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.

East Does It: The Three Dimensions of Ease

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Make life easy. Keep it simple. Be convenient. These are benefits that will never go out of date. The proliferation of product and service options, and the diffusion of accelerating technologies have made decision-making more difficult than ever.

Information overload sometimes confuses rather than confirms, making us uncertain. Through the use of technology, we some times make the service experience more difficult, more complex, more frustrating.

According to a recent report in Automotive News, technologies in our vehicles are changing our perceptions about ease in relations to cars and driving. (Most Americans are familiar with J.D. Power’s surveys of customer satisfaction, product quality, and buyer behavior across a wide variety of industries.) The concept of ease is evolving. Ease is a three-dimensional concept.

Ease of choice. Make a brand decision easy to choose. We are living in an over-choiced world. It is difficult to select the best toothbrush for my needs. Hard, medium, soft bristles? Battery powered, electric powered, no power? Crest, Colgate, Braun, Store brand? In other words, we do not want manual? Oscillating, fixed, vibrating? Is it worth the time and mental effort? We do not want increases in the difficulty of decision-making. It is the role of the marketer to take the complexity out of choice. Reduce choice complexity. How many brands of olive oil do we really need?

Ease of. Make the product or service easy to use. Make it easy to learn how to use a product or service. Overly complicated products and services cause us to feel inept or inadequate, and, sometimes, cause us to feel stupid. One of the genius insights of the design of Apple products was to make them easy and intuitive to use. J.D. Power data indicate that ease of the user interface affects whether a driver chooses to actually use a specific feature. Lane-keeping systems and lane-changing warnings fall into this category. People do not want to feel stupid. If a product is too complicated to use, people will avoid it.

Again, J.D. Power survey data show that problems with DTU (difficult to use) are much more frequently occurring than quality problems. When J.D. Power started the car surveys 50 years ago, the studies were replete with mechanical malfunction issues. This is not the case today. Now, the surveys are rich with DTU problems. “Even if a feature works as designed, if it is not intuitive, consumers will ding the vehicle’s feature as having poor quality,” says retiring J.D. Power CEO, Finbarr O’Neill.

Ease of Mind. People want to feel comfortable with their decisions. Feeling satisfied not only reflects a good choice and ease of use, it also means that I can relax and feel better about my decisions.
Ease of mind raises all kinds of questions: Did I make the right choice? Am I comfortable with the decision? Am I doing the right thing for me? Am I doing the right thing for my family? Am I doing the right thing for the community? Am I doing the right thing for future generations? The rise of autonomous vehicles is altering perceptions of uneasiness when it comes to driving. Automation and artificial intelligence will make our lives easier. Will they also put our minds at ease? Does occupying an autonomous vehicle require more confidence in the vehicle or a different sort of confidence? What will it take to deliver ease of mind to a passenger who is in the driver’s seat but not actually driving?

The Three Dimensions of Ease are not some warm-and-fuzzy thoughts about convenience. Making our lives easy is a powerful product and service benefit. Amazon is a brand built on making our lives easy. They make it easy to choose and buy. They make their site easy to use. The provide ease of mind with superior service and guarantees. As our world becomes more technical, digital, and complex, brands should aim to win across the three dimensions of ease: ease of choice, ease of use, and ease of mind across the entire brand experience.

Clearly Define Your Brand Now Or Forever Hold Your Peace: The Future of Automotive

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On January 15, 2018, three of the four top stories in Google News’ Technology section were about cars. Coincidently, the CEO of Fiat Chrysler Automotive (FCA), Sergio Marchionne, said, in an interview with Bloomberg, that automotive companies have to come to terms with the fact that pretty soon automotive news will no longer be about combustion engines: “Developing technologies like electrification, self-driving software, and ride-sharing will alter consumers’ car-buying decisions within six or seven years. The industry will divide into segments, with premium brands managing to hold onto their cachet while mere people-transporters struggle to cope with the onslaught from disruptors like Tesla Inc. and Google’s Waymo.” Mr. Marchionne added, “Auto companies need to quickly separate the stuff that will be swallowed by commodity from the brand stuff.”

When asked about the automotive makers that will survive, he continued, “If a portion of the industry is going to be commoditized, then the attrition rate is going to be tremendous for those that cannot distinguish by brand.” But, at FCA, it will be different. “We took a completely different strategy when we came to brand differentiation from our competitors. If you look at Jeep, RAM, and the premium brands, those are brands that will survive. But if you provide basic transportation, it is like buying a generic phone.”

This is a rather remarkable prediction as Ford unveiled the Steve McQueen Mustang BULLITT, from the iconic 1968 movie with the incredible, pre-special effects, car chase. Mr. Marchionne’s words have dramatic consequences for automotive marketing.

First, if the future of automotive is technological advancements, self-driving vehicles and ride-sharing, then handling, cornering, the turn radius, and the feel of the driving experience are moot communication points. Brands are going to have to figure out something new to say if people are going to buy or be driven in a car.

Second, articulating clear brand differentiation will need to be revisited in ways that will carry into the future. This requires a thorough review, and contemporizing of automotive brand promises. Waiting around to address this is the wrong approach. Get ahead of the parade. Brands like Tesla, Lyft, and Uber have already overturned the norms of the automotive world. All seem to be promising electric vehicles well within the coming decade. Ford is investing $11 billion in electric vehicles, and stated that the company intends to have 40 electrified vehicles by 2022. Ford CEO, Mr. Jim Hackett is planning to cut $14 billion in costs over the next five years, moving monies away from sedans and internal combustion engines to develop more trucks and electric and hybrid cars.

Third, automotive brands must also be better differentiated from sibling brands within the corporate family. The days when cars consider a unique grille and tail lights enough to distinguish a brand name are over. Aside from the aggressive grille, is a Lexus ES really that different from a Toyota Avalon?

Fourth, as Mr. Marchionne stated, technology will become commoditized. All vehicles will have electric batteries, GPS, self-parking, back up and side cameras, and all the other electronics that are currently seeping into the driving experience. Basing a brand’s promise on excellent, groundbreaking technology will not be a winning strategy. Mere technologies will not be the basis for a sustainable, differentiated brand promise. Differentiation will require real creativity to make the total experience distinctive. Nissan’s concept car, the Nissan Xmotion (pronounced as cross motion) has 7 touch screens: The Verge emag said, to enter the vehicle is like “entering a dense forest of technology.” To understand how far Nissan took the technology, The Verge writer, Andrew J. Hawkins, highlighted his favorite paragraph from the Nissan press release: “Fingerprint authentication is used to start the operation of the Xmotion concept. When the driver touches the fingerprint authentication area on the top of the console, the opening sequence starts, awakening the virtual personal assistant – which takes the shape of a Japanese koi fish.” Need we say more?

All brands are facing a challenging but creative future as technology invades all aspects of our lives from home life to browsing the Internet, to shopping, to entertainment, to driving experiences. Just as retail brands are reimagining themselves, automotive brands must revisit and reinvent themselves.

All’s Fair: Brands Must Be The Forefront Of Fairness

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Institutional trust is in serious decline. Sadly, as the surveys show, people around the world no longer trust government, healthcare systems, political systems, educational entities, leaders, experts, social systems, financial communities, news media, religious institutions, and so forth. Increasingly, we trust peers of unknown expertise on rating sites and their reviews. We trust online communities, and online influencers – many of whom we never meet in person.

However, there is good news on the horizon. While we are experiencing a trust deficit, at the same time we are observing a desire for fairness. While we wring our hands over the decline in trust, there are indications that as people we are seeking fairness on a global basis.

Financial Times tells us that corporate brands are facing revolts against only having their AGMs (Annual General Meetings of shareholders) as online meetings. The original rationale for online only AGMs was to make the meeting more global as many shareholders could not always participate due to geography. Many corporations love the idea of online only meetings. Shareholders are face-to-face with the powers that be, asking questions, pressing for answers, and putting CEOs’, CFOs’, with all the other Cs’ feet to the fire in an extremely public manner. However, there is also pushback to online only meetings: many, including some large shareholders, see the lack of in-person annual meetings as unfair. Without the ability to stand up and look a CEO in the eyes, corporations can avoid public embarrassment.

The New York Times writes that Larry Fink, CEO of BlackRock, an investment firm that manages $6 trillion, is telling fund managers, private equity companies, and corporate leaders that it is not enough to make profits; it is imperative to serve a social purpose. There is too much talk and not enough action when it comes to social responsibility; enterprises must be fair and just in what they implement for the common good.

Additionally. The New York Times points out that Jana Partners (the activists that Whole Foods’ CEO John Mackey called “greedy bastards”) is now urging Apple to take a long, deep look at how its products are affecting children. We can overlook the irony of Jana Partners urging Apple to look at the long-term effects of its products on children, as any focus on health, wellness, and fairness to children is desirable.

Finally, a recent American Express Company study indicates that as Millennials age and rise in their companies, their commitments to social justice and fairness will reshape C-Suites around the world. In the US alone, currently 40% of Millennials leaders and managers see fairness as essential for a corporate leader.
They expect to be treated fairly. They expect prices to be fair for the benefits received. Is this brand a fair value? Marketers do not determine fair value: customers determine fair value. What is fair value? Every brand should know what customers perceive as fair value.

Today’s conversations about fairness are no longer merely about the fair relationship between benefits and price. The conversation is about whether or not you are behaving in a fair manner. Of course, pricing is important. People were outraged with Uber’s extreme use of dynamic pricing fluctuations. The fare was not fair.

Brands must be transparent in their behaviors toward employees, communities, customers, countries, stakeholders, and planet. Brands must deal with personal customer data in fair ways, not leveraging the information in ways that violate an individual’s privacy for the sake of brand profits. Brands must not only create the doors of career opportunities, but also open wide those doors so employees can walk through and take advantage of those opportunities. Brand must stand up for what they stand for. Commitment to social responsibility increases the perception of earning fair profits. Be fair to employees, customers, the community, the planet.

Fairness is highly personal. From our playground cries of “that’s not fair” to our current focus on fair-based behaviors towards people and planet, brands have an opportunity to build trust by focusing on fairness.

Be Relevant. Be Different, Or, Be Nothing

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The retail world just provided another example of the importance of relevant differentiation. Sam’s Club is closing 10% of its 660 stores, as reported by Sarah Nassauer in The Wall Street Journal. Sam’s Club is the Walmart version of a bulk-item membership shopping experience. It is Walmart’s version of Costco.

Sam’s Club CEO, John Furner, states that the stores’ locations are the problem. The Sam’s Club locations were chosen in anticipation of larger affluent populations leading to increased store traffic. However, there is a deeper issue to consider, an issue that came to the forefront in 2015.

In August 2015, Ms. Nassauer, who reports on retail for The Wall Street Journal, revealed that Sam’s Club’s was concerned about its close association with Walmart reinforced with nearby locations. The 2015 CEO, Rosalind Brewer, said in an interview, “We want to be less of a Walmart.” The belief was that the close association with Walmart was an impediment to attracting more affluent membership club shoppers who are able to pay for a membership, and have the money and space to bulk up on products ranging from paper towels to plasma screen TVs. The Walmart shopper and the Costco shopper are different segments. But, Sam’s Club was unable to shake off the image of Walmart.

According to Ms. Nassauer, Sam Walton developed Sam’s Club (1983) as “a place for small business to stock up on discounted bulk items, not a Walmart clone that offers everyday deals.” However, as time passed, wherever Walmart placed a store, Sam’s Club was next door. In 2015, 200 Sam’s Club stores shared parking lots with Walmart.

Location matters. Costco places its stores in urban areas and along the nation’s coasts. Its Brookfield, CT location draws customers from wealthy northern Fairfield County, CT, as well as from parts of eastern Connecticut. It also has a store in Norwalk, CT that reaches towns such as Greenwich, CT. Costco was an early seller of organic foods, and by 2015 had over 200 organic items available.

Leadership stability has been an issue at Sam’s Club as well. Nine executives have run Sam’s Club over the past 22 years: that is one CEO every 2 – 2 1/2 years. It seems that many executives see the Sam’s Club job as a stepping-stone to a higher level in the Walmart organization.

But, it is the power of the Walmart brand essence that has affected the ability of Sam’s Club to establish itself as a brand for affluent shoppers. Even the Sam’s Club stores located in affluent areas are not attracting enough of those customers to make the store viable. Walmart’s brand essence is all about selling more for less, as its website states. By selling more for less, Walmart is able to make a difference in people’s lives. Sam’s Club lives in the Walmart brand embrace and has not been able to sufficiently differentiate its brand in a relevant manner from Walmart.

Tests of high-end Sam’s club stores have delivered mixed results. Test stores offer “individual prepared meals, pricey furniture, apparel and food, next to bulk Coca Cola. The aim is to try to attract shoppers who might also shop at Whole Foods Market.” In order to succeed, Sam’s Club is seeking new suppliers, as its current vendor roster is not able to supply these types of products.

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Aside from not being able to successfully differentiate the Sam’s Club brand from its parent in a relevant manner, it is far easier to extend an upscale brand downward, than it is to take a lower scale brand and move the image upscale. Giorgio Armani created Armani X as its less expensive, less couture brand. It would have been difficult to take an Armani X brand and make it couture. When Toyota brought Lexus into the US, it kept the relationship with Toyota distant. An entire new dealership network was created.

A current example of an effort to make an affordable brand go upscale is Hyundai. The South Korean brand has decided to take its new Genesis luxury vehicle out of general Hyundai dealerships, and create a separate dealer network. Hyundai executives believe that early Genesis sales were hurt by the highly affordable image of the Hyundai brand, and its early low quality perceptions. The plan is for Genesis vehicles to be completely phased out of Hyundai dealerships.

Brands can be repositioned and reimaged and upgraded to attract a more affluent customer. But, this takes substantial resources that few can afford. For example, P&G turned Oil of Olay, a drugstore staple competing with Pond’s Cold Cream and Nivea, into a more expensive beauty and skin care brand. It differentiated the brand on the basis of science and ingredients.

On its website, the Sam’s Club mission is articulated as “At Sam’s Club, we’re committed to saving our members money on the items they buy most and surprising members with the unexpected find.” The store says it is dedicated to offering exceptional wholesale club values. The website also states: “Sam’s Club is on a mission for Savings Made Simple. Since 1983, we’ve worked to provide our members quality products at incredible values.” This is not enough to differentiate from Walmart. Walmart can make a very similar claim. And, in visiting the Sam’s Club website there is more than remarkable similarity to the Walmart website: the only difference appears to be the brand name and some of the items.

For all the talk about location, product selection, ever-changing leadership, and the economy, the truth seems to be that Sam’s Club never really differentiated its brand from Walmart. Sam’s Club never had a chance to build its brand into a Costco challenger.