. From its beginnings as America’s catalog with expertise in fulfillment to its selling everything Americans could want with storied, trusted brands such as Kenmore, DieHard and Craftsman, Sears was the Amazon of its time. The Sears catalog was ubiquitous in American homes.

However, this great success fueled arrogance. Sears’ management’s mentality was that it could do no wrong. Sears believed it could sell anything and everything. Its retail outlets featured real estate (Coldwell Banker), financial services expertise (Dean Witter Reynolds) and Discover credit card. The diversity of these brands led to management taking its eyes off of the Sears brand. In a blink of an eye, Walmart became America’s everything store. Nothing Mr. Lampert’s team did changed Sears’ trajectory.

Thinking that you know everything and can sell anything is admirable. But, it is also dangerous. A new book on Boeing and its tragic 737 Max crashes cites arrogance as one of the factors leading to Boeing’s being toppled from its top perch in aviation.

Avoiding arrogance takes character and effort on the part of leadership. Great leadership means fighting the inclination to focus on oneself rather than the customer and the brand. The leader who creates a culture of arrogance by letting success go to the and egos of managers is a leader who is more committed to self rather than brand.

Troubling tendency #2: The comfort of complacency

Avoid complacency at all costs. Complacency stops innovation, renovation and keeping up with changing customer values and behaviors. Complacency allows employees to continue doing what they are most comfortable doing. Complacency lulls people into laziness and inaction. Complacency crushes curiosity and creativity. Complacency allows people to avoid looking at trends and changes. According to some, complacency leads to market share loss and underperformance. Complacency is passive. Brands are not. Brands are active promises of an expected relevant, differentiated experience. 

A professor at the University of Michigan Ross School of Business pointed out several Sears’ management missteps. Sears did not appreciate the rise of big box stores, ended the catalog and neglected to invest in e-commerce. The professor told Retail Dive that even prior to Eddie Lampert, “Sears was fat rich and complacent.” He added that retailing is just an incredibly “brutal” business and fat, self-satisfied, complacency and arrogance allows great retailing to suffer.

Troubling tendency #3: Financial engineering above customer satisfaction

Retail Dive states that Eddie Lampert “… undertook some of the most complicated and thorough financial engineering the industry has ever witnessed, and which has now become infamous among retail observers, as well as the target of litigation.”

Financial engineering is 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. Financial engineering can damage brands. This is because the priority of financial engineering is building shareholder value at the expense of customer value… a formula for failure. Boeing suffered from cost-cutting and suffered catastrophic consequences.

Financial engineers see strong brand equity as an opportunity to extract value rather than extend brand strength.  This is a form of brand extortion. A retail analyst and president of a retail consulting firm told Retail Dive, “(Eddie Lampert) is a mastermind of the corporate rule book. He was always manipulating Sears for the most profit for the owners of Sears, or for the companies he created to benefit from Sears.”

As one industry observer stated, “It’s a financial play. There are probably some things to do with the (Sears’ and Kmart’s) property, but as a viable retail business, there’s no future there.” This highlights one clear rule: you cannot cost manage your way to high quality revenue growth.  

Mr. Lampert saw the gold in Sears’ brands. In 2017, while heading Sears Holding Co., Mr. Lampert sold Craftsman, the 90-year-old tools brand to Stanley Black and Decker for $900 million. Transformco sold the DieHard (batteries) brand to Advance Auto Parts in 2019. A Transformco spokesperson indicated that at Advance Auto parts, Diehard would be able to innovate: something that was not happening at Sears Holdings.

Troubling tendency #4: Loss of relevance

Staying relevant means always staying aware of marketplace changes, altered customer behaviors and attitudes, competitive brands and your brands. Relevance requires learning about customers’ needs, problems and occasions of use that the brand satisfies better than alternatives. 

When a brand loses relevance, it can come close to death. However, brand demise is not inevitable. Ongoing brand management is a leadership challenge. Based on various reporting, however, it appears as if Sears’ and Kmart management is not focused on the customer. 

One data consultant interviewed stated the obvious about Tranformco: “There’s no love for the consumers, no relevance for consumers. There is no intention there of (operating) as a legitimate retailer.” 

In the 1970s and 1980s, Sears and Kmart were America’s largest and second largest retailers, respectively. Now, Sears and Kmart are irrelevant shadows, ghosts of arrogance, complacency and financial engineering.  Coming back to life will take leadership that cares about the brands. But, it also means asking customers to care about the brands. Retail observers say that shoppers do not seem to care about Sears and Kmart anymore. One observer asked, “Why would you care?” If you can even find a store, the experiences do not compare to competition. The once-treasured Sears and its brands are distant memories, as is Kmart. 

Just look at Sears’ Kenmore brand.

Those who said Mr. Lampert would make money by licensing the Kenmore name, for example, might want to reconsider. Kenmore loyalists are aging out of the marketplace. Those who are shopping large appliances most likely have never heard of Kenmore. Or, they may associate Kenmore with their grandparents’ homes. This happened to Electrolux vacuums, those heavy, long metal cannisters. A survey from the 1990s showed that Electrolux vacuum cleaners had incredible brand relevance, but it was among loyal 70+ year-olds. The brand lacked familiarity, let alone relevance, with most vacuum cleaner shoppers. Oldsmobile also suffered from a lack of relevance. The brand actually put its own nails in its own coffin by (ironically) advertising that Oldsmobile was not your grandfather’s Oldsmobile anymore. General Motors subsequently killed the brand.

Loss of relevance is self-inflicted. Loss of relevance stems from losing touch with the customer and from taking your eyes off of a world is changing. Loss of relevance stems from lack of innovation and renovation. The good news is that relevance can be built quickly, unlike trust which takes time to rebuild. With proper resource allocation – not financial finagling – and a passionate belief in the brands, brands can recapture relevance again. 

A statement from Transformco in USA Today indicated that there is a “go-forward strategy” for Sears and Kmart. This strategy is “ … to operate a diversified portfolio consisting of a small number of larger, premier stores with a larger number of small format stores.” Transformco believes it “… will continue to expand both Hometown Stores (appliances, tools, garden implements) and Home & Life Stores (Smart home and home services, replacement parts and connected appliances) in cities and towns that previously had larger format stores.” Additionally, efforts will be made to grow sears.com and the Sears Home Services business.

This remains to be seen. 

Brands do not die natural deaths. As Sears and Kmart show, deaths and declines of brands generate internally from mismanagement and nonbelief. Brands can be revitalized but it is unclear if revitalization is in the works at Transformco. In the meantime, Sears and Kmart are in a twilight zone, shadows of their former selves, drained of life but still walking the earth, waiting for the inevitable. Eventually, all the life will be sucked out of Sears and, then, Kmart. When wringing all the worth out of a brand is the goal, there is no going back. You’ve entered the twilight zone.

Peloton’s Three Marketing Must-Do’s

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Apparently, Peloton is losing its shine. Press reports indicate that Peloton’s shares are down as are investors’ hopes. Now that cities and towns are open, why workout from home anymore? 

Peloton will need to work harder to generate new customers. And, the brand could risk losing some of its current customers. 

Answers to Peloton’s dilemma are not as simple as home workout versus gym workout. Peloton came on the scene well before Covid-19. Peloton provided a solo at-home workout within an avid online community. With the advent of coronavirus lockdowns, in-home physical activity became critical. All Peloton did was leverage the lockdowns. The schedule of classes grew to include outdoor runs and walks, yoga, meditation, Pilates, barre, stretching, core, weight training, bodyweight training, bike and tread bootcamps and dance cardio. Peloton added pre- and post-natal classes. The brand also segued into apparel and accessories. 

Fewer sign-ups with purchases of its hardware cannot be blamed completely on the waning pandemic. Peloton’s marketing could use an improvement. 

Here are three marketing must-do’s that Peloton should implement to get its mojo back with customers and potential customers:

1. Stop The Excessive Price Marketing

Peloton communications have been price-focused, not brand-focused. Peloton has been luring customers with incentives. This has serious implications for brand loyalty. Brand loyalty cannot be bought with bribes. True, the communications show lots of different people on Peloton cycles and treads or people taking off-equipment, mat classes. But, the main message point is that the cycles and treads are now cheaper. Making the brand’s experience cheaper does not build brand strength. Reminding people that a brand is affordable is important. But, emphasizing price alone damages brands. Peloton’s communications should say “Great brand at a great price” instead of this is a great deal. Unfortunately, Peloton’s recent messaging has not emphasized the “great brand”.  The message has been “We are on sale. This is a great deal.”

2. Connect With The Brand’s Purpose

Peloton’s communications have not connected with Peloton’s core mission. A brand must be in sync with its desired spirit. Mission statements express the brand’s intent, its purpose. Peloton’s prospectus offered the following: “Peloton uses technology and design to connect the world through fitness, empowering people to be the best version of themselves anywhere, anytime.” Clearly the instructors are aligned. You understand this if you actually take classes. But, for a prospective customer, the brand’s purposeful message is unstated. There are probably a lot of people who would appreciate the opportunity to participate in Peloton’s world view. Peloton’s uplifting, positive, you-can-do-it message is not communicated to the uninitiated. It is a best-kept secret.

Describing Peloton’s business model in a recent Harvard Business Review article, the authors conclude that even though participants are in different locations, participants exercise “…with a virtual community of peers and instructors” and “… the brand’s meaning extends beyond what they would experience with the bike alone.” 

This is true. But in order to increase owners/subscribers, Peloton must share its meaning with prime prospects. Peloton’s meaning has to be meaningful to both users and like-minded others. 

3. Maximize The Paradox of Inclusive Individuality 

People want to be seen and respected as individuals. At the same time, people want to belong so something bigger than themselves. People want both independence and interdependence at the same time. People savor their uniqueness while wanting to share that uniqueness with like-minded others. People cherish their particular characters and their commonalities with others. They want to respond as individuals and they want to share as members of a community of common interests. “I am an individual with unique wants and needs. But I am not alone. I belong to communities of people who want the same things as I do.”

This is what Peloton does really well. This is what Peloton is: the epitome of Inclusive Individuality. And, yet, you would not know this unless you were actually part of the Peloton family. There is no relevant distinctive messaging around this critical connective social force. Peloton must manage its brand messaging differently, articulating that its brand experience promises to respect, encourage and strengthen individuality while belonging to a supportive family. Peloton is the ideal place where people are praised for who they uniquely are and what they can uniquely do while belonging to a group that shares their distinctiveness. Peloton’s messaging lacks this compelling, powerful promise of inclusive individuality. Going to a gym pales in comparison.

No one really knows the extent to which people’s attitudes and behaviors changed during the past 20 months. Peloton needs to determine what the actual causes are for fewer signups. But, there is no question that needs to be marketing improvement. 

Peloton has a lot to give. Implementing the three must-do’s will allow Peloton to demonstrate that it has more to give than exercise equipment, physical fitness, music and leggings. By connecting to its stated purpose and emphasizing its inclusive individuality, Peloton will be on its way to becoming a great brand that is a great value.

Hertz Bets On An Accessible Tomorrow In Which We All Will Win

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This is surprising news.

If any legacy automotive company were to have a clear, concise, inspirational vision about the future it would be Ford Motor Company. Ford Motor Company became successful because its founder, Henry Ford, had an incredible vision. Simply put, Henry Ford saw a future where everyone who makes a car would be able to drive to work in their own car. To do this, his company would make a car that would be affordable to every American.

However, it is not Ford Motor Company that is creating a future in which it will win. It is a most unlikely candidate: Hertz.

Hertz is over 100 years old. Its car rental business was decimated by Covid-19. When people stopped traveling, they stopped renting cars. Hertz filed for bankruptcy selling off inventory just to keep the business operational. If you did wind up at a Hertz counter during the pandemic, your choices were not only limited, but iffy as some vehicles had maintenance issues.

In a detailed and rather distressing review of Hertz’ problems in Bloomberg BusinessWeek, Hertz suffered for decades with financial engineers managing the business. Hertz amassed extraordinary debt. Additionally, there were operational problems merging its Hertz systems with newly acquired Dollar Thrifty, pressure and input from Carl Icahn, serious accounting issues resulting in an SEC fine and a lawsuit against three executives and a CEO, still ongoing.

Yet now, under new ownership and leadership, Hertz is being viewed as visionary. Hertz’ post-bankruptcy future is being guided by interim CEO, Mark Fields, who is an ex-Ford Motor Company leader. Mark Fields is not just a car guy: he is a Ford Motor Company car guy. He understands the value of creating, articulating and actualizing a galvanizing, startling, compelling possible dream. 

You cannot work at Ford Motor Company and ignore its provenance. The greatest part of the Ford Motor Company legacy was the democratization of mobility. Anyone could afford to buy a car. And, according to Mark Fields, underlying the purchase of 100,000 Tesla vehicles, the construction of EV charging stations and a partnership with Uber, is the belief that for electric vehicles to become the norm, some company will have to democratize electric vehicle mobility. Mr. Fields stakes his bet on Hertz.

Surveying the established automotive brands, most of these have or will have EV’s with prices out of range for the average car buyer. And, as Mr. Fields points out, only Tesla has the capacity to churn out electric vehicles “at scale.” Success for electric vehicles will only come when they can be owned by anyone. This is vintage Henry Ford.

“I will build a motor car for the great multitude. It will be so low in price that no man making a good salary will be unable to own one.

“When I’m through everybody will be able to afford one and everyone will have one ad will be able to enjoy with his family the blessing of hours of pleasure in God’s great open spaces. The horse will have disappeared from our highways, the automobile will be taken for granted and we will give a large number of men employment at wages.”

In other words, the purpose of Ford Motor Company was to make “… mobility accessible to everyone.”

Some of the most successful brands are based on democratizing their categories. McDonald’s democratized eating out. Target democratized stylish, well-designed yet affordable products. The Franklin Mint democratized owning artworks. Its die-cast airplanes and vehicles, plates, commemorative pieces, dolls, coins, sculptures gave people the opportunity to own and collect art. Olay skincare democratized scientifically designed products that work at affordable pricing. The Ordinary, recently purchased by Estee Lauder, takes that affordability to a new level. The Ordinary’s serums oils and creams in most cases cost around US $8. IKEA democratized furniture while its Swedish relative, H&M, democratized fashion.

Many of the automotive companies betting on the all-electric future envision a cleaner world, a more sustainable tomorrow, a smarter (AI, digital) tomorrow. Sustainability is essential, of course. Opening that sustainable world to everyone in ways that make mobility accessible to the masses is even more bold and exciting. (The Chevy Bolt EV and the Bolt EUV could have been positioned as democratizing EVs but all Bolt electric vehicles have been recalled because their batteries could be defective and cause fires. In San Francisco, bolt EVs are banned from parking lots citing “public safety.” General Motors has focused on EV leadership rather than on EV’s for the masses, look no further than it electric Hummer, starting at US $80,000.

While business press and practicing pundits focus on the financial implications of Hertz’ statements, and while Elon Musk (a visionary in his own right) tweets about the on-off nature of the unsigned Hertz contract along with the pace of Tesla-to-Hertz deliveries, Mark Fields presents a future-oriented, ambitious goal with opportunities that others did not see. Mr. Fields is creating the dimensions of the world in which Hertz will win, a world in which competitors will be playing by Hertz’ rules. He is providing a framework that will guide decision-making, planning and action.

In Hertz’ tomorrow, Hertz will succeed by owning the bat, the ball and the playing field. And yet, in Hertz’ tomorrow, we will all be winners.

Friendly’s Faces the Future

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Recently, Friendly’s, the 80 year old east coast, family-friendly restaurant known for its ice cream creations and flavors, along with signature sandwiches, burgers and other main courses, hired a new advertising agency. The new advertising agency will help Friendly’s transform itself into a modern, fast-casual restaurant that is more in touch with our “on-the-go’ dining behaviors. The agency’s task is to revitalize an aging brand.

Founded in 1935, Friendly’s became a place to take the kids where adults could enjoy a nice, substantial meal at a fair price. Since 1935 dining out with kids changed. Fast food brands offer family-friendly environments. Frozen treats chains offer ice creams and frozen yogurts. Entertainment dining options (i.e., Chuck E Cheese) make dining fun. Casual dining restaurants offer kids’ menus. People are having fewer children. Now, Friendly’s finds itself in a shrinking market with a shrinking need with a shrinking customer base. 

To make matters worse, Friendly’s fell into a vicious cycle of being bought and sold. Friendly’s has had numerous owners (Hershey’s, Sun Capital, Dean Foods), none of which were able to get Friendly’s back in sync with customers. And, as part of this vicious vortex, Friendly’s filed for bankruptcy twice. Also, Friendly’s closed numerous stores up-and-down the Eastern Seaboard. 

In early 2021, Amici Partners Group, an investor group with expertise in restaurants, purchased Friendly’s. Amici Partners Group is affiliated with BRIX Holdings, owner of RedBrick Pizza Kitchen Café, Souper Salad, Red Mango Yogurt Café Smoothie and Juice Bar, and other restaurant chain brands.

Friendly’s describes itself as “… an iconic brand offering everyday value, full-service … with great tasting food and ice cream creations.” Now, Friendly’s wants to be a player in “on demand dining” while keeping its essence as a joyful, fun place to eat with fair prices and great service. According to recent press releases, Friendly’s wants to deliver a revitalized brand experience in a fast casual, take out, grab-and-go digital dining world.

This will be a challenge. But, Friendly’s can be revitalized. 

Friendly’s has a foundation that is relevant in any age. The key will be to modernize its provenance without completely discarding the brand’s inherent, powerful values. Sure, Friendly’s has been in trouble over its eight decades. But, Friendly’s heritage provides an enduring fundamental core. 

Legacies can actually be liberating if managed properly.

However, brand revitalization is more complex than hiring an advertising agency. Successful brand revitalization requires a disciplined adherence to six basic rules. 

The six rules for brand revitalization are:

  1. Refocus the Organization
  2. Restore Brand Relevance
  3. Reinvent the Brand Experience
  4. Reinforce a Results Culture
  5. Rebuild Brand Trust
  6. Realize Global Alignment (if a global brand)

Refocus the organization around financial discipline, operational excellence, leadership marketing and the brand’s purpose.

Friendly’s is familiar with this first rule. Friendly’s has a deep-rooted ethic dedicated to growth and operational excellence. 

According to an online archive from its Hershey-owned days (1999), Friendly’s believed success would be based on its ability to: “Achieve profitable growth by leveraging Friendly’s brand strengths and heritage, while utilizing franchising as a key growth initiative designed to fully penetrate identified opportunity markets,” 

Financial discipline means getting back to profitability: stop the bleeding, eliminate waste, improve productivity. Friendly’s already endured massive store closings. Friendly’s emerged from two bankruptcies. Cost cutting alone should not be the only solution. There may not be anything left to cut. 

Operational excellence means delighting customers with a branded experience so an increasing percentage of them look forward to purchasing the brand more often. Key is achieving an efficient and effective balance between meeting customer expectations and minimizing waste. Friendly’s already understands this. One of its guiding principles was Operations Excellence: “Consistently achieve operations excellence – 100% guest satisfaction, 100% of the time… taking great care of our guests, no matter what it takes.”

Leadership marketing means attracting new customers to the brand, encouraging existing customers to purchase more often and increasing customer loyalty. Operational excellence moves customers to the door; leadership marketing moves them into the store. Friendly’s move to communicate its new direction will help.

The brand’s goal – its purpose – clarifies the brand’s strategic direction. Purpose articulates the brand’s intent: its North Star. In the online archive, Friendly’s North Star was: “To be the leading casual full service restaurant/ice cream shoppe and premium retail ice cream brand in the Eastern United States…known for operations excellence, great signature foods, famous ice cream shoppe desserts, sparkling clean facilities, prompt, friendly service and dedicated, talented people… resulting in outstanding customer loyalty and consistent profitable growth.” There is a lot to work with here.

Friendly’s must focus on articulating and implementing a relevant, differentiated North Star as Friendly’s is aiming for the already crowded, competitive fast casual category.

Restore brand relevance through a thorough knowledge of the market, needs-based occasion driven market segmentation and a clear statement of the brand’s brand promise. 

There is nothing more important in brand revitalization than understanding what is relevant to today’s customers. Know your customers as if they were your BFFs. Focus on customer needs, problems and occasions. 

Articulate a compelling brand promise describing the trustworthy branded experience that will be delivered in a quality manner, each time, every time, to each and every customer. 

Friendly’s has a history of quality and integrity as expressed in its value statements: (Integrity) “Practice the highest standards of business ethics and integrity in all lines of our work.” And, (Quality) “Consistently exceed our customer’s expectations in terms of great tasting recipes, spectacular presentation, quality and value.”

The dining landscape changed around Friendly’s. Customers changed attitudes and behaviors. Friendly’s advertising will only work if there is a truly insightful understanding of how to solve for customers’ altered perceptions of family-friendly dining.

Reinvent the brand experience through innovation, renovation, focusing on the brand’s Trustworthy Brand Value, the brand’s fair value and the total brand experience. 

Innovation and renovation create news. News moves customers into the store, onto the website, onto the app. Product and service innovation and renovation are essential for enduring profitable growth. News generates frequency. News helps to change behavior.

Build trustworthiness. Customers’ new value equation is Trustworthy Brand Value: what the customer receives (functional emotional and social benefits) relative to the perceived costs (money, time and effort) multiplied by trust. Without trust, a brand has no value. To generate Trustworthy Brand Value, the brand’s inherent value must be perceived as fair value. More than price, fairness means that the benefits-per-costs are equitable and just. Friendly’s has always promised fair value. Keeping this promise will build trustworthiness.

Total brand experience defines what the brand will do for its customers. How will the brand’s people deliver the brand’s experience? How will the brand’s product and/or service deliver the brand’s experience? How will the brand’s place (store, website, app, etc.) deliver the brand’s experience? How will the brand’s price deliver the brand’s experience? How will efforts to promote the brand deliver the brand’s experience?

Friendly’s must assess its perceived trustworthiness while updating its total brand experience. Years of financial instability and store closings affect customer perceptions of trustworthiness.

Reinforce a results culture by establishing measurable milestones, through recognition and rewards and by implementing a balanced brand-business scorecard.

This should not be difficult for Friendly’s. It has a results culture provenance: “Build a results driven organization by attracting, motivating and retaining a diverse, talented and friendly workforce who takes responsibility and has a passion for great service and a keen sense of urgency for fulfilling customer needs,” as stated in the online archive.

Measurable milestones help measure progress. People need to know where the organization is headed and whether the organization is making meaningful progress in getting there.

People manage what management measures, recognizes and rewards. Leadership defines how progress will be measured. The right results must be produced in the right way for the right reasons. Recognition is visible, public and vocal praise, acclaim and tribute in front of your team, your function or the entire brand or company.

A balance brand-business scorecard is a single integrated report card with metrics that represent business strengths and weaknesses as well as brand strengths and weaknesses. Prove progress.

With its checkered history, an immediate must-do for Friendly’s is to galvanize the organization and all stakeholders into believing the brand is stable and capable. Everyone must become an adherent of the new brand direction.

Rebuild brand trust both internally and externally. 

Friendly’s has always been dedicated to building trust with investors and with the community. 

Friendly’s values and guiding principles state, “Continually increase shareholder value through annual increases in customer counts and through performance focused on return on investment, asset productivity, cash flow returns and a strengthened balance sheet.” And, “Solidify Friendly’s image by developing strong, sincere and long term community relationships.

Trust must be earned. It does happen automatically. Friendly’s has endured some troubling times. Trust is needed on the inside and the outside.

Internally, rebuild commitment through education, implementation, inspiration and evaluation. Externally, rebuild trust by following the five principles of trust building: You are what you do; Lead the debate; do not hide from it; Openness is an opportunity; Be a trustworthy source of trustworthy messages; Be a good citizen.

Trust rebuilding requires amassing Trust Capital, along with the other sources of organizational wealth: Financial Capital, Intellectual Capital, Human Capital, Climate Capital and Social Capital. Trust Capital is the customer confidence in the authority, credibility, integrity, leadership and responsibility of the organization to deliver promises of value to all stakeholders.

Realize global alignment (if global) through creating a brand framework and a Plan to Win, and through managing using a collaborative three-box model.

Friendly’s has a heritage of strategic planning for the future. As stated in a guiding principle: “Apply a strategic and planned approach to developing the Friendly’s brand both short and long term, through full-service family-oriented restaurants, retail expansion and other brand tested channels of distribution.”

A Brand Framework provides the non-negotiable guidelines and policies that define the brand’s common customer experience.  The Framework creates the brand’s boundary lines within which the brand is to be communicated and delivered. 

A Plan to Win is a one-page aligning document that articulates 8 must-do’s: the brand purpose, promise, 5 actions (people, product/service, place, price, promotion) and performance metrics. Friendly’s 9 values and guiding principles ( focus, growth, brand, operations, people, integrity, quality, shareholder, community) form a solid starting point.

A collaborative three-box model for global brands is all about shared responsibility. It requires brand personnel to coordinate, cooperate and collaborate. 

Although Friendly’s is not global, the brand must create its brand framework to guide its creativity. And, having a Plan to Win will ensure that everyone knows what to do, when to do and what it will achieve and when. Friendly’s values and guiding principles are an excellent start.

Brand rejuvenation is more than an advertising campaign. Friendly’s has a provenance that connected with customers for decades. Figuring out how to bring that core back to life in a compelling, surprising, delightful, exciting, quality manner for a new, demanding dining marketplace will require following the six rules of brand revitalization.

The Future of Marketing

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Marketing needs a new business purpose. Without a new business purpose, marketing will have no purpose. Instead of a profession, marketing has become a trade: the trade of managing and executing marketing and media tactics. Marketing has fallen in love with the increasing number of communication channel opportunities, social media, entertainment, events, online and so on.  In fact, the most recent 2021 Deloitte CMO survey indicates that digital marketing is the CMOs primary responsibility. Digital is a communication channel. Communication channel management is not marketing management. 

Marketers have been complicit in degrading marketing. In 2018, three years ago, in Deloitte’s previous CMO survey, the data indicated that CMOs are not fulfilling responsibilities that go beyond brand recognition, brand value and specific tactics. In the study, 34% of the 200 responding CMOs said their role in their organization was ‘storyteller’ while only 20% said their role was identifying and mapping new routes to client revenue. In other words, the CMOs focus first on what they do day-to-day rather than focusing on the client’s business results as the first priority.  

The latest survey reports the same unfortunate situation. CMOs say their focus is on short-term value. CMOs still have no solid idea if what they do has any long-term value. Brand building and trustworthiness take time. Short-term is important but for enduring profitable growth of the enterprise, there needs to be a long-term as well.

Telling brand stories is fine. Producing quality revenue growth is better. Increasing penetration and building brand loyalty makes money. Being great storytellers is nice if it contributes to the client’s enduring profitable growth. Telling isn’t selling.

Even with the pandemic, it appears as if little substantive has changed over the past 3 years. 

In September 2021, ADWEEK ran an opinion piece on the “trust gap” between the CEO and CMO. In order to bridge the “trust gap,” the author asked us to rethink the CMO role. Part of this “rethinking” is that marketers tend to use marketing language rather than business language (value creation, growth, revenue and share price, for example). Of course, driving enduring profitable growth rather than defining value creation, growth, revenue and share price would be better. 

The recent 2021 Deloitte survey agrees. It indicates that CMOs must defend and “justify” the value of marketing to the CEO and the CFO. CMOs must “explain” the value of marketing. It is not enough to “show how marketing spending is aligned with business priorities and strategies.” Marketing leaders must show the marketing impact on generating quality revenue growth. This is bigger than sales.

Additionally, the ADWEEK author stated that marketers must stop believing that marketing alone can change the enterprise. This is a particularly bad habit. It makes a mockery out of marketing.

We need to look no further than the recent announcement from Nielsen, the giant media measurement company, that the Nielsen logo and brand purpose have been “updated” in order to transform the company. For some time, Nielsen has been criticized for services that do not accurately count audiences in the new world of streaming, cable cord cutting and multiple devices. Nielsen lost its third-party accreditation for its national and local TV panels… the foundational lifeblood of Nielsen. Nielsen is struggling to gain back this accreditation. The updated logo and brand purpose create a new Nielsen. Forget about our past issues. A new brand identity can fix all previous problems.

Somehow, a new logo and brand purpose have magically transformed Nielsen into an enterprise that is “Powering a Better Media Future for All People.” Marketing is not about magic. Being chief magician is not the job description.

Facebook is also considering a name change. The Verge stating that Facebook wants to create a holding company of which Facebook would be just one product. Facebook wants to be known now as a metaverse company. The assumption is that analysts and investors, as well as other stakeholders, will focus on the profitability of the holding company and forget the management and marketing miseries and missteps of Facebook. This thinking assumes that marketing the company as an alternative world will defray the difficulties of the real world. Financial Times wrote, “A rebrand won’t fix Facebook.” And added, “The metaverse promises extraordinary parallel realities, perhaps even including one in which Facebook is well run. … what the company needs is not a new name and a new mission, it (needs) a new culture.”

Marketing can make things sound rosy. Unfortunately, marketing cannot make systems and culture right.

Finally, the ADWEEK piece stated that marketers must rethink the reliance on the “old” definition of brand management which the author believes is “outdated.” It all depends on how you define marketing. The purpose of marketing is the profitable satisfaction of customer needs. There is nothing out of date about this. What is outwardly wrong is the belief that marketing is all about advertising, channels and media.

Marketing is about managing the business. Managing the business is bigger than managing messages and media. Peter Drucker, the most respected management guru ever, once said, “The purpose of business is to create a customer.”  Effective marketing is not merely about message and media management: it is about business management. Effective marketing is fundamentally about attracting and retaining customers. The CMO – the marketing leader – must be the business leader responsible for generating, supporting, and activating a customer-driven focus within the organization.

Marketing leaders must bring a distinctive brand-business perspective to C-suite table by being responsible for:

  • Helping to define the quality revenue growth strategy: attracting and maintaining customers who frequent the brand becoming brand loyalty to generate enduring profitable growth
  • Achieving organizational alignment behind a common brand-business purpose and direction
  • Helping to define the Brand-Business priorities such as 
  • Being the voice of the customer, whether B-B or B-C
  • Knowing more about the customer than anyone else in the organization: being the customer’s advocate
  • Leading the effort to drive true customer-insight focused growth strategies and innovation
  • Leading the effort to break down organizational silo
  • Developing and implementing a Balanced Brand-Business Scorecard
  • Leading customer-driven innovation, through providing insights into customer needs and problems, defining the focus for the development of innovative insight-driven products and services
  • Contributing to the development and implementation of a Brand-Business Plan
  • Developing the price-value strategy (Deloitte states that a collaboration between the CFO and the CMO on pricing is essential for driving organizational growth in a world of inflation and shortages.)
  • As well as responsibility for brand communications, internal and external

Marketing is all about profitably managing customer-driven, top-line growth. 

Respect for marketing will continue to decline unless CMOs re-form and transform marketing’s role from a communication channel role to a brand-business leadership role. (It is interesting that the recent Deloitte CMO survey excerpt from The Wall Street Journal does not mention the word brand at all.) 

But, also, shame on CEOs, CFOs, COO’s and other C-Suite executives when often the first questions they ask a new marketing leader are, “What will the new advertising be? Will there be a new slogan? Will there be a new advertising agency? What is our new digital strategy?”

Marketing leadership must revitalize the marketing function now. It is not enough to be “at the C-suite table.” Deloitte 2021 states that 53.5% of CMOs interviewed participate in Board meetings. Whatever this participation entails, apparently it has not helped increase perceptions that marketing has value.

Marketing must reassert its role as the leader in guiding the development of customer-driven growth strategies that lead to brand value creation and enduring profitable growth. Digital transformation is necessary. But, what you are communicating and why and its impact on enduring profitable growth are critical.

The future of marketing will depend on leaders who understand marketing’s role as driving a brand-based, customer-focused business that attracts and retains customers resulting in sustainable, profitable growth. Marketing is more than a multi-channeled, multi-device communications role; it is a business management role.