American Express’ Three-Legged Stool For High Quality Revenue Growth

American Express weathered the pandemic with a three-legged stool strategy. American Express’ strategy was, and still is, to protect its customers, its people and its brand, according to an interview with CEO Stephen Squeri for the financial paper, Barron’s. American Express’ strategy is brand-business-leadership common sense. Unfortunately, there is less common sense in brand-business leadership these days. 

Reading about the numerous layoffs in the tech industry, the focus tends to be on cost-cutting. Of course, eliminating waste is critical, especially in perilous times. But, enterprises must recognize that they cannot cost cut their way to enduring profitable growth. American Express contends that to survive a crisis and move forward with strength, investments in its people, its customers and its brand were, and are, the correct and necessary move.

First, people. Mr. Squeri stated that the resiliency of American Express rests on the brand-business’ commitment to its colleagues. This involved investment in its people. During the pandemic, instead of cutting back, American Express spent more on compensation. The brand-business focused on generating colleague commitment.

Generating internal commitment is as important as generating external loyalty. Colleagues must know what is going on and how this affects them. Even if what is happening is not a massive change, it is essential to ground employees in the need-to-know details that affect them.

Colleagues need to know what are the expected brand-business behaviors. But, colleagues also need to know that leadership is on their side. Leadership must say and do the right things. The brand-business mission must be continually reinforced. Communications and behaviors must be anchored in shared values. 

When American Express took the # 1 ranking on Fast Company’s annual list of the World’s Most Innovative Companies for 2023 in the ‘Personal Finance’ category, the award was for winning over Millennials and Gen Z. The president of US American Express Consumer Services told the press, “This recognition is a testament to the passion, ingenuity and commitment our colleagues demonstrate each day to deliver the world’s best customer experience. We’re focused on continuing to innovate our products, services and brand as we bring to life American Express Membership for a new generation of customers.” This public recognition of a brand-business’ people is an exceptional way to generate internal pride and loyalty.

Second, customers. American Express understands that its customer base is a premium consumer and a premium small business, as well as large national and global corporations. Renovating rewards on many of its cards helped maintain current card holders and attract new card holders.

For example, American Express designed new benefits for its small business customers. American Express observed that post-pandemic, there was a surge in small business creation. The acquisition of Kabbage, a financial technology company that offers automated cash flow solutions and automated lending programs addressed small business needs. Kabbage, integrated into American Express, offered programs that American Express’ small business customers wanted.

American Express has also generated a lot of presence among Gen Zers and Millennials. The data show that 60% of the cards in 2022 were Gen Z and Millennial acquisitions.

Fast Company cited American Express’ “… modernization of its travel and lifestyle benefits, providing younger consumers with services they care about, from lounge access at airports when they travel to streaming service deals.” American Express responded that its efforts “… helped us to deepen relationships with existing Card Members and to resonate with new customers, including Millennial and Gen Z consumers, who comprised more than 60% of American Express’ new proprietary consumer account acquisitions in 2022.” 

A brand-business must focus on its core and on attracting like-minded others. American Express demonstrated that the brand-business was innovating, renovating and tailoring membership benefits to meet customer evolving expectations and anticipating customer needs. 

New benefits such as Uber Cash credits and food and drink promotions are popular. American Express enhanced its dining capabilities through the acquisition of Resy, an American online restaurant reservation brand. American Express also launched Global Dining Access. This benefit offers eligible U.S Card Members access to exclusive tables just for them at the best restaurants in the world. These types of offerings have been a huge driver of Gen Z and Millennial card holder growth.

Additionally, in the latest issue of Travel & Leisure, American Express’ travel magazine, there is are promotions with Uniworld Cruises and Seaborne Expeditions as well as tickets for the Healdsburg Wine & Food Experience. 

Third, protecting the American Express brand. American Express understands that brand-business building in an ongoing activity. American Express states that it is focused on the medium to long term. American Express aimed at adding value to the brand through its investments in customers and colleagues. 

American Express was perceived to be a brand for older people with premium credit card needs. Yet, the brand-business knew that it is difficult to grow when your user base in 60 years old and older. This was Oldsmobile’s problem and look what happened to that venerable brand. 

Through inventive approaches to Gen Z and Millennial customers, American Express changed this perception. American Express recognized that owning an American Express Card is aspirational. American Express knew that to attract younger customers it would need to revitalize card benefits and digital capabilities. Additionally, American Express understood that younger customer would be attracted by a new approach to marketing and brand positioning. 

Compared to baby boomers, Gen Z and Millennials are highly digitally savvy. These cohorts want to be not just aware of, but involved in, card benefits. These cohorts are finely attuned to points and perks and are focused on maximizing rewards offerings such as airport lounges. Going beyond its standard travel-related perks, American Express now offers “… streaming services and Grubhub credits.” 

CEO Squeri believes that American Express’s brand-business experience cannot be easily copied by competitors. American Express has spent decades sharpening its relevant, differentiated brand-business promise of belonging to premium membership that helps customers achieve their aspirations. Belonging is an especially coveted desire; belonging has always been part of human nature.  American Express’ relevant differentiation is also based on its customers: a global network of premium users. American Express is successfully rejuvenating its customer base with it refocus on younger card holders. Mr. Squeri also understands that the stability and reliability of American Express’ payments system is a relevant differentiator for business customers.

Many brand-businesses have been focused on quantity of growth, such as streaming brands that seek subscribers, or have been focused on quality of growth, as with automotive brands that prefer to manufacture expensive SUVs and trucks. American Express focused on both quality of growth and quantity of growth. Brand-businesses must have both quality of growth and quantity of growth if they want to have high-quality revenue growth.

High-quality revenue growth requires that the brand-business consistently delivers an exceptional, expected user experience. This leads to increased customer-perceived brand-business value, which in turn, leads to brand-business preference. A preferred brand-business generates more customers who use the brand-business more frequently and become more loyal. These lead to higher share price and lower price sensitivity, which in turn, profits and revenue and shareholder value.

American Express’ three-legged stool approach – colleagues, customers and brand – to resiliency and profitability, through a pandemic and through our current economic uncertainty, should be a model for other brand-businesses.

OK Meta. But, The Year of Efficiency Still Needs Leadership Marketing And Galvanizing Goals

There is another piece of news coming out of Silicon Valley aside from the banking debacle. And, that is Meta’s “year of efficiency” planning. Apparently, Meta’s leader, Mark Zuckerberg, has just discovered the benefits of financial discipline and operational excellence. In his recent memo to Meta employees, Mr. Zuckerberg indicated that this year will require a flatter and leaner organization. These principles are not new. Many enterprises have jiggered with organizational structures and more disciplined financial approaches to maintain margins and grow profits by cost cutting, zero-based budgeting and other elements of financial engineering.

And, so, Meta’s “year of efficiency” will revolve around financial discipline and organizational alignment. This is a mistake. It is not enough to be disciplined financially and reorganized in an efficient manner. For brand-business success, two additional elements are needed. The brand-business’ most important action is addressing its people. And, for a winning brand-business revitalization, articulating brand-business goals is critical. 

Of course, refocusing a brand-business requires improved financial discipline with a dedication to operational excellence. But, the refocus also requires leadership marketing and revitalized brand goals.

Financial discipline is about stopping the bleeding, eliminating waste and improving productivity. Doing these three actions gives the brand-business the right to grow. Caution is also required. When a brand-business finds itself in a troubling situation, the focus tends to be reducing costs rather than building brand-business value. Eliminating waste and improving productivity are a continuing challenge. But, cost-cutting takes a brand-business only so far. A brand–business needs plans, goals, people and actions that will deliver high-quality revenue growth leading to enduring profitable growth. 

Financial discipline must be more than cost cutting. Meta says that it needs to be better at resource allocation and improved productivity. Meta also indicates that its headcount is part of the problem. But, some of this resource allocation and improved productivity must provide updating and increasing the quality of innovations and refreshing the brand-business experience. A brand-business cannot cost cut its way to enduring profitable growth.

The real commitment, understanding and value of financial discipline relates to how the brand-business is managed. Is the commitment to organic growth? Cost reduction? Acquisition? Financial discipline is one area where the brand-business has immense control. 

Along with financial discipline, there are the two other drivers of quality top-line growth: operational excellence and leadership marketing. 

Operational excellence is delighting the user with a branded experience so that an increasing number of them look forward to interacting and potentially purchasing more often. Operational excellence focuses on improving the experience quality which includes the service experience, the actual product experience and the environment in which these interactions take place, user expectations and minimizing waste. Operational excellence decreases costs and improves customer satisfaction.

The “year of efficiency” needs effectiveness as well. There will be little effectiveness without leadership marketing. Leadership marketing gets users to Meta’s websites. Operational excellence takes place while users interact with Meta’s websites.

Leadership marketing is not about advertising per se. First and foremost, leadership marketing focuses on the brand-business’ people. Customer-focused employees come first. Internal alignment is a must-do action. A committed culture is critical. Employees are the frontline when to comes to customer relationships, regardless of brand-business type. Internal brand pride is an essential success factor affecting external brand-business outcomes. 

No matter how great the financial discipline and operational excellence, a brand-business cannot be revitalized if its people are not proud, are uninspired or lack trust in management and its decisions. What a brand-business does not want are employees who tell their friends not to work at Meta.

At Meta, reports are that employees “sparred” with CEO Zuckerberg because Mr. Zuckerberg’s town hall address focused on corporate outcomes alone. The assumption articulated was that in a leaner, more efficient organization, employees would be happier as there would be fewer roadblocks. 

Along with addressing employees, leadership marketing focuses on attracting new users to the brand, encouraging current users to interact and purchase more often and increasing user loyalty. With a strong foundation of financial discipline and operational excellence, the brand-business is ready for effective marketing. Leadership marketing is not defined by how big the brand-business is; it is all about how big the brand-business acts. Leadership marketing is not defined by the size of the brand-business, but by the size of the ideas. This means anticipating user needs. It means innovating and renovating, not merely responding to the competition. 

It is unfortunate the “year of efficiency” does not include leadership marketing. Being lean and efficient will make Meta look good short-term. But, Meta will still struggle relative to competition without leadership marketing.

And, then, there are goals. Where are we headed? What is the vision for the brand-business? Is there an aspirational, yet attainable North Star? Observers write that this “year of efficiency” has been spurred by the lackluster performance of the heavily-invested metaverse vision.

With all of the changes at Meta, there must be a common, articulated, inspirational definition for Meta’s purpose and promise. Having energizing common goals is a first step in a brand-business revitalization. Without these definitions, Meta is at a disadvantage. The common brand-business differentiating goals provide a motivating declaration of the brand-business’ over-arching mission. Where is the informed judgment defining the clear sense of direction? Meta’s brand purpose and promise will clarify the strategi vision for the brand. It is all well and good that Meta will be leaner and “execute its highest priorities faster.” 

But, its employees are still consumers. They will be less interested in the brand-business model. They will be more interested in what it means to them and what role they are to play in the grand scheme of things. Brand purpose and promise motivate and stimulate an organization in ways that financial discipline and operational excellence alone cannot.

Employees want to know what are the common goals, and what is the common brand purpose. People want to know what is going on and where they are when the situation is in flux or on a down turn or stalled. Everyone expects to know in what direction they are moving. Employees have questions; Is the brand-business on a road to financial health? Are we allocating resources to key areas? Do we all share the same vision for the brand-business’ future? 

A brand-business needs financial discipline, operational excellence, leadership marketing along with galvanizing purpose and promise. This is the most effective way to create a cohesive and collaborative culture that runs efficiently, generating high-quality revenue growth while generating enduring profitable growth.

Donuts - Premiumization

Premiumization: Welcome To The World Of Specialty Doughnuts

Over the past two years, brands raised prices at record rates. In fact, many brands raised prices every quarter over the past two years. Consumers are starting to push back. But, brands, conscious of their margins, are finding ways to raise prices in, shall we say, more creative ways. If the last two years has taught brands anything, it is to be profitable at any cost, even if it is not in the best interest of the customer. Maintaining margins is the rallying cry. And, after all, margins are all about profit.

Now that brands are realizing that there may have been one price hike too many, one of the most creative ways brands are using to protect margins and grow profit is called “premiumization.” According to The Wall Street Journal, the concept of premiumization was mentioned “… in nearly 60 earnings calls and investor meetings over the past three weeks.”

What is premiumization?

Premiumization is a euphemism for higher prices. Premiumization is a way to justify high prices by covering the offering in a coat of high-class, elite status.  Brands are selecting certain items and offering these at higher prices hoping the patina of exclusivity and highest quality give customers a reason to buy. At the same time, brands are culling portfolios to eliminate low-margin offerings.

Premiumization may lull brand leaders into thinking their high-end offerings are now perceived to be extra valuable because the price is high. The etymology of the word premium says otherwise. Premium comes from the Latin word for booty, that is, valuable stolen goods, especially those seized in war. The roots are “before” and “buy,” as in caveat emptor, let the buyer beware.

To be premium is to add a cost to something; sell at above the usual price; regard or treat as particularly valuable or important; have an element of scarcity; and be a reward. Premiumization is the epitome of these definitions. But, basically, brands are just finding a way to lure customers to paying higher prices. This is one of the reasons why marketing is derided. Find a way to sell what we make by telling customers the offerings are not only special but for special people. 

Channel the Consumer Cellular advertisement with Ted Danson, when a confused customer wants to understand what makes a competitive brand better than Consumer Cellular. The salesperson shows that the competitor’s cellular coverage of the US is an all purple US map. Ted Danson tells the confused customer that this just means the brand is more costly, but not any better. The salesperson says purple means premium. Ted Danson indicates that the brand with the purple map is “me too, but more expensive.” This is premiumization.

Is premiumization here to stay?

It is unclear as to whether premiumization will last. Economists point out that trying to maintain profit margins while polishing particular products with a patina of premium-ness may not provide the expected results. What does appear to be clear is that brands believe premiumization will maintain the large profits reaped over two years of extreme price increases. This is what The Wall Street Journal opines as possibly a last ditch effort to show a profitable balance sheet.

Disney tried premiumization under previous CEO Bob Chapek. Not only did Mr. Chapek raise prices at Disney’s theme parks – already an expensive experience – he monetized services that were free to loyal customers (those with annual passes) and hotel guests. Loyalists and hotel guests became vocally livid when Mr. Chapek started charging high fees for parking. Free parking had always been a perk for loyalists and for hotel guests. Needless to say, after Mr. Chapek’s ouster, new CEO Robert Iger walked back many of the increased prices and reversed the parking back to free for those staying at Disney hotels and for loyal customers.

The Wall Street Journal points out that increased fees at Six Flags amusement parks has garnered less than stellar results even though Six Flags’ CEO stated that higher prices were “… a bold change to our business model in order to elevate the guest experience.” Honestly, the customer does not give a damn about a brand’s business model. If the price is too high, the guest may decide the brand is no longer a good value. Which, it appears, is what has happened at Six Flags. Sure, spending per guest rose. But, over the course of the past nine months ending in September 2022, attendance fell 25% versus the previous year. And, profits fell almost 10%.

Wall Street was wowed when Campbell Soup Company showed a 12% rise in sales based on 14% higher prices. Overlooked is that volume dropped 2%

Molson Coors, the giant beer and drinks company, aims to grow market share through innovation and premiumization. It is one of the companies zealously focused on its premium portfolio. In its earnings call, Molson Coors signaled that it is evolving its product portfolio towards premiumization. 

One of those premium offerings is hard seltzer. However, despite its strategic intent, Molson Coors continues to experience lower brand and financial volume. In third-quarter 2022, Molson Coors’ worldwide brand and financial volumes fell 2% and 0.2%, respectively. 

Beam Suntory, the American-founded, Japanese spirits company, is also focused on high-margin offerings. In its earnings report, its CEO and president, Albert Baladi, said, “The quality of these results is clear and reflects our strategy to premiumize (sic) our spirits portfolio, build RTD (ready-to-drink) leadership and focus on value over volume.”

How are consumers reacting to the premiumization trend?

Some premiumization comes across as a stretch or an SNL sketch. Krispy Kreme will move away from discounts and focus on arousing excitement around premium doughnuts. These specialty offerings are considered “fancier, higher-priced and holiday-themed.”  The ubiquitous lubricant WD-40 considers the little red straw on the top of cans to be a premium offering and thus sells that package at a premium price. Apparently, the ability to spray oil with both a precise stream and a mist is premium.

Credit cards have offered premium cards for many years. Yet, now, American Express stated that it is more cautiously reviewing to whom they extend the membership of its cards, including its entry Green card. Airlines have been leaders in offering services with fees attached. Want legroom? Pay a premium. Hotels mimic the airlines in charging fees for everything even if a guest will not be using that service, such as beach towels or gym usage or resort fees.

Putting the potential economic and social issues of a divided society aside, this approach of hiding price hikes behind the curtain of premiumization has the potential to backfire on brands. As brands tend to focus on price, the risk is that the brand’s value may come into question. 

Value is more than price point. Even higher income individuals have a value equation in their mind. A brand’s value is based on an internal assessment of the total brand experience (functional, emotional and social benefits) relative to the total brand costs (price, time, effort). At some point, that specialty doughnut may not be perceived to be a great value anymore. Worse yet, that specialty doughnut may become a novelty. 

Brands need to reckon with the idea that by focusing on those who can afford high prices, the core customer base will become smaller. Focusing on fewer customers who can pay high prices may be good for some brands, but big brands cannot afford to lose significant parts of their customer base. Making money on fewer customers is not a good long-term strategy, unless you are Ferrari or Hermès. What will you charge those last few customers? Making money by alienating current core customers is a dicey strategy. Brand owners must recognize that there must be both quantity of sales and quality of sales. Sales based on higher prices with lower volumes are dangerous. 

Is the premiumization trend a risky play for brands?

Value begins with the customer: value is not determined by the brand leaders or the CFO. Although brand leaders believe they are value creators, they are not. Brand leaders help to create brands to which customers ascribe value. Brand leaders determine pricing but not value. Instead of deciding what to charge, brand leaders should determine if the price they are asking will be a customer-perceived fair value.

Finally, customers are not stupid. Customers know when they are being played for profits. Marketing is all about profitably satisfying customer needs. Brands need to determine whether the customer’s needs are addressed so that the brand is perceived to be a good value. Brands can be perceived as good value at any price point. Marketers must aim their brand to be best values at whichever price point they choose.

Premiumization is charging more to maintain margins. This is a dressed-up version of financial engineering. If the only way a brand can maintain margins is by becoming a premium brand or by offering multiple premium varieties, then risk ruining the brand’s value perceptions. Because this is a fact: there is no shareholder value without customer value. A brand needs quality revenue growth for enduring profitable growth.

Amazon Stores Marketing

Amazon’s Grocery Future

The latest news in brick-and-mortar retailing is that Amazon is “doubling down” on grocery. According to an interview in Financial Times, CEO Andy Jassy indicates that Amazon is planning to “go big” in grocery. Current formats such as Amazon Fresh and Amazon Go have not been the game-changers that Amazon and observers expected. The 2017 purchase of Whole Foods has not changed the grocery landscape as expected.

Mr. Jassy states that part of the problem with Amazon Fresh and Amazon Go is that many of the stores opened during the pandemic. But, some observers note that Amazon does not yet truly understand grocery. And, some say the focus on technological convenience such as smart shopping carts and ‘just-walkout’ intelligence has led Amazon astray. As Financial Times pointed out, no one says they are going to the grocery store because of the smart shopping carts.

Amazon indicates that grocery is still “in the early stages” of concept development. Although technology should play a role, it is not the driver for food shopping. Before Amazon ventures forth with new grocery ideas, the brand needs to recognize that technology is a feature that delivers benefits. Those benefits need to be articulated in relevant, differentiated ways. Saying that just-walk-out technology is convenient is generic. Blaming the pandemic may be a reason why the various Amazon grocery concepts faltered, but making technology the star attraction might also be a reason. Shopping for food is emotional and social and says things about the shopper. 

Additionally, it is a mistake to assume that shoppers want people-less stores for grocery shopping. Peruse the perimeter of your local grocery and observe how many shoppers are conversing with the butcher or the person behind the fish counter. People have questions. People want to chat about that cut of meat or how many people that chicken will serve or which fish is boneless.

Having said this, Amazon is a creative retailer. And, there are many grocery concepts with which Amazon might excel, especially with its ability to track and measure. Here are a few that might be successful especially if underpinned by comforting technology:

365 Stores

Whole Foods 365 own brand items compete across multiple categories. It is a premier own brand. Ever since Amazon changed the name and packaging from Every Day Value to Whole Foods, the quality, variety and consistency of 365 has grown. 365 also provides Whole Foods’ shoppers with less expensive but just-as-good alternatives.

Prime Stores

This is an area where Amazon can compete with Costco. Membership-based Costco is successful due its bulk buying, its limited-time specials, its own brand Kirkland and its mix of food and non-food items. Amazon could easily excel with a Costco format. Plus, Amazon already has a large membership base through Prime.

Re-conceptualizing Amazon Go as 7-11 type Convenience Stores

This concept would require a different approach to real estate. Locations such as strip malls and gas stations/plazas might resuscitate Amazon Go. Amazon Go is high-level convenience, not made for daily grocery shopping. Sure, the format can work in high traffic office space areas. But, there are fewer of these areas as part-time WFH has changed the landscape.

Leveraging Local

Amazon has plenty of food concepts in its backyard of Seattle. There are many greenmarkets and local food box subscriptions. Amazon could use its technology to locate and aggregate local produce, beverages and crafts. That same technology could be the fire power for local fruit and vegetable subscription boxes. These boxes could be picked up at Amazon drop-box locations. Local is not something that happens in just coastal cities. There is a lot of farmland across the country that could participate in a local-focused entity.

Co-op Stores

Again, Amazon has a great local vendor example of a co-op concept in PCC Community Markets. The PCC website states the following:

Our mission is to ensure that good food nourishes the communities we serve while cultivating vibrant, local, organic food systems. In everything, we strive to inspire and advance the health and well-being of people, their communities and our planet.

We embrace stewardship, act with integrity and take action because we care. We’re dedicated to preserving local farmland and we foster high standards by partnering with Northwest producers, farmers, ranchers and makers. Our passion is for great food and cooking, from our locally sourced produce to our in-store kitchens where original recipes are prepared fresh daily using seasonal ingredients. Because when you love a community, you feed it well.

This is something that Amazon could pull off as well considering its focus on customers.

Technology is, of course, a disrupter. But, Amazon needs to determine just how much disruption grocery shoppers will accept. More interesting and relevantly, differentiated store concepts that use technology as a feature rather than a driver may be Amazon’s best bet. Also, technology is not Amazon’s only strength. As discussed above, there are a lot ways in which Amazon could win in grocery that go beyond smart shopping carts.

AB InBev Embraces Occasion Segmentation

AB InBev is the owner of over 500 drinks brands including national beers (Budweiser, Stella Artois, Corona Extra) canned cocktails, craft beers, energy drinks, etc.. In an interview for The Wall Street Journal’s C-Suite Strategies section, the CMO of AB InBev discussed the changes in the Group’s brand marketing. One significant change is the focus on occasion-based segmentation.

Market segmentation is fundamental to successful strategies. Many marketers see segmentation as passé since personalization focuses on a market-of-one concept. But, that is wrong. As AB InBev is demonstrating, understanding the context for the brand’s users and their needs is essential. And, segmentation can drive greater personalization strategies.

The purpose of market segmentation is identifying and understanding a brand’s customers. Market segmentation divides specific people into specific markets that share common needs and common occasions, differentiating these specific people from other specific people who have other needs and other occasions.

Those who view market segmentation as just another research tool miss its strategic value. Viable, insightful, actionable market segmentation addresses several key areas for directing brand-business strategy and brand policy. Market segmentation can also help in managing resource allocation. 

Proper market segmentation avoids product classification, price segmentation, industry segmentation and channel segmentation. These approaches provide generic manufacturers’ viewpoints rather than customer-driven realities. No guest says to a significant other that the dream vacation will be at an upper upscale hotel. No car buyer says the ideal vehicle will be a mid-luxury mid-sized car. Good, better best marketing is a mistake as every brand must be the best value in its specific market regardless of its price.

Market segmentation requires craft as well as research skill. Contrary to what many academics, researchers and consultants say, the output of a segmentation study does not reveal truth. In fact, it can raise more questions than you had beforehand. If analyzed and synthesized with intelligence and creativity, market segmentation can provide insight into the following: 

  • Superior understanding of the customer so the brand can pro- vide outstanding competitive advantage 
  • Strategic focus that is fundamental to effective marketing 
  • Identifying market priorities; effective market segmentation drives business strategy, not just brand strategy 

A proper market segmentation study should help you answer these three key questions: 

  1. Who are the prime customers and prospects? 
  2. What are their needs and problems? 
  3. What are the occasions in which these needs and problems occur? 

The best market segmentation is threefold. It is the fact that what people buy and use is a function of who they are, why they need this brand and how, when, where (context) they use this brand.

Marketers must also remember that customers define the markets, not the marketer. If a brand is a source of a promised relevant differentiated experience – offered to the customer – then it is the customer’s perspective of the market that matters. Customers tell us what they consider when they have a particular need for a particular occasion.

This approach is what AB InBev is implementing in its current strategies. AB InBev sees that people are staying home more. Research indicates that not only are people eating at home more now, they plan to eat at home even more as time goes on. Recent US financial data show that eating out is becoming even more expensive. And, for many seniors on fixed incomes, eating out has disappeared as a dining option. 

All sorts of at-home occasions are open to an AB InBev brand. AB InBev sees that although people are not going out to bars and restaurants as frequently, beer and spirits drinking is still happening. It is happening at home.

And, people are drinking more frequently with meals – whether dinners, snacks, TV watching, etc. These are people who will consider an alcoholic beverage as an accompaniment to a particular meal eaten at home. 

AB InBev makes one out of four beers sold worldwide according to The Wall Street Journal. The company’s large portfolio contains beer brands but other beverages that might be considered as a meal accompaniment such as hard seltzers and ready-to-drink cocktails. AB InBev sees its brands as “adding more value to (at home) occasions.” Not surprisingly, non-meal occasions are also increasing at home for AB InBev brands.

According to AB InBev, these insights have already changed the advertising for its brands. For example, Stella Artois advertising tends to focus on meal occasions. For its Super Bowl advertising, rather than situate in a bar, the ad was situated in the home of a well-known couple who “… grab a couple of beers for an impromptu dance party in their living room to pass the time while one of them waits on hold on the phone.”

Satisfying customer needs and problems while understanding the specific occasions in which these occur is the key differentiator between marketing and selling. Selling is convincing customers to buy what you know how to make. Marketing is about profitably providing what specific customers need or might need or might solve their problems in specific occasions. Superior understanding of customer needs and occasions provides the basis for outstanding competitive advantage.

Hermès-NFT Trademark Suit Branding

The Hermès-NFT Trademark Suit Did Not Change Brand Legality

There is no legal definition of a brand. This is a marketing sin.

Maybe you think the issue of brand legality is not relevant for your marketing efforts. Or, maybe you think that new legal cases testing the limits of trademark law in a techno-digital world are for Intellectual property lawyers, theorists or academicians.

The digital world is challenging the limits of established law. Brand owners should start considering how to protect their brands in this emerging universe.

About a week ago, there was a groundswell of interest in brand, trademark and the possibility that new legal statutes might come into play. Perhaps, even a legal definition of a brand. And, things could have changed. There was a possibility that the Hermès-NFT trademark case could be a catalyst for the legal system to finally generate a legal definition of a brand. The case was a win for established trademark law. Nothing wrong with this. Trademarks must be protected.

But, nothing groundbreaking on the brand front. More than ever, with the power of digital and the pull of the metaverse, brands should not continue to be unprotected.

There are several other trademark lawsuits regarding the creation of NFTs that use well-known brands as part of their art. But, with the ruling in the Hermès-NFT trademark case, the glimmer of hope of a legal definition for a brand will probably turn into a ghost.

One of these unsettled cases is from Nike, a powerhouse brand. Nike filed a trademark infringement lawsuit against StockX. Nike’s complaint states that StockX sold almost 500 Nike brand athletic shoe NFTs. And, these NFTs were sold at exorbitant prices with “murky terms of purchase and ownership.” 

Another test will be the suit brought by Jack Daniels against VIP Products. In this trial, the issue is not a digital one. Rather it focuses on a squeaky dog toy that too closely resembles a bottle of Jack Daniels Bourbon.

Film director, Quentin Tarantino, settled a lawsuit with Miramax last September. The case dealt with the auction of “uncut screenplay scenes” from Pulp Fiction (Tarantino’s 1994 film) as NFTs. Mr. Tarantino along with partner Secret Network, wanted to sell NFTs of Mr. Tarantino’s original Pulp Fiction handwritten script. Miramax, which owns the rights to the film, claimed Mr. Tarantino violated copyright law.

But, the blockbuster lawsuit was the recent Hermès versus Mason Rothschild face-off. Mr. Rothschild is an artist. He created digital images of 100 “MetaBirkins” as NFTs. These NFTs are imaginary fur-covered handbags à la the iconic Hermès Birkin handbag. As an artist, Mr. Rothschild’s position is one of artistic expression which is protected by the First Amendment. His lawyers describe the MetaBirkins as two-dimensional works, which are, by virtue of being a “picture,” not three-dimensional handbags for use in the metaverse or in real life. Yet, a buyer could hang one of these MetaBirkin NFTs on a wall in a digital space. 

Observers, IP lawyers, artists and others connected to NFTs watched this case very carefully. This is because the relevance and power of trademark law is based on “real world” situations. The digital world is different. The question was and still is: how does trademark law work in the metaverse? 

But, importantly, there is another issues that no one mentions. The metaverse is an experiential universe. In an experiential universe, experiences matter. Brands are promises of relevant differentiated experiences. A brand experience is unprotected in law. Anyone can attempt to copy that experience as long as someone’s trademark is not used.

It is necessary at this point to state five critical ideas.

First, here is the definition of a trademark. A trademark is any word, name, symbol, or design, or any combination thereof, used in commerce to identify and distinguish the goods of one manufacturer or seller from those of another and to indicate the source of the goods. 

A trademark identifies the source of a product or service.

In the Hermès-NFT case, Hermès is the source of the Birkin Bag. People might think the Rothschild MetaBirkin bag comes from Hermès. And, therefore, the perception might be that the MetaBirkin Bag has the authenticity and provenance of Hermès.

Second, there is no legal definition of a brand, so here is one: a brand is any distinctive identity distinguishes a specific PROMISE associated with a specific product or service, differentiating that product or service from others in the marketplace. A brand defines a relevant, differentiated experience. 

The concept of brand is not in the law books. The legal cases in which brands play a role are all about trademark infringement and trademark dilution. Hermès is proceeding with trademark infringement in court.

Third, you trademark products.  You brand promises. You brand the promise associated with the product. This means that the promised experience is not protected because a brand is not a legal entity. Keep in mind that a lot of what a Hermès’ Birkin Bag delivers is experiential. Right now, the Hermès’ Birkin Bag experience is not able to be legally protected. Only the trademark can be protected.

Fourth, trademark dilution is not brand dilution.  Trademark infringement is not brand infringement. With trademark dilution and trademark infringement, the source is protected; the experience is not. Trademark dilution is the perceived lessening of the trademark’s uniqueness. Trademark dilution means that there has been unauthorized use of a famous trademark by a third party. 

Fifth, Trademark dilution differs from trademark infringement in that the trademark owner does not need to prove a likelihood of confusion to protect the trademark. Instead, all that is required is that use of a “famous” mark by a third party causes the dilution of the “distinctive quality” of the mark.

With trademark infringement, the trademark owner must show that it has a valid and legally protectable trademark; that it owns that trademark; and that the offender’s use of the trademark likely caused confusion. 

In the Hermès case, Mr. Rothschild created and sold NFTs displaying images of Hermès’ iconic Birkin bag. Hermès successfully argued that Mr. Rothschild’s MetaBirkin NFTs are a case of trademark infringement in that customers could be confused as to the source of the MetaBirkin. Mr. Rothschild believes that people willing to spend five figures for a satchel would not be confused by his artwork.

Hermès believes, as did the jury, that Mr. Rothschild’s NFTs “… may have caused clients to believe that the premium brand (Hermès) is affiliated with his artwork.”

The jury determined that NFTs are less artwork and more consumer product. Therefore, as consumer product, the NFTs are subject to copyright law protection from copycats. The jury also decided that there was consumer confusion, as Mr. Rothschild’s website URL was too similar to the Hermès website. Hermès did provide market research indicating there had been some confusion. Mr. Rothschild’s legal team stated that the data were sketchy and the confusion was “minor.”

Intellectual Property lawyers and creators eagerly followed this case. Going in, many believed that there could be some rulings that might better direct how trademarks, art and trademark law will operate in the digital world.  Pre-verdict, one law professor indicated that there is a strong possibility that for “game-changing” rulings. Another lawyer indicated that digital assets are “revolutionary” requiring new “legal options” with the acceptance of “NFT owners as copyright owners.” Yet another IP lawyer wrote that the Hermès-MetaBirkins case will be a “momentous turning point for Web3 and digital products.”

As it turned out, established intellectual property law won out. Or as one of Mr. Rothschild’s lawyers stated, it was “… a great day for big brands and a terrible day for artists and the First Amendment.” 

All of this legal wrangling is good for trademark protection. But, what about brand protection? Hermès may have won over Mr. Rothschild for trademark infringement. But, its total brand experience still remains unprotected. And, in the metaverse, experience is everything. So, Hermès and the other brands that are cracking down on use of their logos in digital contexts will still own brands that are at risk. Creators may find that although the trademark cannot be used, the brand experience can be digitally replicated without infringing on a trademark. 

Brands must be able to legally own and protect the value they create. This Hermès case demonstrates that now is the time to create and institute a legal definition of a brand.

branding cars vehicles

Lincoln Channels 1989 Infiniti Debut

Once upon a time, someone at Ford Motor Company may have known what the Lincoln brand stood for in the customer’s mind. But, that was then. Over the years, defining Lincoln has been a challenge.  In 2019, Lincoln decided the brand would be American Luxury. That was an undefined title. It was left to the potential customer to fill in the blanks. Today, American Luxury is Sanctuary, as in a refuge or a sacred place.

Cars are for driving. It is wonderful to drive a car that is luxurious on the inside. It is wonderful to drive a car that is quiet inside, shutting out all of the street and highway noise. It is wonderful to drive a car that has all the appurtenances of class and status. These are benefits – functional, emotional and social – that we may look for in a vehicle.

But Lincoln does not tell us about these benefits. Lincoln as Sanctuary is left up to the customer to imagine. A brand must own a promise. A brand must have a relevant, differentiated promise that is created by the brand owners. A brand promise relevantly differentiates a brand from competition.  Vague Sanctuary can easily be understood as a benefit of a competitor, Lexus, for example.  The brand promise describes the relevantly differentiated experience that customers can expect time after time. 

Brands that have opted for letting the customer decide what the brand stands for tend to regret that stance. 

Take Infiniti.

In 1999, Nissan began advertising its new luxury vehicle, Infiniti. The ad campaign was gorgeous photography of the car in the woods. The lighting was exquisite. The door handles were remarkable. The feeling was one of, well, sanctuary. There were no words about the benefits of the vehicle. There was just the beauty of the design in a beautiful setting.

At the same time, Toyota’s new luxury vehicle, Lexus, was also introducing itself to the American public. Unlike Infiniti, Lexus focused on the vehicle’s sanctuary-like ride. One of the ads showed champagne classes on the car’s roof never wavering even over a rough road. Another referenced its quiet interior.

For all of the amazing market research at Infiniti, its lack of focus on the actual benefits of driving an Infiniti put the brand at a deficit relative to Lexus. Lexus took off; Infiniti languished. At one point, almost a decade later, there was consideration given to eliminating the brand.

Back to Ford Motor Company, owner of Lincoln.

In the mid-2000’s, Ford Motor Company created a campaign for Mercury – the now defunct brand, a relative of Lincoln. You bought your Mercury at the Lincoln-Mercury dealership. Ford was not able to articulate what exactly Mercury stood for… so in its campaign, the tag line was “Imagine Yourself In a Mercury.” If Ford could not tell you what Mercury was, at least you might be able to create some fantasy. Mercury faded away into automotive history. People may have loved the vehicle, but not even Ford could articulate what Mercury stood for in the customer’s mind.

Why is this history important?

With the current Lincoln campaign, Ford is channeling the same approach as Infiniti and Mercury. Let the customer imagine what driving a Lincoln is like based on beautiful photography, serene-hip music and lofty, resounding, yet amorphous wording. Sanctuary sounds wonderful.

For example, we hear:

The legacy continues. Innovative design is in our nature, and we can’t wait for the road ahead

We’ve shaped one century. Let’s define the next.

The power of sanctuary…

Here is a truism. You know a brand has no idea what it stands for when the words, “the power of…” are used. It is one of those catch-all phrases that ad people use when ideas escape them.

So, what is a Lincoln? A visit to the Lincoln website tells us that the power of sanctuary is elevated peace while driving. The definition ends there. It is up to you to imagine just what peace-while-driving is all about. There is a heavy focus on peripheral services called membership such as Lincoln Access Rewards, Lincoln Access Rewards Visa Card, Travel Benefits, Roadside Assistance, Concierge, Insurance. There is an app – Lincoln Way App – and pick-up/delivery for service visits. 

But what about the vehicle? How does it drive? What exactly is a peaceful interior experience? Are small children part of this peacefulness?

Does this mean that the cars themselves are not unique? Does this mean that because designers and marketers could not articulate the Lincoln brand essence they decided to focus on non-vehicle services? Does a focus on the inside of the vehicle mean that the actual vehicle itself delivers benefits and features that are not relevantly differentiated from competitors?

Features can be copied. A relevant, differentiating brand definition can be owned. Brand features are the key service and product elements that make the brand promise credible. But what is the brand promise? 

Lincoln’s provenance is a business built on quiet, honest, affordable classic beauty. There was no ostentation. Originally, the Lincoln vehicles were practical prestige with luxurious functionality. Although its drivers appreciated the cachet and status, they did not want to feel embarrassed or guilty while on the road. With subtle, classic elegance and a contoured grace, these affordable luxury vehicles were impressive and distinct. 

Somehow, in today’s world, this provenance is missing in Lincoln’s brand articulation. There is no reference to Lincoln’s classic beauty expressed in a contemporary manner either in its public design description or in its articulation of its reason for being. Leaving the brand promise up to the imagination of the customer creates a brand that has multiple, individual meanings. Hoping that this approach will rev the engine of enduring profitable growth in a highly competitive marketplace is a lot of gas.

whirlpool branding

Whirlpool And The Need For Ease Of Mind

Whirlpool makes home appliances. A lot of these home appliances are “smart.” This means the appliances can be connected to your in-home WIFI and stream your behaviors and your appliances’ “health” back to Whirlpool. 

Unfortunately for Whirlpool, it appears that customers are not buying into this “relationship.” Customers have either disabled or not synced the connection. This worries Whirlpool. 

Whirlpool believes the disconnectedness is due to education. Clearly, customers do not understand how beneficial it is for Whirlpool to know what you are doing when you do the laundry. This is a manufacturer’s POV. It is always a problem when the brand believes customers care about your strategy.

As reflected in The Wall Street Journal, Whirlpool wants to reinforce customer bonds with the brand in a category that sees repurchase about every 12-15 years. Whirlpool believes that if the brand messages you with advice or recommends a new part be installed, you will be a customer for life and will consider other products and services from the brand. 

There is nothing wrong with this idea. It is good brand management. But, the connectedness that Whirlpool has created perhaps crosses the privacy line. The lack of “attachment” to the brand could be the uneasiness of knowing that you are being continuously monitored by your washing machine. Recent third-party research indicates that people do weigh the costs of loss of privacy relative to the benefits of being an open source of personal data.

Trust plays a role. People expect the brands with which they do business to be vigilant with personal information. Perhaps customers trust Whirlpool to do the laundry but do not trust Whirlpool with their in-home behavioral data. It is a possibility. People are willing to accept risks up to a point. Data show that only around 30% of consumers believe brands take personal data protection very seriously. Additionally, 58% of people fear they will be a victim of a data breach.

Further, even when people are willing to provide some personal data, they are less willing to do so when it involves their children. And, laundry involves children, albeit indirectly.

Whirlpool is asking their users to keep the channel of information open 24/7. This is like having a security camera from Walmart in one’s home. Except in this case, the data are not for safety purposes but are being sent to a brand that seemingly wants to use it for their own advantage. Consumers do not see the benefits of having this unwavering eye spying on them all the time. Not hooking up the system is the user saying, “You do not have my permission.”

But, there is possibly more to this story.

Part of what drives this disconnect is how we perceive ease. Ease is a multi-dimensional concept. Brands such as Whirlpool must deliver against all three dimensions of Ease: Ease of Choice, Ease of Use and Ease of Mind. 

Whirlpool may do well on Ease of Choice and Ease of Use, but its failure with 24/ machines is 7 monitoring may be due to overlooking the power of Ease of Mind. 

Ease of Choice

Choice should be easy. We want more choice, and more personalization. But, we want choosing to be simple. Making a choice should be easy. It should require a minimum effort, and not take a lot of time. We do not want to spend a lot of time on a choice that should not take huge amount of energy to make.  In other words, we do not want increased mental and physical effort.

To understand the quandary of choice, stand in front of the snack food aisle at the supermarket. Unless you already know your favorite brand, size of package and variety, you will probably become overcome and dazed.  There are potato chips, corn tortilla chips in blue, red yellow or white corn, cheese snacks in puffs, twists, baked or fried, and pretzel sticks, nuggets, twists (tiny or large, cheese or peanut butter filled) along with the chickpea, soy, lentil, gluten-free and black bean chips. There is popcorn – kernels or already popped – in a variety of salts and flavors next to nuts, also in a multitude of flavors. 

Forget trying to make a quick confident choice in the pet food aisle. For cats and dogs, it used to be just wet or dry, bagged or canned. But, now you can purchase food in pouches, fresh food in the chill-case, food by age of pet, breed of pet, size of pet, health of pet, weight of pet, bad breath of pet, mental health of pet and combinations of these ingredients.  There are snacks for pets, fried, soft or filled.

As for appliances, washing machines have differing and multiple menus of cycles, fabric care, water temperatures, times or sensors. How does one choose what is best? We all wish to make the best purchase decision. Too many options can lead to making a satisfactory decision over making the best decision.

Ease of Use

We want to live in a user-manual-free world. Service options should not require a lot of explanation. Once we easily choose, use of the product or service should be easy. People have enough happening in their lives: they do not need to waste precious time and energy on learning how to use or navigate a product or service. It is the role of the provider to take the complexity out of choice as well as the use. Further, overly complicated products and services cause us to feel inept or inadequate, and, sometimes, cause us to feel stupid.

Something as simple as a washing machine can cause a user to feel unintelligent.  The rinse-soak-wash choices require too much thinking. There are multiple temperature options. The options for the wash cycle do not match my natural language.  In attempting to provide rinse-soak-wash options for all sorts of fabrics and levels of dirt, the washing machine beomes too complicated. The more complicated, the more stupid the user feels. Why am I having trouble with this? Yet, with fewer options, the user believes the machine is not doing a good job. The question became, “Is it better to have multiple options or a simple one-button machine?” 

Ease of Mind

It is not enough to be easy to choose and easy to use. People want to feel comfortable with their decision.  They want to feel reassured that they made the right choice. “Am I comfortable with the decision? Now that I am using this product or service, am I satisfied with the choice?” Am I doing the right thing for me? Am I doing the right thing for my family? Am I doing the right thing for my pet? Am I doing the right thing for the community? Am I doing the right thing for future generations? 

People want to feel right about their decisions rather than feel regret. And, people want to know that the brands and organizations with which they do business are doing the right thing. Are employees treated properly? Is the company a good global citizen? Is the brand or the company a decent contributor to my communities? Are the brand and corporate leaders making ethical decisions?

As for the connectedness of the appliance, people question whether the brand has their best interests in mind. Is the brand-business managing my information with care? Do I trust this brand as a data manager of my personal life? How are my data used? Do I approve of how my data are used? Does the brand use my data for my personal advantage or to theirs?

Not understanding and implementing against Ease of Mind is brand-business mismanagement. Research indicates that people believe brand-businesses will take advantage of the public if the brand-business believes is unlikely to be found out.

Whirlpool is not alone is its problems with consumers and connections to smart machines. LG faces a similar problem. As The Wall Street Journal points out, Whirlpool and others continue to seek “new lines of revenue” due to weakening demand. Users may not be comfortable with the brand’s revenue desires coming from perpetual peeping. Statements such as “We want to continue to leverage the technology in the product,” do not help users feel comfortable about the day-in-day-out monitoring of their behaviors.

Looking at this issue from the manufacturer’s perspective will only exacerbate the issue.  The manufacturers think this is all about educating users. Sure, users need to know the benefits of this behavior monitoring. But, manufacturers also need to do some soul-searching. 

Brands must understand the emotional and social ramifications that can violate the user’s ease of mind. Gaining permission depends on users feeling that the data collection is justifiable. Unless the user feels comfortable and implicitly trusts the brand, there will be no further “leveraging of the technology.” 

Success with the customer is not like a horse race. There is no prize for being second or third. Brands must win on all three dimensions of ease. when it comes to the three dimensions of ease, brands must win, place and show. Not marketing against all three dimensions of ease is perilous for brands.

stitch fix marketing branding

Stitch Fix Continues To Find Itself In A Serious Brand Fix

Stitch Fix, the online personal shopper clothing brand, has a problem. The brand is losing active customers, closing warehouses, laying off staff and is bringing back its founder as CEO to right the ship. Data indicate that since the height of pandemic shopping, Stitch Fix lost 95% of its value. The Wall Street Journal states that the huge decline in Stitch Fix’ valuation is due in large part to becoming a brand that is “everything to everyone.” In other words, Stitch Fix’ dilemma is due to serious mission creep.

In marketing, mission creep is the expansion of a brand beyond its original vision, promise or ambition. Mission creep is when a brand expands while losing focus on its core. 

Regardless of whether the brand is healthy or failing, it is essential that the main core business be protected and cultivated. Keep the heart of the brand alive and restore it to health. When the heart stops, the business dies.  With Stitch Fix, the main core business was an online, subscription, personal shopping service where anyone could have their own personal shopper to select and organize their wardrobe. A subscribed customer filled out a questionnaire, an algorithm kicked in. And, then, a human “stylist” curated a personalized box of clothing. Once delivered to the customer, the customer could keep (buy) all or some of the clothing or send back what is not wanted.

Somewhere post-PO and post-pandemic, Stitch Fix took its eye off of the brand’s core identity. Stitch Fix did not figure out how to make the core newly relevant and differentiated in a new era of shopping behaviors. Instead, the brand’s focus wandered away from the core.

Brand management is an ongoing process. Leaders must continuously focus energies on communicating, implementing, nurturing, developing, enhancing, and reinforcing the brand’s core purpose. Stand up for something special or you stand for nothing. Be the best at something relevant and differentiated. Never compromise quality in the name of efficiency or availability. 

Losing focus on the core happens more frequently than you might imagine. Thinking the grass is greener with different brands and/or different market segments is death-wish marketing.

For example, when McDonald’s business started to decline in the late 1990’s and early 2000’s, the brand expanded by buying a host of other restaurant brands: Donato’s Pizza, Boston Market, Pret A Manger and Chipotle. It was a “BOB” strategy – Believe in Other Brands. Additionally, the brand increased the number of restaurants by 50% over 10 years. At an analyst meeting in 1998, then chairman and CEO, Michael Quinlan’s plan for new stores was equivalent to opening a new store every four hours. 

Another, more current example is Meta. Meta is focusing more on the metaverse and less on Facebook. 

There is no doubt that Stitch Fix implemented a mission creep approach to profitability. When brand-business was losing steam, the CEO looked everywhere. In 2016, Stitch Fix expanded to men’s wear. In 2018, Stitch Fix expanded to children’s wear. In 2019, The brand expanded into the UK. And, in 2019, Stitch Fix created Stitch Fix Freestyle, an a la carte service now open to new customers. According to The Wall Street Journal’s “Heard On The Street” analysis, none of these expansions did anything positive for the bottom line.  When the brand wants to be for everyone, it becomes a brand for no one special.

But, not only has Stitch Fix lost its focus on its core, Stitch Fix continues to have a branding problem that is exacerbating its ability to manage. Stitch Fix must figure out how all of its offerings – men’s, children, Freestyle – relate to each other within the Stitch Fix brand portfolio while continuing to enhance and relevantly differentiate the Stitch Fix core brand promise. What is the Stitch Fix brand corporate brand architecture? 

Brand architecture is the brand identity approach used to define the relationship of each Stitch Fix brand offering to another in a portfolio. The Stitch Fix corporate brand expresses the authority (quality, leadership, trust, expertise) of Stitch Fix as a personalized online shopping experience. What are the relationships of each of these additional “brands” to one another and to the corporate promise?

This really matters. 

How you manage your brands is how you manage your business. Brand management is business management and vice versa. Brand architecture provides a framework for job descriptions and assignments, resource allocation, communications, market research, media, brand loyalty and brand power. Brand architecture helps customers sort out if a particular brand is for them. When there is more than one brand, customers want to know the benefits to expect from each brand. Customers do not care about the strategies; they just want to know about the expected experiences.

Brand architecture is significant because it dictates how resources are allocated. It also provides clarity of brand management. Brand architecture provides a strategic framework. 

Analysts are worried about Stitch Fix’ forward strategy. Is the plan to focus on Stitch Fix? What will be the relationship between Stitch Fix and Stitch Fix Freestyle, for example? What is the future of this pioneering brand? How do these other offerings relevantly differentiate Stitch Fix from other retail options, whether online or brick-and-mortar? Is the original Stitch Fix proposition still viable?

The Stitch Fix mission creep has rendered the brand more of a commodity than a relevant differentiated experience. Walking away from its core promise of providing anyone with a clothing stylist, curator and personal shopper left Stitch Fix at parity with any department store or clothing provider. Additionally, among the strategic plans that need to be articulated is this: Stitch Fix must adopt and manage its portfolio against a desired brand architecture. The brand must decide now what the offerings will be in the future and how these offerings will be managed. How you manage your brands is how you manage your business.


Spark by Hilton: Hotels Must Focus on Need-State Occasion-Driven Segments

Hilton just introduced a new hotel brand in its Elevated Essentials group of hospitality offerings. The Elevated Essentials category comprises Hilton Garden Inn, Hampton by Hilton, Tru by Hilton and the latest entry, Spark by Hilton. The overarching description of the Elevated Essentials group is “Signature amenities and services in all the places you want to be.” 

In describing Spark, Hilton’s Chief Brand Officer said, “In looking at the economy category, we saw a segment that has grown dramatically but lacks consistency, providing us an opportunity to deliver on the needs of this underserved segment of travelers. True to its name, Spark by Hilton signifies the start of something great – a moment of ignition as we add energy and momentum into the category and deliver the most reliable and friendly stays. This breakthrough premium economy brand will deliver the essentials done exceptionally well for every guest, every time along with friendly service – ensuring all travelers can enjoy a great hotel experience where they feel truly cared for.” 

There are a couple of take-aways from this statement that have consequences for brands.

First, segmenting by price. The hotel industry tends to segment by price. The underlying thought is that there are expensive hotels, less expensive hotels and inexpensive hotels.  Amenities and services are designed according to the price point. This is why the hotel industry market segments are usually labeled Luxury, Upper Upscale, Upscale, Upper Midscale, Midscale and Economy. And, now, Hilton has segmented Economy with a Premium Economy. 

Price segmentation is not customer-centric. Price segmentation makes things clear for the industry, but is of not help to a customer making a decision. Price segmentation is designed for the hotel owners not their guests. Customers do not say “I am looking for a premium economy hotel.” It is doubtful that a customer knows what Upper Upscale is relative to Upscale in terms of services and amenities. Customers want to know that the brand will satisfy their needs, solve their problems and be correct for their situation. No matter how the hotels spin the labels, price segmentation is generic marketing. Perpetually focusing on price is a pathway to commoditization. 

Second, price segmentation leads to the mistaken mismarketing idea that there is a value segment. Low price and best value are not the same thing. Focusing on low price reinforces this unfortunate idea that there are “value conscious” customers versus “non-value-conscious” customers. This is simply not true. Everyone is value conscious. Customers buying a Mercedes S-class believe the vehicle is a good value for them. Considering their situation, these drivers believe the vehicle is the best value to satisfy their needs. Likewise, the Kia customer think Kia is the best value to satisfy their needs. The customers shopping for an engagement ring at Zales think the value is excellent as do the customers shopping for an engagement ring at Tiffany’s.

Persistent focus on low price at the expense of great brand can quickly demean the brand. 

Third, relevant differentiation is more than features or attributes of a brand. A brand is a promise of a relevant, differentiated trustworthy experience. A brand experience consists of functional, emotional and social benefits. The brand experience also reflects the users’ values and their perceived, appealing brand personality. A brand’s features are the proof of the functions, benefits, customer values and brand personality. Focusing on features alone is death-wish marketing. Features can be copied. The brand experience cannot. 

Furthermore, in the hotel industry, a focus on features creates mystifying relevant differences among brands. The brands in the Elevated Essential group tend to just restate the same features.

Spark by Hilton

Spark by Hilton has this brand promise: “Practically inspired. Simply delightful. A budget-friendly stay offering the best of everything you need, done just the way you want.”

Spark by Hilton’s elements are: thoughtful simplicity, reliable service, unexpected touches and consistent quality.

Hilton Garden Inn 

Hilton Garden Inn: “Offering upscale accommodations and unexpected amenities to open up the brighter side of travel and out the best in you.”

“Our goal is to make your stay better and brighter. If something isn’t just the way you like it, simply let any hotel team member know, and we’ll make it right. Guaranteed.”

Hampton by Hilton 

Hampton by Hilton: “Always delivering an exceptional experience you deserve with thoughtful service, free hot breakfast and a warm, friendly smile. Every time.”

Every Hampton Inn and Hampton Inn & Suites is committed to the 100% Hampton Guarantee providing an exceptional guest experience and consistent, high-quality accommodations and amenities.”

Tru by Hilton 

Tru by Hilton: “With free pancake breakfast, a playful lobby packed with games and cozy nooks, and fun-sized rooms, you’ll get true comfort and more value.”

“At Tru, we’re rethinking hotel design to deal in trade-ups, not trade-offs. That means more space to spark creativity, more opportunities for connection and thoughtfully redesigned guest rooms that concentrate on comfort. Add in a must-see lobby and you’ve found your favorite cost-conscious hotel.”

Hilton believes that Spark by Hilton reimagines the economy category. And, maybe it will. But, the best way to reimagine the brands is to develop brand positionings that are meaningfully differentiated across a need-states occasion-driven landscape where everyone is viewed as value-conscious and price is a strategy.