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Boeing and Starbucks Have A Common Brand Problem: Trust Generating Trust Capital

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Two of America’s foremost brands have new CEOs. Both brands appear to be in crisis. These two brands are very different. One brand is a consumer café brand. The other brand is a durable goods, engineering brand. 

Boeing and Starbucks. 

You could not find two more unrelated brands. And, yet, Boeing and Starbucks have a significant issue in common. This issue is so significant that it should be on the turnaround agendas of both of the new CEOs. 

That common significant issue is trust generating Trust Capital.

You may be thinking that trust in Boeing and trust in Starbucks have totally different implications. After all, trust in Boeing revolves around personal safety, in extreme situations, life and death. Trust in Starbucks revolves around the quality delivery of the expected total brand experience time and again. There are no life and death ramifications when choosing Starbucks, although it may seem like it when you really need that caffeine hit.

Trust is a complicated and elegant component for any brand. Trust is an absolute necessity for brand value. And, brand value is integral to Trust Capital. Research identifies trust as having a significant effect on brand value. And, brand value influences loyalty. And, without brand value there is no shareholder value. 

In a working paper from 2001, research supported the facts that trust

“… creates value by a) providing relational benefits derived from interacting with a service provider who is operationally competent, benevolent towards the consumer, and committed to solving exchange problems, and, b) reducing exchange uncertainty and helping the consumer from consistent and reliable expectations of the service provider in ongoing relationships.”

In other words, trust is the willingness of one party to rely on another partner to deliver what is expected. Trustworthiness relies on employees as well as management policies and practices designed with the customer’s best interests at heart.

Other trust definitions are “a willingness to rely on an exchange partner in whom one has confidence.” Or, “the expectation held by the customer that the service provider is dependable and can be relied on to deliver its promises.” Trust is fundamental in building and maintaining long-term relationships, both personal and brand-business. Trust enhances the quality of a relationship and minimizes perceived risk, financial or otherwise. 

Bottom line: People prefer to do business – whether business-to-consumer or business-to business – with brands they trust. 

A few years ago, the global financial services group, Deloitte, referred to trust as currency. Deloitte stated that trust is an exchange of value. Deloitte defined trust as “… our willingness to be vulnerable to the actions of others because we believe they have good intentions and will behave well towards us.”

Whatever your trust definition, to succeed – to win, organizations must build trust and generate Trust Capital. “Capital” means “… money and/or other assets and resources that contribute to the health and enduring profitable growth of the enterprise.”

In general, most brand-businesses focus on three forms of organizational wealth: Financial Capital, Intellectual Capital and Human Capital. But, Trust Capital is a critical fourth component.

Financial Capital is the money used by a brand-business to buy what it needs to make its products. Financial Capital is the money allocated to provide services to the sector of the economy in which its operation is based.

Intellectual Capital is the combination of three things. 1) Intellectual Capital is the organization’s intellectual property including trademarks, patents, licenses and brands. 2) Intellectual Capital is the brand-business’ unique processes, databases and infrastructures. 3) Intellectual Capital is the brand-business’ special customer, franchisee/owner-operator and supplier relationships for building and maximizing the organization’s wealth.

Human Capital is the collective skills, knowledge or other intangible people-assets of the brand-business’ individuals. Human Capital is the “people talent” of the brand-business helping to create economic wealth.

Add Trust Capital to these three.

Trust Capital is stakeholder confidence in the leadership, credibility, integrity and responsibility of a brand-business to deliver its promises of value to its stakeholders. Trust Capital is a value-creating asset. Trust Capital is an intangible asset that increases the power of marketing expenditures and reduces the cost of new brand introductions. 

Trust Capital is what the organization draws on during troubling events, mishaps or crises, such as coronavirus, plane crashes, perceptions of socio-political-cultural bias or eroding customer traffic. Trust Capital is a most valuable asset in those occasions when a brand needs to defend itself during unexpected, unfortunate situations. Generating and accumulating Trust Capital in a trust reserve – a Trust Bank – provides a trust buttress helping to weather crises of character. 

Trust Capital helps to create enduring profitable growth. But, although Trust Capital is an intangible asset, Trust Capital is an asset that strengthens brands, bringing stability, organizational confidence and the generation of future potential earnings. Aside from the myriad of issues facing Boeing and Starbucks, both Boeing and Starbucks need brand strengthening, organizational confidence and the hope of generating future potential earnings. 

Boeing and Starbucks demonstrate how easy it is for trust to become mistrust in a matter of moments. Whether there has been a disaster or a crisis of mismanagement, having a full Trust Bank reserve of Trust Capital stabilizes the situation helping organizations return to their trusted relationships with stakeholders. It appears that both Boeing and Starbucks have depleted their Trust Banks, especially among their various stakeholders.

Boeing and Starbucks have vastly different operational issues. There are also vastly different constituencies to satisfy. But, trust and building Trust Capital are essential for both brands. And, both brands have new CEOs who can add trust and Trust Capital to their other important, must-do’s strategies. 

When it comes to trust and building Trust Capital, what can Boeing and Starbucks add to their turnaround plans? 

Here are four actions to take right now.

First, create a Trust Agenda.

It is critical to produce the right results by doing the right things in the right way.  This principle applies to every stakeholder relationship. In order to grow trust and generate Trust Capital, the new CEOs at Boeing and Starbucks must have a corporate strategic platform based on a Trust Agenda. This Trust Agenda addresses issues such as: 

  • How will we build trust across our geographies, our brands, our people, our shareholders, our franchisees, our partners, our suppliers and our local communities? 
  • How will we build trust chains throughout all of our relationships, internal and external? 
  • How will we ensure that we include corporate responsibility is integrated into all of our decision-making? 
  • Are we a good global and local corporate citizen? 
  • How sustainable are our actions? A Trust Agenda will ensure that a sustainability opportunity is on the front burner. This means meeting the needs of customers, communities and businesses without compromising the needs of future generations. 

Having a Trust Agenda allows an organization to be a steady force for good while not standing still.

Second, the CEO must be the CTO, Chief Trust Officer.

The new CEOs at Boeing and Starbucks cannot delegate the leadership necessary for building trust and generating corporate Trust Capital. Trust Capital-building is a CEO responsibility. The CEO is the Chief Trust Officer. Chief Trust Officer is a fundamental, ongoing, leadership responsibility. Trust building begins at the top. The CTO role must not be delegated.

The role of Chief Trust Officer is more than a title. CTO is an indispensable, trust-growing and Trust Capital-building task of major cultural and financial significance inside and outside the organization. Studies show that increased trust is a critical factor leading to increased preference and loyalty, generating high quality revenue growth. 

Third, do what you say you will do.

Do what you say you will do is the foundation upon which trust is built. It is a cliché to say that actions speak louder than words. It is a cliché because it is so true. Nothing kills trust more than promising and not delivering. Boeing must deliver high quality, zero defect airplanes. Starbucks must deliver high quality coffee and the Starbucks connoisseur café experience.

Fourth, build Leadership, Credibility, Integrity and Responsibility.

  • Leadership must be demonstrated, not merely claimed. The brand-business must be a thought leader. Is your brand-business perceived to be innovative? And, are you growing in size? 
  • Credibility means your statements and actions are plausible. Be dependable. Be capable, competent and an expert in your field. Provide superior complaint resolution. Be a trustworthy source of information. 
  • Integrity means having customers’ interests at heart. Be accountable for actions. Behave ethically. 
  • Responsibility provides competitive advantage. Demonstrate good global corporate citizenship. Corporate Social Responsibility is not a separate division within the organization. It is a way of doing business. 

As the Edelman Trust Barometer continues to show, there is a global trust deficit. Building trust must be a brand-business priority. Accruing Trust Capital is essential for high quality revenue growth for profitability and success. Without trust there is no brand value. Without brand value there is no shareholder value. Trust plays a critical role in perceived value. Trust Capital leads to high quality revenue growth. 

Businesses want brand-businesses that businesses can trust. Trust is must. The recent story of Costco in The New York Times shows the power of trust and Trust Capital. In describing Sol Price, Costco’s founder, the co-author of The Joy of Costco said, “Everything was about trust. He (Sol Price)  would rather lose your business than your trust.” For Boeing and Starbucks, having  new CEOs provides the needed jump-start for rebuilding trust and generating Trust Capital.

Walmart Where Frugal Is Fashionable

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“Consumers are trading down to lower-priced items and those cans and boxes in the back of the pantry staples are now on the table,” The Wall Street Journal.

“… soaring sales of Popov Vodka and Majorska Vodka … at $9.49  and $7.99 a bottle … these are vodkas that languished for years next to the Grey Goose and Chopin … at $36 plus,” The New York Times.

“The consumer’s new mantra is value,” Financial Times.

The Wall Street Journal also reported that a consumer proudly showed off a bottom round roast she had found in the meat case of her Costco that was marked down to $7.21 from $18.26. Costco is not about buying cheap; it is about buying smart. After all, as Taco Bell would say, “Why pay more?”

Sound familiar? 

All four of these statements are from 2009. Today, consumers are falling back on shopping behaviors developed fifteen years ago. Many of these consumers are copying behaviors observed when they were kids. 

But, let’s be real. 

“Smart shopping” has been around for a very long time. Wal-Mart and Costco were not born last year.  Tesco in the UK did not just appear on the scene yesterday. Private label growth has been increasing for a long time. At Aldi, 95% of the goods in the stores are Aldi’s own brand.

This is what is happening: the current economy is once again putting a magnifying glass on the long-term importance of price-value. As Walmart just reported to Bloomberg BusinessWeek, “We are seeing that the consumer continues to be discerning, choiceful, value-seeking.” As CNN reported, “… shoppers are looking for deals after years of higher prices and interest rates and now a slowing job market. Although inflation has fallen to its lowest level in three years, Americans are still paying more than they were for groceries, housing and many goods.”

Consumers continue to be more informed, more demanding, more quality conscious, more convenience conscious, more environmentally conscious, more value conscious, more price conscious and, now, more price-sensitive than ever.

Online, CNN stated that, “… consumer spending, the backbone of America’s economy, is still resilient. Consumers are just being more selective about what they buy and where they shop.”

Frugal is fashionable. 

In the flight to frugality, consumers are moving from conspicuous consumption to careful consumption; from status conscious shopping to conscientious shopping.  This careful, conscientious consumption is not confined to those strapped for cash. Walmart states that “In particular, wealthier shoppers have been a meaningful driver as they search for deals, too.” 

Reporting indicates that higher-income shoppers represented most of Walmart’s market share gains. With an emphasis on online, spruced-up stores and its new own-brand, bettergoods, Yahoo Finance indicated that Walmart intends to keep these “… higher-income households by making shoppers think, ‘Hey! This is not the Walmart from 10-15 years ago.’”

Walmart continues to be a haven for shoppers seeking “a broad assortment of items and services.” As one analyst said, “The only place anyone is shopping right now is Amazon, Walmart and Costco. Walmart does a great job focusing on value. Value has become more important. Structurally, they’re well positioned.”

Shoppers are focusing on affordable groceries and other essentials. Walmart kept its grocery prices flat. Shoppers noticed. This is where Walmart shines: mass affordability. Mass affordability makes frugal fashionable.

“Mass Affordability” represents opportunity for the savvy brand marketer and always has been a winning opportunity. It is a fundamental marketing truth that mass affordability wins. 

  • Henry Ford made automotive transportation affordable.
  • Sam Walton made retail purchases affordable for the people in the small towns.
  • Ray Kroc made eating out affordable. He even put the 15-cent price point on his sign.
  • Bill Levitt, the founder of Levittown, made single-family homes affordable for everyone
  • H&M made fashionable clothes affordable
  • IKEA made stylish furniture affordable.
  • Aldi competes with high quality, low priced items
  • VW — the “people’s car” – an affordable reliable car for everyone
  • Swatch made low priced, affordable, watches stylish.

These brands and others have focused on the relationship between price and value. It is called price-value for a reason. Price comes first in defining mass affordability. Brands that ignore affordability such as Disney or Starbucks find themselves in dire straits. Brands that spent the last four years raising prices are not feeling the pinch from consumers who are opting for lower priced options and high quality tore brands.

Instead of asking “What do I want, can I afford it?” Consumers ask, “What can I afford? What am I willing to pay? What is the best value I can get at that price?” Price is the mass affordability decision gate.

Price is critical. The brand defines price. Price and value are not the same. The brand does not define value. Price, along with time and effort are costs that consumers factor into their value assessment of a branded product or service. Consumers define value. Value is the brand costs relative to the brand’s experience multiplied by trust. Price is just one of a brand’s costs.

Walmart knows this. Walmart understands that all consumers are value consumers, regardless of income. This is why Walmart offers branded value that amazes at prices that excite. Walmart understands that a price-value strategy is not just a tactical calendar of a series of price promotions. Walmart understands that value must be available all the time. Walmart understands fair value. But, instead, goes beyond fair value to amazing value. Amazing value is a great brand with its great branded experience at a great price. Amazing value is when a shopper says, “Wow! I didn’t think I could get this great value at this great price!” 

At its most recent earnings call, Walmart reported that US comparable sales rose 42% in the last quarter compared with same quarter a year ago.

Walmart also indicated that consumers focus on groceries. But, its shoppers are also purchasing discretionary items. Walmart stated that its prices are generally lower than other retailers. “We know that they’re looking for value and their dollars are stretched, they’re focusing in on those things that are providing value for them,” CFO John David Rainey told Yahoo Finance. Walmart is perceived to be amazing value.

How can brands and brand businesses manage is a world where frugal is fashionable? 

  1. Create branded value that amazes at a price that excites. 
Offer value that amazes at a price that excites. In other words, “Great brand, great quality product, great branded experience and great price.” Do not cheapen the quality of the offer to meet the price. Value that amazes is a great brand providing unique, high quality at a price that excites. Branded value that amazes at a price that excites is irresistible.
  1. Start with the price-point. Then, design distinctive value that amazes. The price must entice.
Engineer and innovate the offer. Design distinctive offers. Brand the price-point
Make it a branded signature price-value offer. Own a price-point perception.
  1. Create an Every Day Low Price strategy
Offer predictable prices. Have predictable offers.
Walmart is an EDLP retailer. According to The Wall Street Journal, Walmart is thriving. Rather than constantly dealing, Walmart is ensuring its perception as an affordable place to shop for all sort so items. Relative to its competitors, Walmart is an EDLPAV retailer: Every Day Low Price Amazing Value.
If a brand is offering deals, marketers should reduce deal-focused messaging to less than 20% of its expenditures.  
  1. The brand must be perceived to be value.
The entire brand’s offerings must be perceived as “value.” This means providing superior value at all price-points. Just having a few “value items” is not true value, it is voodoo value. Remember: every customer is a value customer. No one wants to purchase a “poor” value.
  1. Change thinking from “profitability of the item” to “profitability of the customer visit”  
Margins are important, but an obsessive focus on item margins will marginalize the brand. Focus on the profitability of the visit and the business. 

Price-value is the eye of the marketing storm. Having a strong brand, providing high quality, and getting the price right is the best way to be ready to weather anything and, not just for today, but for the times ahead.

Frugal is fashionable. Now is a great time for branded value that amazes at a price that excites 

If this sounds like a cliché, it is because it is true: Great brand, great quality, at a great price will win.

As Walmart told Bloomberg BusinessWeek, “They (people) want value.” 

 
disney florida park, magic kingdom

Disney And The Erosion of The Three Dimensions of Ease

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Ease is a multi-dimensional concept. Innovators, brands, entrepreneurs, organizations and others must recognize that it is essential to deliver on the Three Dimensions of Ease: ease of choice, ease of use, and ease of mind. 

People do not want to feel stupid. If a product or service is too complex or confusing, we do not feel comfortable. If too much effort and or time are required to choose or use, we feel frustrated or defeated. Humans are pain avoidance mammals. Discomfort is painful. We will avoid interacting with products and services that make us feel uneasy.

There is another reason to address the three dimensions of ease. It is based on work conducted by Nobel Prize winner Herbert Simon in 1956. Professor Simon’s focus was the decision-making process. He coined a word, “satisficing” that is a blend of satisfy and suffice. 

Satisficing is a decision-making strategy that attempts to meet criteria for adequacy rather than to identify an optimal solution. In situations where there are many choices or many choices are presented one by one, finding the best choice can be a hopeless quest.  We become stymied: we will opt for the first choice or opt for a choice that appears to address the most needs. In either case, we do not make the best choice. 

Additionally, our inherent desire to make simple, effortless choices in the face of too many, uncertain options, forces us to default to the cheapest, the most expensive, or whatever choice feels satisfactory whether it is best or not.

Brands addressing ease on all three dimensions have an advantage. If a brand loses its ease advantage, that brand will probably become less desired.

This is why the Disney brand’s dilemma is so unfortunate. Disney has finally made its streaming profitable and highly competitive. At the same time, Disney’s park performances are now less stellar. 

Marketers need to stop blaming outside events for marketing mismanagement. The reduction of Disney park visits can no longer be blamed on COVID. Nor is the reduction of Disney parks visits only the fault of lower income customers struggling to make ends meet. According to the information from a story in The New York Times, it appears that Disney has defaulted on The Three Dimensions of Ease.

The Three Dimensions of Ease

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.

We do not want decreases in the speed of our decision-making. We live in a world of “now,” and that means we have expectations about making good, satisfying decisions quickly. Our current technologies allow us to swipe an icon to make an immediate purchase on our smartphone. We have become used to “instant” choice satisfaction. The idea of slowing down to make a choice is agonizing.  Apps and Amazon have made selection immediate. We are rewarded with immediate gratification.  

Under its previous CEO, Disney not only raised prices across the Disney parks’ board, Disney also started charging for products and services that used to be free. The price of a Disney visit skyrocketed.

When Robert Iger returned to run Disney, there was movement on restoring some of the free services and lowering some prices. But, according to The New York Times, the cost of a Disney vacation has skyrocketed. This makes a Disney visit a difficult choice. Can I find a family vacation that will be more affordable and as interesting?

Disney visits used to be “no-brainers” if you had children or if you were a life-long fan. Now, Disney appears to be losing some of its easy-to-choose cachet. 

Ease of use

We should 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 so many things happening in their lives: people 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 or extremely frustrated.

Ease of use is essential, especially when it involves technology. Many companies get this right. But, then there are those companies that seem to make it more difficult.

Disney seems to be falling into the category of making the technology for ride-decisions difficult. Navigating Disney’s tools for rides changed from an easy-to-use and free Fast pass technology to something called Genie+ which is not free and not easy to use. Then, Genie+ morphed into Lightning Lane Multi Pass at a cost of $30 a day. Again, not easy to use. And, apparently, highly frustrating while requiring a lot of attention and vigilance to continue to score places on popular rides.

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?  Does the company have my best interests in mind? Is the brand or the company a decent contributor to my communities? Are the brand and corporate leaders making ethical decisions?

There is a concept called Prospect Theory that describes how people tend to prefer making decisions that are defined as “gains” rather than “losses.” In business, this means framing the decisions in terms of profitability.  It is similar to the value equation that runs through consumers’ minds.  What will I relative to what I will pay?

The costs, complexities and frustrations of a Disney visit seem to be overriding the joy and delight for many, at least the adult payers and planners. When the total brand experience marvel of Disney is marred by the total costs of money, time and effort, Disney’s value equation is thrown out of whack. Disney begins to lose its original vision, mission and purpose:

To be a place where the whole family can have fun and escape from the stresses of the real world. A place where Disney will make a safe, high quality, affordable, magical place appropriate for the whole family.  And, create happiness.

Disney just announced that it will expand its offerings in cruises and theme park experiences. The Wall Street Journal wrote that Disney is under “pressure to add new attractions as revenue from the Experiences unit softened recently.” Disney appears to convey that its “moderation of consumer demand” at Disney parks possibly reflects the need for an extreme re-imaging. This means that the Experiences division will be spending money to add new attractions that will “justify” the expense of a Disney visit. Will new experiences generate visits?

Maybe.

Disney should take a look at the entire value equation, remembering that it is the customer who defines value. And, Disney must keep in mind that price is not the only cost customers review when assessing value. In the customer’s value equation, time and effort are also key elements of cost, not just price. If the new Disney park experiences are still difficult to choose, difficult to use and cause frustrating psychic unease, then no matter how extraordinary the re-imaging and anticipated magical delight, customers will still opt for joyfulness and happiness elsewhere.

It does not matter whether your brand is affordable, premium-priced, packaged goods, durable goods, product or service, ignoring The Three Dimensions of Ease is major mismarketing.

party city

The Personalization of Party City

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In the 1970’s, the advertising agency BBDO had a set of principles for building, nurturing and managing brands. One principle was “Know your prime prospect.”  A second principle was “Know your prime prospect’s problems.” The concept was this: find out everything you can about who is the core customer for your brand. Know that customer inside out. Know your customer’s opinions, attitudes, interests, personal values. Know your core customer as if this person were your best friend. Then, figure out what troubles this core customer when it comes to your brand. What are the core customer’s problems with the category? With specific brands within the category? With your brand, if this is not a new product? After all, humans are pain avoidance mammals. And, we are great at complaining. We are very specific when it comes to problems, concerns, worries.

The principles of knowing your core customer and your customer’s problems are evergreen. Every marketer must begin with the core customer. Innovation and renovation must begin with the core customer.

Intimate knowledge about your customer has always been and will continue to be de rigeur for successful branding. A brand will not survive if it is aimed at everyone. If everyone is your customer then there is no relevant differentiation. A brand focused on everyone is a brand that a lot of people like but few love. Real brand loyalty is comprised of brand lovers. Deal brand loyalty is comprised of leavers. Real loyalists follow their heart. Deal loyalists follow the deal.

Data help marketers intimately know their core customers. Personalization continues to be a force with which marketers must manage. People value brands that create personalized experiences. Personalized brands promise to meet an individual’s physical, psychological, social and emotional needs. Personalization reinforces respect, status, and positive self-image. Data tell you about behavior: the what it is that we do. The marketer must synthesize the why: why do we behave in this particular manner.  Personalization is possible because of data. But, the data must be interpreted properly. 

When the brand delivers personalization, experience is key. Personalization is experiential. Personalization delivers a branded experience that recognizes and reflects the customer and is exclusively designed to meet an individual’s needs for a particular occasion. 

This is why personalization differs from customization. We tend to use the words interchangeably; this is wrong. Customization focuses on features and functions, the practical aspects of a brand, readying the brand for a transaction. A custom-made Nike shoe is about finding the features you like, colors, stripes, laces, and so on, creating a transactional event. This transactional event is similar to using your measurements and finding fabrics that customize your bespoke silk suit or shirt. Personalization is experiential. Personalization happens when, based on who you are and what you like, an entire branded experience is created. 

Party City is the largest retailer of party goods in North America. In September of 2023, Party City emerged from bankruptcy announcing that its Chapter 11 reorganization had achieved its promised plan of erasing over $1 billion in debt and eliminating underperforming outlets.  The Wall Street Journal indicates that Party City is focusing on becoming an omnichannel operation. And, becoming omnichannel means using personalization. 

The CMO of Party City told The Wall Street Journal, “Our goal is to show up on a one-to-one basis in the channels customers prefer, have conversations that fit the way they celebrate and plant the seed for return visits throughout the year.”

A large part of personalization means generating insights into customers as individuals.  Party City understands that insights going beyond behavior that supports building “customer lifetime value.” And, contrary to what many marketers are currently doing, including big brands like Harley-Davidson, Party City now segments its customers on psychographics. Of course, demographics such as age, gender and purchase behaviors are necessary. But, to deliver at those “moments that matter,” those “Kodak moments,” knowing the customer inside-out knowing the customers value, attitudes, opinions and interests is essential.

Personalization delivers a branded experience marketers design specifically to meet an individual’s needs for a particular occasion. Customers increasingly desire products and services that reflect personal wants and needs. Personalization delivers a respectful recognition of who I am as a person by reflecting aspects of my personality and by satisfying my needs and problems.

Party City is operationalizing personalization. 

Here are some rules;

Focus is fundamental

Mass marketing to masses of consumers with a mass message is a massive mistake.

Mass marketers try to appeal to all people for all occasions with a marketing message that everyone likes a little and nobody likes a lot. Mass marketing misdirects branding. It dilutes the brand…it genericizes and generalizes the brand.

Marketing must be more personalized. 

Merely communicating about new products, new prices, a new app or website will not build personal brand relationships. Customers want branded experiences that reflect the brand’s essence while at the same time reflecting parts of themselves. Increasingly, customers are willing to have the focus be on them as individual users of the brand. 

Brand management is customer-experience management.

Brand management is not mere advertising. Brand management is first and foremost customer-experience management. Experiential marketing is not new news. 

Brand management is about managing the whole experience end-to-end in a brand-coherent manner, from consideration, through shopping, deciding, purchasing, using, evaluating, and reconsideration.

Technology is the enabler helping brands stay in touch with customers at every single experience point, one customer at a time, any time, all the time. Think about ways in which you will manage, evolve, edit, create and curate the branded experience over the course of the entire customer journey.

Move from asking, “What can we predict?” to “Permissible Personalization.”

Avoid predictions based on intrusive, invasive information gathering. 

Permissible Personalization is based on informed knowledge about a person based on past experience and information provided or permitted by the customer. Permissible Personalization builds trust.

As you build trust with a customer, permissibility levels increase. Just remember, the customer defines the limits of personalization.

Use Brand Journalism.

For younger cohorts, user-generated content is a more trustworthy communication than branded or corporate or institutional information. Brand Journalism is the marketing approach that allows the brand to create personalized content while allowing the reader to become “personally” involved.

Brand Journalism involves telling journalism-style stories about a brand: this is not preaching or bombardment with a repetitive, uni-dimensional message. It means communicating authentic and interesting chronicles to which customers can relate and which they can share. A well-told brand story is the best way to get a brand across to today’s multi-media, multi-device consumers. Brand Journalism is today’s way of communicating a personalized branded experience while maintaining the core integrity of the brand promise.

dior

Dior’s Dilemma And Anorexia Industriosa

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Over the two past decades, the concept of luxury underwent some conceptual changes. The definition of luxury as something inessential, desirable, expensive and difficult to obtain has changed. Luxury goods are now obtainable around the globe. Luxury goods can be purchased online. Luxury goods are available at airports and shopping malls. And, luxury goods are bought by many people, not just those from the upper echelons of society.

Jean-Noël Kapferer, a French brand marketing guru who writes about luxury, created a name for the current luxury brands situation. He calls the phenomenon, Abundant Rarity. This is paradoxical. That is, rare luxury items happen to be available to anyone anywhere. Abundant rarity is a marketing and conceptual paradox where items are rare and are available anywhere. Monsieur Kapferer believes that increasingly luxury brands need to figure out how to master the paradox of abundant rarity.

Abundant rarity has sparked many discussions around whether or not a brand can actually be a luxury brand and, at the same time, be sold to everyone everywhere. Many argue that it is impossible to be luxury and be abundant. They argue that abundance negates the exclusivity that is part of a luxury brand’s DNA. They argue that a luxury brand’s provenance and brand promise assure that the luxury brand – by virtue of the fact that it is luxury of the highest standards – is restrictive and limited in its availability and thus desired for this specific rarity. They argue that abundance tarnishes a luxury brand, demoting its luxury image to everyday.

Now, we learn from The Wall Street Journal, that luxury brands have figured out how to tarnish their provenances and promises in another way. Luxury brand are making their expensive offerings on the cheap, as it were. Think of this as Anorexia Industriosa. 

Anorexia Industriosa, cutting costs to the bone, is dangerously detrimental to brand health. CEOs and senior managers fall in love with cost management over brand management. Cost management allows for greater shareholder and C-Suite profits. Focusing only on cost cutting does not create real sustainable value. Businesses cannot cost manage their brands to enduring profitable growth. At some point, there are no more costs to cut. Cutting costs chokes off resources for investing in a brand’s future potential. Brands receive fewer resources, and then, are milked, thinned, and discarded. If high quality production is no longer a luxury promise than you might as well consider the knock-off hawked by the street vendor.

Cost reductions show up immediately in quarterly reports and on balance sheets. Of course, eliminating waste and improving productivity are a continuing challenge and important for maintaining brand-business health. But, cost cutting alone takes you only so far. Brands need plans, people and actions that will deliver high quality revenue growth leading to enduring profitable growth. And, luxury brands have heritages to uphold.

It is unfortunate that many businesses cloak cost cutting as a strategy for building strong businesses. Improving productivity is good. But, for enduring profitable growth, businesses need to invest in increasing brand strength. Financial discipline is more than across-the-board cost cutting.

Anorexia Industriosa is especially dangerous for luxury brands. One of the elements of luxury is the idea of craftsmanship. In other words, luxury brands have a caché of and heritage in quality of design and work made by hand; an overarching inherent artistry.

When luxury brands, such as we learned about Dior, farm out their manufacture to facilities that are like ‘sweatshops,” the essence of the brand can become denigrated. Sure, outside manufacturing facilities help with increased demand.  But, the use of certain types of outside factories to make luxury goods has one real purpose: margins. Worshiping at the altar of margins tends to have a negative effect on a brand, luxury or not. This is because high-margin brands are more attractive and reassuring to shareholders. Catering to shareholders over catering to customers is a tendency for trouble. Thin margins tend to convey less profitability.

It seems that some luxury brands are now made by the same sort of outside factories that make fast fashion items: factories that churn out items saving businesses lots of money when manufacturing. As The Wall Street Journal points out, the use of “independent workshops” by luxury brands can create a “reputational” crisis. Not only are there the social and legal ramifications, but there are image-tarnishing issues that no luxury brand wants to shoulder.

And, Dior. Mon Dieu.

Dior is one of those luxury brands that helped define an era of haute couture. Dior’s  “New Look” in the late 1940s, restored France’s heritage of fashion. Dior brought glamor and youthfulness back to fashion.  After years of world wars, Dior’s creations helped to bring back life and liveliness to France. 

And, now, we learn that using the outside facility, Dior’s cost of assembly for that US $5000 handbag may be as low as US $57. Anorexia Industriosa!

These financials may make sense to you. After all, look at the margins! Just a note here: consumers do not care about your margins. Consumers care about quality and living up to expectations. A brand is a promise of a relevant, differentiated expected experience.

When people are willing to pay large sums of money for your brand, it is because people see value in that brand. But, brand value depends on trust. Trust is built over time. Trust can dissolve quickly. Can a consumer trust that the $5000 handbag assembled by a “sweatshop” for under $100 has the same brand value as the one created in-house with care? Is the Dior name strong enough to manage this discrepancy? Can a consumer trust that a brand is luxury when that brand is made in a non-luxury manner? Is this assembly in keeping with the brand’s provenance and promise? Is this assembly a new version of abundant rarity? Should a luxury brand be subject to Anorexia Industriosa? Could be, as the outside facility is a cost-cutting factory designed to make an abundance of ”rare” items.

The global services company Deloitte writes that luxury brands are now using digital passports. These digital passports relay the luxury brand’s “authenticity, sustainability and trust” to the customer. However, what happens if that luxury brand is manufactured not with the expected craftsmanship but with the outside, independent facility? Deloitte indicates that the digital passport certifies authenticity and insights in craftsmanship. How does this work in this manufacturing mindset of Anorexia Industriosa?

The combination of abundant rarity and anorexia industriosa is self-immolating for luxury brands. To provide abundance, some luxury brands will need to manufacture product at minimum costs to meet demand. The cheaper the production, the better for the bottom line. But, more availability which may be based on less traditional craftsmanship and art could damage a luxury brand’s customer perception as exclusive and worth the costs.

Just as Dior defined a new luxury couture in post-war France in the late 1940s, all luxury brands must start redefining what it means to be a luxury brand today. Does luxury extend to the way in which a product is manufactured? Does the luxury brand’s provenance and promise extend to how the luxury brand is made? Of course, financial discipline is expected in every Board room and every analyst earnings call. But, does that mean that a luxury brand be subject to Anorexia Industriosa? Does Anorexia Industriosa  tarnish a luxury brand to the extent that the brand is no longer considered luxury? If so, then the paradox of abundant rarity will define luxury as we move forward.

CVS and the Paradox of Do-It-Myself Vs. Do-It-For-Me

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There is a powerful conflict raging in brand management. This conflict reflects how brands define customer service. The conflict is a paradox that most brands have not yet solved: it is the paradox of DIM vs. DIFM: Do-It-Myself vs. Do-It-For-Me. At its heart, the DIM vs. DIFM paradox is about customer control.

Technology, apps, mobility, digitalization, robotics, constant contact, 24/7-time spans and artificial intelligence create everyday customer control issues. For years, data showed that customers are willing to cede control for increased personalization of services.

Kiosks, voice-activated applications, digital wallets, conversing bots, self-tracking of physical and mental functions (the quantitative self), driverless cars, connected cars, connected-smart appliances in the connected-smart home – all of these shift accountability of actions to things other than ourselves, changing our perceptions of what we can accomplish. We may set the parameters, but the operations are no longer ours.

However, we expect the technology to deliver outcomes just the way we want. Wearables track our movements, sleep, health, etc., yet, we set our own goals expecting the wearable to participate in helping us to deliver against our personal strategy.

Robotics and AI (supposedly) make our choosing and using easier. But, can robots or AI deliver humanized ease of mind? What happens when you take the person out of personal? What happens when we take the self out of self-service?

We appreciate the convenience benefits of the digital world. However, we desire the experience of human contact. In an increasingly digital world, we seek person-to-person contact. Of course, each cohort perceives self-control and the relationship of man and machine differently. One challenge for brands is to maximize each customer’s desire for being in control while in many cases not being the controller. In the battle for the soul of control, the best brand experiences will be the optimization of DIM and DIFM: control delivered my way, regardless of who or what is in control.

To understand how at odds are these two sides of branded customer service look no farther than CVS and your local grocery store.

The chief digital, data, analytics and technology officer at CVS, Tilak Mandadi, spoke with The Wall Street Journal about the future of the CVS customer experience. Mr. Mandadi stated that CVS research indicates customers want “accurate real-time status of their order, wanting to know where is their prescription and when that prescription will be filled.“ So, CVS is building a new self-service app. This new CVS app will employ “conversational AI” using natural language. Mr. Mandadi believes the conversational app will be able to answer most customer questions. And, this new self-service will not include “annoying menu-based options such as press 1 for this and press 2 for this, etc.”

In real life, pharmacies are struggling. Profits are at risk. For example, Walgreen’s is closing stores. Walgreen’s dismal reporting to analysts detailed the challenges facing drug stores. Walgreen’s says that its store closings will not entail firing employees, just reassignments. On the other hand, CVS “cut costs and thousands of jobs” according to The Wall Street Journal. Pharmacies including CVS say they are committed to staffing stores but there have been complaints and mistakes. The Wall Street Journal indicates that there are reports of overworked staff and “dangerous” order-filling errors.

Self-service, according to CVS, will place some of the pharma responsibility onto the shoulders of the customer while reducing the need for pharmacists to attend to phone calls. The tacit understanding seems to be that there will be less need for extra personnel.

The CVS app will also test how much trust customers will invest in the CVS brand. After all, this is our personal health and wellness. Pharmaceuticals go beyond aches and pains to life and death. AI, conversational or not, takes the human out of experiences, especially service. Who or what do we trust?

Trust is at the heart of all relationships. Can customers trust voicing their feelings, fears and their human interactions to AI? Is trustworthiness related to degree of technology or to depth of human service? Can trust be digitized? Can pharmacy services be trusted if it is an algorithm? Or an inanimate conversationalist? Is CVS having these discussions?

Trust is earned, not given. Customers must trust the technology to deliver the promised brand experience in a quality manner. Customers must trust the machine to perform the task and without depersonalizing and dehumanizing the task. Doubt damages trust. Damaged trust destroys brand value.

Another challenge for brands is whether trust can be de-humanized. To what degree? Brands must determine how much is technology and how much is human. Then, ensure quality delivery of both. There are going to be areas where human autonomy is needed. Can the app know when to turn the conversation over to a real person?

There is a definition of service as “a set of one-time consumable and perishable benefits. It relies on the human connection aspects of a relationship.” But, the CVS app is allocating the services to a non-sentient operation. Helpful assistance makes life easier. But, each brand experience requires different levels of technological integration. Sometimes it is necessary to have a human on the other end.

Digest this CVS story along with another story from The Wall Street Journal about the issues surrounding self-service check-out in grocery stores. Self-service check-out in grocery has not turned out to be the panacea grocery store owners envisioned. Many stores are eliminating their self-service kiosks. Even Amazon has stepped back from its people-less, smart-cart stores. Amazon’s lesson is described as not grasping the desire for human interaction in the supermarket.

Regarding self-checkout, as with all technology, there are always glitches. This necessitates an employee standing by for assistance. There is theft. Just like the behaviors on National Geographic’s How To Catch A Smuggler, self-service check-out seems to attract those with sneaking and cheating behaviors where certain items can be manipulated to lower prices on larger items. California has a new proposition ready for a vote that would post one employee for every two self-check-out registers. The only function for these employees is to assist customers and, hopefully, spot the sneaky ones. Self-checkout is supposed to be an efficiency provider: fewer employees at registers. Now, those employees are still on payroll, just doing a different job.

As for customers, only 26% of shoppers over 60 like self-service check-out. Under 45 year olds are most likely to approve of self-service, with a little more than half of the under 45-year olds saying the preferred self-service. As with everything, age matters. Brands need to find ways in which to satisfy customers of different cohorts without trespassing on the brand’s core reason for being.

Furthermore, new data in an article in Harvard Business Review reveal that for office personnel AI can make office workers feel lonelier and less healthy. Is there a possibility that grocery and pharmacy customers, looking for assistance and solace will feel the same way as office workers from frequent interactions with a conversational bot? Will cashiers and other grocery staff start to feel lonely?

So, with contradictory needs of Do-It-Myself and Do-It-For-Me, what happens with brands like CVS? All brands must continue to build and nurture a strong, adaptable, flexible intelligent and empathetic corporate culture. Digitized does not mean dehumanized. Yet, the technological changes in the workplace should not allow a dehumanized personal experience. CVS may be treading a fine line. Brands must determine by customer set where the line is between machine and me.

At the same time, brands must deploy self-service and control within the framework of their mainspring fundamental ethos. Don’t allow technology to impinge upon the brand’s core essence and reason for being. As the executive vice president and chief information and technology officer at CarMax told a Deloitte interviewer, “We’ve done a lot of cool things through machine learning and AI. I’m now focused on ensuring that whatever we deploy as a company is being used responsibly and in ways consistent with our core values.”

Gap And The Contradictory Leadership Challenge

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Brands face the challenges of optimizing contradictory customer needs. This is because customer do not want to compromise one benefit for another. Leaders face the same challenges. Leaders must figure out ways to maximize seemingly uncompromising views such as focusing on profitability and sustainability. Or focusing on core customers’ views while satisfying other customers’ views.

Another seemingly difficult leadership challenge is being data-driven rather than creative-driven and vice versa. This is the problem that has faced many retailers. Fashion needs data. On the other hand, fashion decisions, are in many cases, creative, gut-driven decisions. And, data-driven versus creative-driven is apparently seen as a challenge that plagues Gap, the once popular, de rigueur clothing establishment.

A creation from 1969, Gap was a store stocked with Levi’s denims. It promised to never be out of stock. The clothing was available in all styles and sizes. An instant hit with the baby boom cohort (the Gap name came from the concept of the generation gap), soon there were stores nationwide. It was not until the 1980’s that a new CEO focused on raising the style level. Gap was great until it was not great. 

In its latest analyst earnings call, Gap signaled a less than encouraging forecast. Reporting indicates that Gap dragged down the overall company (Banana Republic, Athletica, Old Navy and Gap).

One of the problems with brand management and marketing is the mystique of measurement. As business has become more demanding, business has become more defensive. In a world where marketing activities and budgets are being squeezed by limited resources, there is a tendency to over-rely on metrics.  Sometimes, leaders allow the mystical muscle of measurement to take over the role of marketing expertise and experience. Creativity is forced to conform to measures. While there is much that we can measure, there is also much that is not measurable. If the value of marketing and creativity need validation within the organization, then the organization has a bigger problem than can be solved through measurement. 

It is necessary to recognize that data show us what has happened. Data are backward looking. And, in most cases, data do not tell us why customer behavior is what it is, only what it is now and what it was then. 

At Gap, there were CEO’s who leaned towards fixing Gap’s issues by drilling down on what data were showing. Until recently, with the hiring of a creative-style-focused leader, Gap has cycled through executives who, according to The Wall Street Journal, fixed “weak spots here and there but (these) were not the fundamental problem.” Gap’s new CEO is “the first creative-minded leader” in quite a while.

These Gap fixes were important. But, when the enterprise is clothing, creativity is important too. It is possible to maximize creativity and data. All that a brand needs is a leader who is insight-focused acting on informed judgment.

Leadership, regardless of industry, must not allow process to dictate over passion.  Leadership must not sacrifice accountability on the altar of measurement. Leadership must not fear failure. When decisions fail, it is very easy to say, “It is not my fault. The measurement process made me do it.” 

Disciplined research is an important contributor to effective business management. But, research discipline alone cannot be creative; it cannot be innovative. Measurement can evaluate but not create ideas. Creative ideas require creative insight. People provide these insights based on data and judgment.

Real, actionable insight will not come from superior data analysis. Superior analysis provides understanding of where we are and how we got to where we are. Superior analysis does not provide insight into what kind of future we can create. 

Leadership must use their expertise and their judgment. Leadership must use their creativity to make reasoned, informed, and insightful decisions. 

In this increasingly competitive, sometimes frustrating brand-business world, there is a pervasive fear of taking the leap of faith based on informed judgment. Informed judgment is not guesswork. Of course, no one intentionally commits valuable resources to something that is likely to fail.

Informed judgment is critical. The emphasis is on “informed.” Personal judgment can become a hindrance to success. 

In 2011, Ron Johnson, the former star of Apple’s retail stores, took on the CEO role at J.C. Penney. Mr. Johnson had some ideas as to the direction of J.C. Penney. According to the press, most of these ideas went untested. These ideas were not particularly “informed.” The result was a retail debacle.

On the other hand, informed creativity is a formula for success. The Wall Street Journal cites the case of Abercrombie & Fitch. A new CEO made a huge difference using informed creativity. It was clear that Abercrombie & Fitch’s “cool-kids” approach lost its luster. The brand-business’ revitalization changed the target audience and the over-reliance on logos, “to cater to working-age adults who might be searching for tasteful wedding guest outfits.”  This type of rejuvenation relies on creative interpretation of data.

Part of the problem comes from the muddled definitions of information, trends and insights Not only do we tend to use these terms interchangeably but also, we overuse and misuse the word “insight.” 

This matters because there is a relationship between information and trends, and trends and insights. Information happens first. Information leads to the generation of trends, which then lead to the creation of insights. It is a process that sets the context for creativity. 

Information are facts. And, in our data processing world, information are data that are processed, stored and/or communicated. There are massive amounts of data being processed into massive amounts of information. 

A trend is something that is developing or changing. A trend is enduring. A trend is an idea or concept that is happening around us and influencing the way and manner in which we behave.

Trends have implications, of course. And we can generate strategies to address these trends. 

But, trends are not insights.  Trends are valuable because they inform us about the world around us.  But, collecting and analyzing information and turning these into trends are not enough. We must go from information to insight.  

Informed insight is not guesswork. Insight means seeing below the surface of information.  Insight is all about “why?” This necessitates synthesizing rather than only analyzing.  Analysis travels backward. But brand-businesses move forward. Use synthesis. Synthesis means, “the combining of diverse concepts into a new coherent whole.” Analysis leads to understanding what is happening and why.  Synthesis leads to insight into what might happen. 

Trends are general. It is the insight about the trends that is critical.  It means looking under the surface, beyond appearances and seeing ahead. Meaningful insights are more than mere information and trends. 

A consumer insight is not what you always believed. A consumer insight is not driven by what the factory makes. A consumer insight is not just information or facts. A consumer insight is not product attributes. 

An insight needs to meet two criteria: 1) Surprise at what you learned; and, 2) As a result, a change in behavior based on this learning. An insight is a fundamental consumer truth that has the power to open our eyes. It is relevant, recognizable, believable, ownable, adaptable to geographies and capable of building business for the long-term.

Right now, Gap could use some creativity-driven informed insight. The Wall Street Journal indicates that many on Wall Street are pleased with the choice of a creative leader for Gap. As newly appointed CEO, Mr. Richard Dickson stated that it is time to redefine the Gap’s image for consumers. Mr. Dickson also admitted that many problems were self-inflicted. One way to rejuvenate Gap will be to recognize the limits of data-driven only strategies. Data will be key but as a way to inform judgment, allow executives to take that informed leap of faith, and help evaluate ideas. 

Tupperware: Trapped in Tendencies for Trouble

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We may soon have a world without Tupperware. Recently, there have been numerous doom-laden reports on the sad situation for this iconic American brand-business. In fact, a brief Nexis search of Tupperware-demise articles for the past week alone turned up 13 pages of commentary. 

Pundits and analysts identified the many reasons for Tupperware’s dire straits. There is the lack of innovation. There is the lack of focus on the changing roles of women. There are the two-year Covid-19 restrictions on gatherings. There are the supply chain issues created by Covid-19. There are the price increases on materials. And, so forth.

Tupperware has yet to die. But, what is clear is that the brand-business fell victim to several brand-business tendencies for trouble. Not every brand-business enmeshed in troubling landscapes dies. Brands such as Lego, Campbell’s, McDonald’s have all been in trouble and managed to claw their way back to incredible success. Even Toy R’ Us is actively seeking rejuvenation with its stores inside of all Macy’s stores. Unfortunately, others such as Blackberry, Nokia, Sears, Avon, Kodak and Bed, Bath & Beyond have left the scene, are leaving the scene or are shadows of their former selves. Sometimes brand-business decline is a fast, free fall. Sometimes it takes decades. Some observers indicate that Tupperware’s current troubles were years in the making.

Tendencies for trouble are the result of brand mismanagement. Tendencies for trouble must be considered as “stop-now” behaviors and attitudes. When it comes to brand-business revitalization, brand-business teams need to eliminate these “stop-nows” as these are impediments to invigoration. 

Tendencies for trouble have financial consequences. Anything that stops a brand-business from growing customer-perceived brand value has financial consequences. Customer-perceived brand value depends on renovation, innovation and relevant differentiation. Without customer-perceived brand value, there is no shareholder value.

Tupperware is a poster child for several corporate tendencies for trouble. The jury is out as to whether Tupperware will find a pathway back to success. However, in order to do so, Tupperware will need to reverse its engagement with the behaviors and attitudes that have forced the brand-business into its downward spiral.

First, Tupperware became complacent. Complacency is comfortable but it is a hindrance to success.

For brand-businesses, complacency must be avoided. Complacency stops ideas and innovation. Complacency allows brand-businesses to stop focusing on changing customer needs. Complacency permits employees to keep on doing what they are most comfortable doing, lulling people into laziness and inaction. Complacency crushes curiosity and creativity. 

Complacency gives brand-businesses permission to stop looking at the changes in the world and in its specific market segment. Specifically, complacency takes eyes off new entries in your category and in identified segments. Complacency blinds a brand-business to the forces of the changing world. It creates a “staying alive” mentality rather than a “moving forward” mentality. Complacency supports the static mind-set that keeps the brand away from risk. As the Frederic Forrest character Chef says in Apocalypse Now, “Never get off the boat.” 

Complacency is simply brand-business mismanagement. Brands are not passive; they are promises. Brands are active promises of an expected, relevant, differentiated experience. Brands can be soft, quiet, traditional, laid back, and chill. But, they have to move if they want to deliver a relevantly differentiated experience. Complacency is anti-movement creating inaction and, eventually, irrelevancy. 

The more powerful and successful the brand, the easier it is to walk off the complacency cliff. Complacency leads brand-businesses to believe that there is now nothing left to do but live off past success. 

Brand-businesses that fall into complacency due to their belief in their historical power lose because other brands in the competitive set are innovating all the time. Complacent brand-businesses are so enamored with their success that they stop looking outside at new entries and new threats.

Complacency is a culture flaw. Brands need leaders who fight complacency. Complacency is satisfying. But, from a brand-business perspective, it generates inaction supporting the trajectory of continuing to do what has worked in the past instead of what will work in the future. 

Second, Tupperware fell for the belief that what worked yesterday will continue to work today and tomorrow.

Customers change; the world changes; brand reputations change; competition changes. Doing what once worked when the current landscape is different makes no sense. Standing still while changes rage around you is a formula for failure. 

Peter Drucker, the marketing guru, recognized the pitfalls into which so many great brand-businesses fall when it comes to doing the same thing over and over again. His lessons include these: 

  • Environments change. Continuing strategies and actions that created past successes will eventually lead to failure. 
  • Being defensive and unyielding will also lead to failure. Brand-businesses must be willing to (quickly) abandon formerly successful approaches. 
  • Believe that change will happen and that sometimes the change will be revolutionary. Brand-businesses should create the future by making changes even though it means “obsolescing the products or methods of its current and past success.” 

Leadership is critical. Brand-businesses need leaders who are able to change their minds and switch direction when necessary. Leadership must be able to ditch a no-longer-viable strategy. At some point, leadership must be able to say that it knows as much as it can know and is capable of making an informed judgment call, even if it seems to be a leap of faith. 

Markets and customers change quickly. Brand-businesses must be flexible, agile and quickly decisive. This is why it is important to have leadership that is willing to look outward rather than backward. Just think of all the brand-businesses that had to quickly rethink and implement new strategies when Covid-19 restrictions changed people’s lives.

Building a culture that is not afraid of letting go is critical. This does not mean giving up the brand-business’ core values. It does mean being ready to take leadership in a fast-moving, changing world. Staying out of trouble hinges on how willing the brand-business’ leadership is to recognize when it is time to move on and jettison a strategy that is holding the brand back. 

Third, Tupperware disregarded the changing world.

 Not paying attention to core customers and their changing wants and problems means the brand-business is not up to speed. Disregarding the changing world means not understanding and attracting prospective, like-minded potential new customers. Disregarding the changing world means not renovating or innovating a brand-business. This means not thinking about the present or thinking about the possibilities for tomorrow. Disregarding the changing world means the brand-business is looking backward, trying to reproduce the past. The brand-business is not evolving with the changing times.

Tupperware missed adapting its in-home party model when women quit staying home and went to work in an office. Tupperware turned a blind-eye to the behaviors and attitudes of new younger cohorts. Tupperware did not pay attention to people’s lack of free time.  Tupperware missed competitive entries.

Covid-19 was just a fraction of Tupperware’s problems. Tupperware’s problems started a while ago. Like Avon, Tupperware suffered from lack of recognition that women were no longer at home all day. Additionally, Tupperware did not recognize that younger cohorts were less interested in plastic than previous generations. These younger cohorts were interested is more eco-friendly products and services. SodaStream built its business on consumers’ dislike of buying so many bottles of sparkling water. Recently trending is the idea of reusable containers for take-out foods and restaurants.

Tupperware missed the decline of leisure time. Having or attending a Tupperware party carves out precious time from individuals’ time banks. Tupperware parties may be a luxury in a world of time-deficient people. Tupperware time might be the only time a family has for being together. This is a trade-off that most people will not make.

And, then there is the competition. Tupperware missed plastic food-container products from grocery stalwarts in the plastic bag business such as Glad and Hefty. Tupperware missed competitive food container products from take-out deliverers and restaurants. Tupperware overlooked the food containers from delicatessens. 

Lots of brand-business observers believe that there is a natural brand-business life cycle from birth, to growth, to maturation, to decline, to death. This is wrong. Brand-businesses do not inevitably die. They can live forever. Brand-businesses get into trouble due to self-inflicted actions of brand-business owners and leaders. Brand-businesses die from brand-business mismanagement.  Tupperware neglected staying relevantly differentiated. Having the lid make a ”burp” sound when closing is just not enough in today’s world.

And, then, there is the name. Some analysts are saying that Tupperware allowed its name to become generic for the category. It is true that Tupperware has become the category definer. However, other brand-businesses have managed to maintain the integrity of their brand-business while becoming a catch-all name. Kleenex and Scotch Tape, for example, have well-defined, relevant, differentiated positions in customers’ minds.

Bloomberg BusinessWeek ran an article indicating that a transformation at Tupperware will take another Brownie Wise, the woman who inaugurated and ran the hostess parties. Maybe this will work. 

Tupperware has the opportunity to revitalize its brand-business. It will be a challenge. But, it can be achieved. However, in order to do so, the Tupperware brand-business will need to extricate itself from the trap of the tendencies for trouble.

Hermès-NFT Trademark Suit Branding

The Hermès-NFT Trademark Suit Did Not Change Brand Legality

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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.

The End of An Era: The Dodge Challenger And Dodge Charger Are Now Muscled Out

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In July 1965, Bob Dylan went electric at the Newport Folk Festival, abandoning the acoustic guitar for the rock genre that was sweeping through the counterculture. It was a defining moment for music and for a changing society.

The segue to electric vehicles has been at a slower pace; more of an evolution than a revolution. Up until now, drivers have had the option for electric vehicles. Since 2006, there was Tesla. General Motors (2016 Bolt) and Nissan (2010 Leaf) were available. These days, eyeing Tesla with envy, all of the other domestic and international automotive manufacturers have jumped on board with laser-like focus on being the first choice electric vehicle. But, the transition for drivers will not be overnight.

As far as electric vehicles go, there has not been that instant recognition moment that the world has changed… until now. Sadly, or not, the checkered flag has come down on brands that epitomized the gas-guzzling, hyper-powered American automotive dream.

This week was the end of the brand promise of the American-made pursuit of horsepower and performance. This week was the end of powerful gas-powered performance-oriented muscle cars that express the drag-racing, car chasing quarter-mile crushing spirit of the street.

This week was the end of The Dodge Challenger and The Dodge Charger. Good-bye, Dukes of Hazzard (1969 Dodge Charger). Adios, Fast and Furious (1969 Dodge Charger). Never again, Vanishing Point (1970 Dodge Challenger R/T 440 Magnum). Car chases will never be the same.

Car enthusiasts received the news that those American-made, 2-door sports coupes with V-8 engines designed for high performance driving, rear wheel drive, street performing vehicles were giving up life for the electric car. Muscle cars are now officially muscled out.

Stellantis, owner of Dodge, announced that the Dodge Challenger and the Dodge Charger will be excised from the Dodge line-up. Both the Charger and Challenger will be discontinued at the end of 2023. According to The Wall Street Journal, Dodge is hoping that its loyal muscle car buyers “will embrace a new kind of muscle: one that runs exclusively on battery power.”

This new “muscle car” will be an all-electric concept vehicle designed to embrace the memory of the gas-powered Dodge Challenger and Dodge Charger.  The new EV is expected to go on sale in 2024. It will be the Dodge’s first fully electric model.

Dodge hopes that calling the EV concept car the Charger Daytona SRT, “after the vehicle that first broke 200 miles an hour on a NASCAR track in 1970,” will lessen the pain of the loss. To make the transition even more natural, Dodge also created a synthetic “exhaust tone” designed to reproduce the “thunderous roar of its gas-engine muscle cars.” 

It will be interesting to observe whether a synthetic exhaust tone will jump-start sales. The Dodge Charger and the Dodge Challenger are beyond iconic brands in the lore of American automotive. 

The Dodge Charger’s first year was 1966. The car was an attempt to manufacture an upscale, upsized, affordable, highly-styled rear-wheel pony vehicle. A pony car defined a vehicle model that was performance-oriented, compact but with a long hood, either a coupe or a convertible at a reasonable price point.

The Dodge Challenger’s first year was 1970. It is considered to be Dodge’s late response to Ford’s Mustang. The long-gone, but gorgeous Pontiac Firebird and the Mercury Cougar were also in the competitive set.

Muscle cars were hot. But, during the 1970’s, their sales declined as new amendments on emissions from the Clean Air Act had an impact; there was a fuel crisis and insurance costs rose.

However, car enthusiasts kept the flame alive. The Dodge Charger and the Dodge Challenger were vehicles originally manufactured by Chrysler, a brand that underwent a series of mergers and de-mergers, finally winding up in the arms of Italian automotive maker Fiat. 

However, Stellantis will give us one more year to manage our angst. Stellantis tells us that the Charger’s and Challenger’s last model year will be a throwback. The goal is to keep the brands alive in the minds’ of its loyalists so that these buyers will make the segue to the EV version. This is a big bet. Giving us the best of the best for one last time may make us view the electric model as cringe-worthy.

As reported in JALOPNIK, an online automotive newsletter, Dodge will use the last models to “pay homage” to the Charger’s and the Challenger’s past. There will be seven models, colors from the cars’ heydays and an “expansion of SRT Jailbreak models.” The Jailbreak models will include the 717 horsepower Charger and Challenger SRT Hellcat. 

The idea is to connect each 2023 model with some element of Dodge’s 1960’s and 1970’s history. There will be a “Last Call” plaque on each vehicle as well as a nod to the American origin of both brands “Designed in Auburn Hills” and “Assembled in Brampton.”

The CEO of Dodge, Tim Kuniskis said, “We are celebrating the end of an era – and the start of a bright new electrified future – by staying true to our brand. At Dodge, we never lift and the brand will make the end of our iconic Charger and Challenger nameplates in their current form in the same way that got us here, with a passion both for our products and our enthusiasts that drives us to create as much uniqueness in the muscle car community and marketplace as possible.”

This sounds great. But, the reasons for the demise of the Charger and the Challenger brands are more complicated and not as brand-passionate as stated. To stay competitive, Stellantis has stated that it wants half of its portfolio to be battery-operated by 2030. This cannot happen with The Challenger and The Charger in the roster.

The Wall Street Journal indicates that Dodge and other makers of sports cars have the problem that the popularity of their models “mostly resides in the power and performance of the engine. Some, like the Chrysler-developed Hemi engine, have become recognized names in themselves.”

Additionally, “the popularity of gas-guzzling models like the Challenger and Charger are dragging down Stellantis’s average fuel-economy rating, which has long lagged behind competitors. That has resulted in the car maker having to pay fines for failing to meet certain environmental regulatory requirements.”

In July, Stellantis announced that it had allocated $685.5 million in anticipation of fines related to not meeting US fuel-economy standards.

One dealer speaking with The Wall Street Journal said, “The transition to electric is going to be important, and I don’t know that we will still have those same buyers,” said John Morrill, who owns a dealership in Massachusetts that sells the Dodge, Jeep, Ram and Chrysler brands.

He said muscle cars attract a very specific kind of old-school customer and getting the shift to electrics right will be critical because the brand’s lineup is already narrow. Dodge currently sells only three models.” Another dealer agreed, saying that he did not see current muscle car drivers making the transition.

If you are in doubt as to the impact of ending the lives of The Challenger and Charger, please note that these two brands “accounted for nearly 62% of the brand’s U.S. sales in 2021. The third model is the Durango SUV.” Other muscle car competitors have not fared as well. And, Ford has already manufactured an EV version of the Mustang.

Whatever the case, the reality is that the end of The Charger and The Challenger marks an end of an American era. It is unclear whether an EV with a synthetic sound may help. American muscle cars were defining. All you need to do is type into Google “muscle car chase scenes” to confirm how embedded muscle cars are in the American psyche.

Dodge is mindful enough to recognize that its muscle car loyalists may not transition well. But, the exigencies of a changing world, changing consumer behavior and changing regulations require automotive companies to change their ways.

It takes guts to cancel The Charger and The Challenger brands.