THE LURE OF LOCALIZATION

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Customization and personalization are increasingly important marketing opportunities. Customization means flexibility of product and service design. Personalization means respecting and reflecting personal differences, attitudes and values. Personalization conveys respect for customers as individuals.

There is another powerful force… the lure of localization. Localization is more than the farmers’ market or the neighborhood craft brewery.  Local is a distinctive feeling of community. Local creates a sense of belonging.

Locally sourced, locally crafted, locally owned, regionally authentic, one-of-a-kind, bring a sense of cultural, ethnic, economic, and social connection. Artisanal, regional cheeses, local distilleries and breweries, grass-fed cows on local farms, cage-free chickens, arts and crafts, non-GMO, fresh, organic, locally made employing local people, and other local elements and activities that bring “real” into our lives continue to grow and are increasingly attractive and affordable. Homemade items from Etsy; retro items from eBay; and modern vintage from Restoration Hardware – all of these give us a sense of truth.

Local is more than location. It is also about local values. It is the comfort of belonging to a familiar community. Localism provides authenticity, genuineness, and a true sense of reality as in “This is what it is really all about.” It is a feeling of being a part of people just like me.

Feeling like a local gives us a sense of belonging to a social group with distinctive interests and priorities. In our current world, we have this need to belong while we consciously attempt to maintain our individuality. Feeling like a local means that we can stand out while we blend in.

For Millennials especially, it is important to feel like a local. Millennials value living and working in the same neighborhood.  They like “walking neighborhoods where you step outside your home, and have opportunities to have exchanges with others. In walking neighborhoods, people pass others on the street, and can connect. In a digital, AI, VR, and AR world, we need neighbors and belonging more than ever before.

Short-term residential rental housing is leveraging this need. For many people, staying away from home creates a sense of loss. We lose our anchors. Instead of staying at a standardized global hotel brand, people are searching for hotels with a local, neighborhood feeling.  As Airbnb says, short-term rentals let us choose a neighborhood where we can “live like a local.” Feeling and acting like a resident is important. Barry Sternlicht (former CEO of Starwood Hotels & Resorts, and creator of W Hotel and Westin’s Heavenly Bed) is investing in short-term residential rentals. His investment in a start-up goes to support the addition of new upscale, branded residences for short stays to compete with brands like Lyric, which is listed on Airbnb. Airbnb has its own brand as well, “Friendly Buildings Program” that features rental units provided by “friendly” landlords. The short-term residential rental market appeals to corporate travelers who prefer integrated neighborhood lodging experiences.

WeWork is another example of creating feelings of belonging. WeWork generates feelings of community. Not only does the brand provide communal office space, but, also, through its WeLive brand, it offers apartments. And, to provide for physical and mental wellness, We Work just opened Rise, its gym and spa featuring treadmills, boxing bags, saunas, and massage studios. (The New York Times indicates that the Rise memberships are from $100 to $360 a month.)

Brands have an amazing opportunity to leverage the need for feeling like a local – enhancing the sense of belonging – for all individual customers. Here are three things brands can do right now:

  1. Figure out what makes your brand “authentic” to its audience and then consistently and creatively deliver that authenticity in its experience. Increasingly, deliver the local “real thing” over a who-knows-who-how-where it-was-made. We want something genuine, honest, we can trust. People trust local over distant. People trust locally grown over imported from Mexico.

 

  1. Design ways that customers can become involved in the brand community. People want to feel like a local – this need to belong is a need to be a part of something bigger than themselves. Create personalized participation for customers. Don’t automate everything. People see certain services as being more authentic when delivered by a human. All-digital-all-the-time can be dehumanizing and deadly. Feeling like a local entails being within a neighborhood of real people.

 

  1. Create conversations. Employ the art of conversation. Conversation is collaborative: it is an engaging, connecting, channel-agnostic interactive, and integrative force. Whether vocal or digital, it can be used to generate a feeling of local. Conversation builds trust.

 

Feeling like a local helps us understand our places: our communities, our neighborhoods, our homes, or our countries. Feeling local binds us together as belonging to some place or communal physical, psychological, geographical or virtual space. Local provides kinship with a particular place, wherever that is, and in whatever physical/virtual state that is.  Technology is transforming the world by lowering the physical barriers of place. By respecting local values and tastes and ideas, by rooting in the local space, brands deepen trust.

 

THE ART OF ATTITUDE

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In our increasingly visual, digital, world of video posts and selfie poses, Pinterest, and Snapchat, a powerful non-verbal attitude is a must for a brand. Brand attitude is not claimed. It must be designed into the brand experience.

McKinsey & Co. posted an article on their website, “Ten Design Practices to Deliver Business Value.” McKinsey & Co. points out that design is a top-level priority for the CEO, design being a necessity for long-term performance.

Design has many definitions. Design has always been placed into the “emotional” business bucket, the art side of the business. And, design has, in most cases, been a concept attached to a brand later rather than built into the brand from the beginning. Brand management must be integrated with brand design management. The word “design” means, to “create, invent, devise, execute, or construct.” Brand design focuses on creating, inventing, devising, executing, and constructing a distinctive attitude into the experience.

Effective brand management is about the design of a relevant, differentiated brand experience. A brand is a trustworthy promise of relevant, differentiated experience. It is more than a promise of features and functions. It is about creating a distinctive brand attitude that is designed into the experience. Brands are promises of brand-designed experiences. Trustworthy brand-designed experiences are the real enduring differentiators.  

Brand design integrates the voice and the emotion of the customer into renovation and innovation. Brand design brings creativity into the development and implementation of the total brand experience.

Brand design harnesses a brand’s elements into something tangible, memorable, and visceral creating a special brand attitude. The brand attitude is the non-verbal perceptual impression that makes the brand feel special. The brand’s attitude expresses the brand’s character in nonverbal ways that can be seen, sensed, understood, heard, and felt. A brand’s attitude is the unified expression of aesthetic cues. These non-verbal elements guide how a brand will be identified in the marketplace. Brand attitude answers the question: “How do we want people to recognize, sense, know or feel this particular brand experience?”

Creating and owning a brand attitude is a vital tool for building a strong brand. It is key for projecting a brand’s promise across all communication media. Brand attitude is an interpretive guide for the consistent expression of the brand’s promise. Brand attitude is not easy to create, but well worth creating. Crafting a non-verbal brand attitude for consistent use across all of a brand’s touch-points is an art. Brand attitude is that all-important art that must be a part of any brand policy.

 

A LOVE AFFAIR WITH MARKETING NUMEROLOGY

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A walk through the market research trade press is a frightening experience. The articles are paeans to technology and proprietary methodologies. If we can quantify something, it must be actionable. It is a love affair with marketing numerology.

Market research has split into two groups: the academics who publish statistical articles in technical journals. (To read these, you need a degree in statistics and familiarity with an obscure academic language.) And the marketing numerologists, who believe in some kind of magical relationship between their mystical techniques and some measure of marketing effectiveness. In both cases, producing numbers is the goal. We learned as children that correlation does not mean causality. However, the numerologists love correlations.

Data hyping by the numerologists underlies the poor research reporting we regularly see. In one recent article, on the relationship between video ads on social media and purchase, the researchers concluded that all brands should use video ads. Why? 54% of the sample who watched a video ad also went to the brand’s website. The researchers exclaimed, “Yes, that’s over half.” True, but only by 4 percentage points. And, it means that almost half, 46% did not. In other words, the odds that a viewer of the video ad also bought the product are the same as the flip of coin. It does not follow that viewing a video ad increased the probability of a purchase. It could also be the other way around. Or, one could have nothing to do with the other. Just because you can produce a number does not make it a relevant insight. The researchers were ecstatic that 28% of respondents watched the video ad and then claimed to buy the product.

Just because it is based on numbers does not make misleading, misinterpreted observations actionable. If we produce a number, it must be true. Or, if we produce a number it must be news. Much market research is merely observation of the obvious. In an article on finding the best ways to reach Millennials, the first recommendation based on data, was “Don’t Overgeneralize.” Really? Supported by data, they observe that all Millennials are not the same age. People born in the mid-1980s are at least 10 to 12 years older than those born in the mid-1990s. Wow! What an insight!

The battle for numbers is supported by the battle for proprietary models and methods.  One firm claims that it provides unmatched sensory testing including eye tracking. Another states that it generates ideas from the “squeezing” of behavioral science and cultural anthropology. There is fascination today with something called neuromarketing. Neuromarketing is the application of neuroscience to marketing research to study our sensorimotor, cognitive, and affective responses to marketing communications. Neuromarketing uses technologies such MRIs EEGs, and Steady state topography (SST) to measure brain activity changes in physiological state (biometrics – heart rate, respiratory rate, and galvanic skin response), and something called facial coding (did your face show emotion when you  saw the pizza). Market researchers are fascinated with the latest new technology, the latest new equations, and the latest new, bright, shiny methodology.

Not everything that is important is quantifiable and not everything that is quantifiable is important. Some numerologists at Facebook have created “trustworthiness” measure that will rank news feeds. There has already been withering criticism of this measure. Furthermore, Facebook says they are also developing a metric to help advertisers assess brand success on Facebook. When an analyst questioned Mr. Zuckerberg about the metric, he responded:

“The thing that we’re going to be measuring is basically the number of interactions that people have on the platform and off because of what they’re seeing that they report to us as meaningful.”

As Bloomberg commented, “Good luck putting that into a spreadsheet.” And, “It is remarkable that a company as data-driven as Facebook would gauge success based on qualitative user surveys.” Given the desire for a magical number, Facebook must have hired a group of marketing numerologists.

The love of numbers as evidence of truth, has led to an over-reliance on numbers however they are derived. Marketing numerology is contributing to an over-reliance on numbers over judgment in making creative decisions. People interpret, question, evaluate, simplify, clarify, examine, illuminate, imagine, create. Decisions should be informed by evidence. But, the evidence does not make the decision. People do.

PASSION OR POISON: THE HORROR OF HUBRIS

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Brand founders are special. They have great ideas. And, they have passion. They act on their ideas. Brand founders have the code of the brand in their core. It is always worthwhile to spend time listening to their stories, learning from where the brand’s values come, and understanding the brand’s guiding principles. Unfortunately, sometimes a brand founder’s passion becomes arrogance; poison for the health of the brand. Uber is a recent example of passion turning into the poison of arrogance. And, sadly, another recent example is Chipotle.

Recent UBS research indicates that the customer perceptions about Chipotle have fallen enough to merit downgrading Chipotle’s rating from neutral to sell. The research indicates that concerns about food safety are only the tip of the iceberg. Customers indicate that they frequent the brand less not only because of food safety but also because customers perceive the brand as not as clean as it used to be; the food is not as good as it used to be; the service is slower than it used to be; its food is not healthy; and friends do not want to go there with me.  Whether these statements are actually true, perceptions are everything: the hovering food safety issues have tainted customers’ overall brand perceptions. UBS examined Chipotle’s online ratings across various websites: the brand’s online ratings – reflecting customer reviews – have deteriorated substantially.

Chipotle was built on the brand founder’s commitment to sourcing and preparing food according to classical culinary techniques applied to fast food. His passion for Chipotle’s founding principles worked when the brand was small. However, Chipotle has grown to over 2000 restaurants. It now needs to operate differently. Yet, Chipotle did not adapt. Classical cooking does not work for a 2000 restaurant chain. Food safety was a looming risk. The founder’s passion actually prevented the brand from handling an incredibly serious food safety situation where customers in multiple states were becoming ill. The brand founder’s unwavering belief in the food’s provenance and the logistical and culinary processes became stumbling blocks.  The food could not be the problem: the food is organically, naturally, humanely grown, nurtured, handled, and the food is additive-free.

Chipotle’s commitment to classical culinary techniques meant crewmembers had to learn how to properly use knives, and all preparation would be handled in the restaurant, just as in high-end, sit-down, restaurants. Chipotle does not use frozen food. Rice and guacamole are made fresh every day in the restaurant.

The public communications reflected the founder’s hubris. Over the course of the multiple food safety incidents, the brand released numerous press statements that boggled the mind. There was a statement indicating that along with Food with Integrity, Chipotle was now committed to food safety. Did they mean that previously the idea of integrity did not include food safety? Chipotle hired a food safety expert, but there have been no indications that this expert’s recommendations have been followed. In fact, after using a commissary to safely prepare the food the brand’s founder thought the food tasted differently and so the commissary preparation was stopped.  

Chipotle seemed to view the food contamination issue as a small, limited standalone issue. They did not imagine that overall brand imagery perceptions across the brand would be damaged. Contaminated food appears to affect the image of restaurant cleanliness, food taste, and customer service.

Chipotle felt the media treated them unfairly. The incidents were only a very small fraction of the total number of customers served very day. But, the credibility of Chipotle’s promise of “food with integrity” was attacked at its core by these incidents. Playing the situation down will not make it go away.

Advertising can do many things, but it cannot make a restaurant’s food safer. Chipotle tried strange, unconventional adverting. Product safety issues cannot be changed by running a philosophically existential advertising campaign that is probably making Jean Paul Sartre turn over in his grave.

New products did not help change the perceptions of Chipotle either. Chipotle’s queso has been ferociously panned. Commitment to the founding principles of classical culinary techniques does not work for preparing queso as people know it. Chipotle tries a new dessert item. This was destined to fail. People come to a restaurant for its core menu. They are not likely to choose chipotle for a dessert if they do not like the burritos. The dessert entry has been yanked from the stores. And,

Chipotle is not a franchise. Chipotle owns all the restaurants. There was no interest in having outsiders meddling in the brand. As Chipotle grew to over 2000 restaurants, the management of the brand became much more complex. Furthermore, the creation of two other restaurant brands using the Chipotle-style assembly line distracted executives.

Chipotle has experienced tremendous success. The brand changed the fast food landscape. Chipotle leapt to success by leveraging an idea that food can be great and fast. The problem fast food is not that the service was fast; it was the food. Offering quality, sustainably sourced food, made in the restaurant according to classical culinary techniques was something new for the fast food customer. Chipotle’s success created a new business model the industry dubbed fast casual.  

Success needs to be leveraged, not lived off. As brands grow, as the world changes, as customers change, properly managing brands demands changing the way the brand experience is delivered. The essence of the brand’s promise can be kept intact while adapting to changing circumstances.

Chipotle is now looking for a new CEO. As with Uber, Chipotle needs a new leader to put the brand back together. The belief that stubbornly sticking to original techniques supported by unusual advertising would bring back customers and allay their fears was arrogant.

Chipotle is on a downward spiral. Executive hubris will not change this trajectory. Yet, the death of the Chipotle brand is not inevitable. Brands can live forever if they are properly managed.

 

THE CAROUSEL OF CREDIBILITY GRAB THE GOLD BAND OF BELIEVABILITY

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What goes around, comes around. From the beginning of advertising, expert testimony was the way to sell a brand. From the remarkable RJ Reynolds cigarette ads that touted that Doctors recommend Camels, to the ADA seal of approval on Crest toothpaste (Look Ma, no cavities!), to Ronald Reagan and GE, to TV star Mariette Hartley selling Polaroid cameras, to today with Marie Osmond and Oprah Winfrey confirming their weight loss results with Nutrisystem and Weight Watchers, respectively.

But, overpowering expert testimony has been the increasing reliance on peer review, peer ratings, and online peer influencers and websites of peers alerting us to situations such as the food safety (alleged) poisonings at Chipotle. Many people do not make a hotel reservation without checking with TripAdvisor, even though faceless, unknowns of potentially sketchy backgrounds are dishing their opinions. They do not make a restaurant choice without checking Yelp. They select a doctor by searching for patient ratings. They select a home-repair person by checking Home Advisor.

Things have changed. The carousel of credibility has turned around with its calliope crooning a new crescendo: experts and academics are now more trusted than peers. The credibility and validity of peer ratings are being questioned.  According to the 2018 Edelman Trust Barometer, just released, 2017 was a good year for faith in experts, and a really bad year for faith in peers. Technical (63%) and academic (61%) experts became the most credible spokespeople relative to “a person like yourself,” which dropped six points to an all-time low of 54%.

In the Edelman press release, the head of the Reputation practice said the following: “In a world where facts are under siege, credentialed sources are proving more important than ever. There are credibility problems for both platforms and sources. People’s trust in them is collapsing, leaving a vacuum and an opportunity for bona fide experts to fill.”

Trust in CEO’s is benefiting. For years, CEO credibility has been on the decline. But as the new study reports, “…this past year saw CEO credibility rise sharply by seven points to 44% after a number of high-profile business leaders voiced their positions on the issues of the day.” In other words, CEOs have moved to standing up for what their brands stand for, a welcome change.

Being the purveyor of credibility has responsibilities. As Edelman points out, “building trust (69%) is now the No. 1 job for CEOs, surpassing producing high-quality products and services (68%).”

Brands must leverage this turn of events. Now is the time to involve expert testimony to enhance brand expertise in the brand’s area of authority. Peer testimony is not going away, but allowing it to totally define and drive the brand is creating a lot of baseless buzz rather than believability.

Brand credibility is a driver of purchase intent. Studies show that the more credible the brand, the higher is the purchase intention toward the brand. Customers show greater purchase intention toward brands that are credible. Research from 2004 indicated that brand credibility could increase the probability of inclusion of a brand in a customer’s consideration set. The years of research on credibility and brand clearly articulate that one of the significant factors in augmenting brand credibility is based on providing expertise.

Credibility means that the brand can be believed to consistently deliver what it promises. The support of “credentialed” individuals is a factor that helps build trust. Credentials means having specific qualifications or checkable achievements as indicators of relevant expertise.

The question for brands has always been “who do you trust?” Brands relied on their heritage, and sometimes the support of experts. But, in the modern social media age, brands relied on the power of peer ratings and comments.

It seems the carousel is spinning around to a new time for trusting the experts over the amateurs. Peer reports and ratings will always be important. But, in a world of information overload, expert testimony will rise in importance. Brands must step out into this brave new world where expertise is the new king. Brands must adopt a new view on how to communicate their expertise as an authoritative source of quality, leadership, and trust.

 

 

 

 

 

 

 

DITCHING THE DARK SIDE, BOOSTING OUR BEST SIDE

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Social media is the premier tool for The Age of I, where people want to be seen as individuals while at the same want to belong to identifiable groups. Social media allows people to communicate their individuality to anyone, anywhere, any time. At the same time it connects people to like-minded others. It embraces individual differences. It fosters communities. Social media opens doors to new ideas. It reinforces familiar ideas. It gives the voiceless a voice.

However, social media has a dark side. Social media can distort the truth while eroding trust, as Facebook is now aware. Marketing has an opportunity to play a role steering social media away from the dark side by promoting our best side.

Facebook has finally recognized that its laissez faire attitude to news postings has created a swamp of suspect stories that torpedo truth and trash trust. As helpful as Facebook can be in our lives, it has a tendency to devolve to the dark side. Facebook believes it needs to address this now, especially since the US will be in election mode for House and Senate seats in 2018.

Facebook is a social media force of galactic proportions. Although Mark Zuckerberg is neither Darth Vader nor obi Wan Kenobi, the good over evil tension of Facebook is a battle worth having. Mr. Zuckerberg believes that by providing a trust metric, Facebook will be able to include trustworthy news sources while blocking less trustworthy sources. We can only wait to see how this turns out. Facebook is asking Facebook users to provide the judgments that create the trust metric rather than allowing the brand to become the arbiter of truth. (There is already serious blowback regarding this metric. For example, The Atlantic and The Shorenstein Center on Media, Politics, and Public Policy have recently expressed concerns.)

Brands no longer have the option of sitting by and waiting for the dust to settle. Brands need to evaluate how they can bolster our best intentions. What can brands do to bolster our better intentions?

Become part of the solution for customers’ important issues

Customers prefer brands reflecting values that match their own.

Behave predictably

Erratic behavior and changing beliefs and practices confuse customers and dilute trust. Consistency breeds comfort.

Provide information

If you do not, customers will find it anyway. Social media is an image-maker or an image-breaker.

Respect the customer

Communications that talk down to, or demean customer’s thinking may be funny and witty, but you may be insulting someone.

Seek out credible third-party testimony

Borrowing credibility works: peers and influencers matter. There is a positive halo effect.

Show you care

Whether globally or locally, find issues that show you care about and then don’t spectate, participate. You are what you do.

Speak up

Do not stay silent. Silence may be golden but only in the library reading room. Be proud out loud.

Be visible and up front

Do not hide from the debates. Don’t obfuscate. Keep it simple. Be clear. Confusion leads to discomfort. Stand up for what you stand for. Customers want to know the simple truth. Someone once wrote, “ A secret is a private truth and that is an acceptable definition of madness.”

 

CENTRALIZED MARKETING IS OLD-VIEW MARKETING

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Brands that control all marketing through centralized command and control are committing brand suicide. True the world is becoming more global. However it is also becoming more local and more personal at the same time. The challenge is how to market at the intersection of increased globalization, increased localization and increased personalization. Insisting that the center knows best and imposing its will on the world is a formula for failure. Global standardization of marketing was once the accepted dogma. Theodore Levitt, a Harvard professor, popularized global standardization in 1983. With few exceptions, the attempts to create monolithic, standardized brands based on a homogenized view of customers were not effective. The rationale was on reducing marketing costs and not on increasing marketing effectiveness. The simplistic marketing efficiency approaches from the 1980’s are even less relevant today. It is a symptom of organizations that place cost management over brand management.
The global marketing view of the 1980’s was to have one standardized, global brand for a globally standardized product supported by standardized communications to a standardized customer. Establish a centralized marketing structure in the head office and dictate directions to the world. Local satellites existed only to execute the global directives. It was cost efficient. It was very popular. It was wrong.

Professor Levitt fervently believed in global homogeneity that would blanket the planet generating power and profitability. However, as efficient as the globalized, centralized, homogenized approach was, it fostered an environment of “lowest common denominator” thinking where ideas are acceptable everywhere, and especially relevant nowhere.

As the 1980’s transitioned into the 1990’s global marketing evolved to make the management of global brands more sensitive to local/regional cultures. Organizations searched for ways in which brand promises could be both globally standardized and locally relevant. The new mantra was “Think Global. Act Local.” (TGAL).

In theory, TGAL was the best way to build, and broaden, global brand appeal in local/regional ways. However, appeal of centricity often prevailed over local marketing relevance. TGAL became just another way to keep the real power at the center. TGAL came to mean that the center was responsible for the important strategic thinking and creativity. Then, the center handed over the thinking and creative template to the regions for execution. The regions were accountable for results but not really responsible for the marketing strategy to produce those results.

The regional marketing management executed the strategy dictated by the center. If a strategy failed, the regions blamed the strategy dictated by the center. It was wrong for the local market. The corporate center would blame the failure on poor local execution.

So what happened? Over time, the tensions between the regions and the center became intense. In the January 28, 2017 issue of The Economist discussed this approach as “decades-old.” Globally centralized, standardized, homogenized marketing is outdated. As the world becomes more global, local and personal, the failure to respect and reflect local wants and needs, centralized marketing is less effective. As The Economist pointed out, “Many industries that tried to globalize seem to work best when national or regional.”

Global brands have to contend with a three-way tug of war: how can a brand maintain its global, standards while reflecting local relevance and complementing personal differentiation? McDonald’s is one of the world’s biggest global brands. Yet, its marketing is becoming increasingly localized and personalized. The menu not only varies from country to country. It also varies from region to region within countries. A global hotel brand can have global safety and cleanliness standards, a common global reservation system, common global brand identification, while localizing the restaurant menu reflecting local culture, and personalizing the guest experience by customizing the in-room bar, the types of pillows and the newspapers you prefer.

Excessive centralization and standardization is yesterday’s marketing approach. Of course, brands must have global standards of coherent brand commonality. But excessive centralization aiming for reduced costs and increased efficiencies is slinking back into a cost-cutting cave that has no relevance for today. It is a formula for failure. 
Fractionalization, personalization, and localization have shattered the comfort of standardization. Globally standardized marketing is an outdated anachronism in today’s business environment.

Common Sense Should Become Common

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Here is some brand common sense. In order to be purchased, a brand must first be considered. The original advertisements for the New York State Lottery: “You can’t win it if you’re not in it.” Well, the same goes for consideration and purchase. Common sense.

Yet, a major consulting firm McKinsey & Co. has collected data to demonstrate the importance of the consideration set. The data show nearly straight-line correlations between a brand being in a customer’s consideration set and market share, across several categories. McKinsey & Co. states that the consideration data explains 60% to 80% of the variation in sales growth from one purchase to the next. Surprise. A customer is not likely to purchase a brand they would not consider. Common sense.

According to McKinsey & Co., brands must shift focus from spending most resources on closing the sale and increasing loyalty to generating and “encouraging” initial consideration. McKinsey & Co. iterates that money spent on loyalty programs may be misplaced as “active engagement in loyalty programs” is slipping. It is McKinsey & Co.’s opinion that the slippage in loyalty program involvement is a result of changes in the way customers shop.

Here is another common sense idea. There is a simple law of marketing life. 100% of a brand’s current customers will die. Every brands needs to attract new customers to stay strong. Every brand needs to keep its customer base loyal. For enduring profitable growth, attract new customers, increase consideration, convince them to purchase, increase repeat purchases, increase loyalty.

Consideration is critical. Common sense. But it is only part of the picture when it comes to purchase and repurchases over time. Loyalty is the lifeblood of a brand. Failing to reinforce brand loyalty is like trying to fill a leaky bucket.

In order to build strong brands, move customers up the Brand Preference Ladder. It is all about increasing commitment to a brand.

Awareness: Awareness is a “yes or no” issue. A prospect is either aware of the brand or not aware of the brand. It is like a light switch: on or off. There is no in between position.

Familiarity: Among those who are aware of the brand, how familiar are they with the brand? Familiarity means a person feels they are sufficiently aware of the brand to express an opinion. Familiarity is a feeling. The familiarity scale goes from unfamiliar, somewhat familiar, very familiar, to extremely familiar.

Willing to consider: Among those who are familiar with the brand, are they willing to consider the brand? Price and convenience are often differentiators.

Short-list: A customer’s short-list of brands is the primary, personal competitive set within which the customer is most likely to make a final purchase decision. Consumer behavior research suggests that the typical size of this competitive set is three brands. Being on the short-list of considered brands prior to the purchase is a big competitive advantage.

Preference: Within the person’s short list, is the brand the first choice? How do they rank the brands in their short list? It should be every brand’s goal to be the preferred, first-choice brand.

Enthusiasm: Brands in this category are brands that the customer not only prefers but also is willing to buy even when their second choice brand costs 10% less. Among those people who say the brand is their #1 choice, would they still choose that brand if their #2 brand were priced at 10% less? These customers who say “YES, I will still choose this brand even if it is more expensive than my second choice are brand enthusiasts. A brand’s ultimate goal is to increase brand enthusiasm.

Growing brand consideration, preference and commitment is a profitable progression up the Brand Preference Ladder. Consideration is critical. It is the opening gate to purchase. Customers are not likely to purchase brands they will not consider. Demonstrating a high correlation between consideration and market share is simply a demonstration that common sense makes sense. Implying that building brand loyalty is not also important makes no sense.

Baloney! Boy, Cost, Cut, Buy

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The 3G Capital approach is to buy a company and cut costs until there is nothing left to cut. To continue to earn profit, 3G Capital has to buy another company to make the initial investment look profitable. So, it should not be a surprise that 3G Capital took a sledgehammer to Kraft Heinz, closing factories and tossing out workers. As The Wall Street Journal comments, the cost-cutting is over. Kraft Heinz managed to wring out $2 billion in savings, leaving the company with the highest margins in the food business. The problem is: now what?

3G Capital is not a brand-building company. It is a cost-cutting system, viewing actions through a lens of efficiency but not marketing effectiveness. For example, 3G Capital modernized, roboticized, and automated a new Kraft factory to make processed meats: primarily baloney, but also ham, and turkey. This factory is considered to be a marvel of modern engineering. However, there is a marketing problem: Americans are cutting back eating processed meats. Just because the factory is efficient will not make up for the fact that processed meats is a dwindling category. The Wall Street Journal points out, sales of cold cuts are slipping, and along with this slippage is Oscar Mayer’s market share. It will only more efficiently provide products that consumers do not want.

This is the second bout of marketing myopia for Kraft Heinz. Last year, under the guise of brand building, investment poured into making a better Oscar Mayer wiener. Unfortunately, Americans do not eat hot dogs on a regular basis any more: it is a food for the Fourth of July and Labor Day.

The Wall Street Journal made one thing clear: even Kraft Heinz executives realize that there is nothing left to cut. Cost cutting can yield short-term profits. Now what? Not a single analyst or observer interviewed for The Wall Street Journal story believes that 3G Capital knows how to generate organic growth. For Kraft Heinz to survive, the over-arching opinion is that an acquisition is the only way to see continued growth in profit. “Buy, cost cut, buy” is the 3G Capital modus operandi. This is not about brand building. It is about financial finagling.

“No,” says, the CEO of 3G Capital, Bernardo Hees: “we know how to invest in brands.” He emphatically denies that 3G Capital knows only how to strip brands rather than support brands. One of the critical first steps in building a brand is understanding “where we are now”. If 3G Capital loved brands, the team would have seen that the food world has changed. Processed foods, especially processed meats with unpronounceable ingredients are no longer on the top of the shopping list. According to The Wall Street Journal, the manufacturing process macerates deboned meats (previously injected with flavorings and preservatives), grinds these meats into “a paste-like goo (batter), which is fed into a chilled vacuum-sealed tumbler. The tumbler massages the meat and cures it in fewer than eight hours.” It does not take a genius or a lot of market research to know that these products are no longer desired. The world has moved on, but only if you care to look at customers. 3G Capital is making one of the worst brand mistakes you can make: manufacturing what you know how to manufacture, instead of manufacturing what you know customers will want. This is investing in manufacturing efficiency. This is not investing in brand effectiveness.

The 3G Capital playbook is only about purchasing and paring. AB InBev is a great example. But so is Restaurant Brands International, owner of Burger King, Tim Horton’s and Popeye’s. Everyone is cooing about the great numbers coming out of Burger King. But, as Financial Times reports, those great numbers are based solely on discounts; even Burger King admits this. Discounting is now its central strategy. Without the discounts, Discounts attract deal loyal customers who do not care for the brand; they care for the deal. These are fickle customers who are not the loyal base needed for enduring profitable growth. Price deals debase brands. This is not brand building.

Right now, everyone is waiting for the next purchase because no one believes in the brand building acumen at 3G Capital. The statement that 3G Capital knows how to invest in brands, well, that is just a lot of baloney.

Meaningful Messaging: Using Smart Objectives To Sell Today and Tomorrow

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In 1993, newly minted IBM CEO, Lou Gerstner, when asked about his vision for the company, replied that IBM was in a mess and he did not have the time now to indulge in of vague forecasts. The press reacted poorly. Descriptions of Mr. Gerstner’s vision for IBM would be helpful for quarterly guidance. The press was not asking for a futuristic, vaguely mystifying, inspirational message. They were looking for visionary guidance to better understand where IBM wants to go and how it plans to get there.

Analysts and observers want to hear a specific and meaningfully encouraging vision that serves as the corporation’s guiding star. , Short-term goals are essential. But so is the future ambition. Using SMART objectives as the basis for guidance provides a framework for delivering both. SMART Objectives mean objectives that are: Specific, Measurable, Aspirational yet achievable, Related to overall business growth, and Time-specific.

Take Ford Motor Company, for example. Ford was the US car company that did not go bankrupt during the financial crisis; Ford did not take millions of dollars from the government. It weathered the downturn using its own reserves and came out of the recession in really strong shape. The company had record earnings in both 2015 and 2016. Ford’s recent statements to Wall Street have erased this recent history.

In May 2017, Ford hired a new CEO, Jim Hackett. Since then, Mr. Hackett has made several attempts to articulate what he sees as the vision for Ford. Every time, Mr. Hackett has been criticized for making generic, uninspiring, less than positive descriptions. Mr. Hackett has said a lot without saying anything.

According to Automotive News, Wall Street is becoming impatient with the vagueness of the Ford messaging. Wall Street complains that he is not specific in his commitments. On the one hand, Mr. Hackett is honest in his comments, letting analysts know that Ford is not as competitively fit as its competitors, and that the company’s revenue and volume have not grown as hoped for: even though there was revenue growth, costs increased at the same time. On the other hand, he has not communicated Ford way forward in an encouraging, meaningful manner. As one money manager remarked, “When a CEO comes out and says it’s going to be a bad year, that’s not going to instill confidence in investors. There hasn’t been the data or the narrative to instill confidence. It’s created uncertainty around what success at Ford can be.” Mr. Hackett has failed to articulate a specific aspirational ambition.

Commentators and analysts say that General Motors CEO, Mary Barra, has done a much better job of creating a meaningful description of GM’s current goals and future goals 5-10 years down the road. At Tesla, Elon Musk continues to generate rapture with analysts and investors even though each statement he has made has not come true. An exciting vision is a powerful force. An analyst with Autotrader.com put it this way in The New York Times, “They (Tesla) haven’t delivered what they’ve promised, but does it matter? It doesn’t seem to matter to its investors and the customers who’ve put down deposits.”

Financial Times’ Lex reporters say that “The Tesla Chief Executive cannot be accused of being distracted by his promises to Wall Street. Nor has he been corrupted by conservatism.” On his analyst call – Financial Times hesitates to call it an earnings call, as Tesla has none – Mr. Musk laid out a future – near and longer-term – of promises and bets. These may seem unachievable but we cannot know. Clearly, Mr. Musk believes these are.

Tesla’s goals are 1) sustained positive quarterly operating income (Tesla has recorded only one of these); 2) 5,000-a-week Model 3’s rolling out (over a year late); 3) to make money (Tesla has recorded only 2 quarters of teeny-tiny profit); 4) to have an autonomous vehicle drive from LA to NYC (promised for 2017); and 5) improved margins for the S and X models (margins for both fell the last two quarters), Mr. Musk offers an exciting, ambitious vision with specifics. He sees a future 4-year’s out where Tesla would produce 100,000 electric trucks a year. He is completely confident this will be achievable. At the end of the call, Mr. Musk enthusiastically proclaimed that if Tesla could send a Roadster into space to orbit the asteroid belt, “I think we can solve Model 3 production.” He is a master of the appeal of SMART objectives.

Mary Barra continues to stonewall on its pledges to compensate families whose loved ones were either injured or killed driving GM cars with flawed ignition switches. Yet, Mary Barra receives positive reviews for GM’s vision of tomorrow

Mr. Hackett’s October 2017 Ford vision generated more grumbles than golly gee’s. He committed Ford to cost cuts, shifting money to the money making vehicles, moving manufacturing to China to save money – including the production of Ford Focus for North America, pivoting from gas to electric, simplifying and modernizing the company, and, making Internet connectivity a priority.

As rapacious and greedy as Wall Street investors and analysts can be, there seems to be a soft spot for the big ideas. As Oliver Wendell Holmes (a Supreme Court Justice) once said, “Every now and then, a man’s mind is stretched by a new idea or sensation, and never shrinks back to its former dimensions.”

CEOs must optimize the short-term with the long-term. To offer meaningful messaging, CEOs must rely on SMART objectives.

  • Specific: Saying that the brand is doing X but not providing details frustrates listeners.
  • Measurable: Remember, especially today, all claims are checkable.
  • Aspirational and achievable: Ensure that plans are possible dreams.
  • Related to overall business growth
  • Time-specific: for the short-term goals, Wall Street can be very impatient. For long-term goals, make the horizon just close enough so investors and analysts can see the brand there.