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Walmart Where Frugal Is Fashionable

August 19, 2024/in Articles /by Jay York

“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?

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.

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.

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.

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.

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.”

Dior’s Dilemma And Anorexia Industriosa

July 16, 2024/in Articles /by Jay York

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

July 1, 2024/in Articles /by Jay York

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

August 28, 2023/in Articles /by Jay York

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

May 1, 2023/in Articles /by Jay York

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.

Whirlpool And The Need For Ease Of Mind

January 30, 2023/in Articles /by Jay York

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.

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

August 22, 2022/in Articles /by Jay York

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.

The Revitalization Of Barnes & Noble

April 25, 2022/in Articles /by Jay York

Recently, The New York Times ran a lengthy story about the revitalization of Barnes & Noble, the last book megastore on the American retail landscape. Although some still question the future of the brand, there is no question that Barnes & Noble has come back from the brink.

In August of 2019, activist hedge fund Elliot Management Corporation purchased Barnes & Noble for $683 million (including debt), taking the bookstore brand private. At the time, responses from the trade and business presses were interesting. Financial Times called the deal “contrarian” while The New York Times hailed the purchase as “a sigh of relief” for book retailing. Elliot Management already owned a UK bookseller, Waterstones and had been successful achieving a turnaround of that UK brand. The turnaround was led by Waterstones’ CEO James Daunt.

Still, for Elliot Management, Barnes & Noble presented a challenge. The brand had survived close calls many times over since its inception in 1886. (The name Barnes & Noble did not appear until 1917.) The environment for large mega-bookstores was not particularly favorable in the mid-2000’s. Barnes & Noble’s competitor Borders went belly-up in 2011. To counter the onslaught and inroads of electronic books and Amazon’s online sales, Barnes & Noble added non-book items such as music, children’s educational toys, events, and Starbucks’ cafés. Barnes & Noble created its own ereader, Nook, to compete with Amazon’s Kindle, but gave Nook very little attention. Barnes & Noble found itself in the unfortunate middle between Amazon and small, independent stores catering to specific subjects mirroring either the tastes of their owners or satisfying local predilections. Barnes & Noble’s stores became a jumble of books and merchandise unrelated to books.

The business press and many readers questioned whether Elliot Management could reignite Barnes & Noble for a future of enduring profitable growth. There were many who thought the Waterstones experience was not transferable to the US.

Elliot Management believed that the strategy used by James Daunt at Waterstones – allowing local bookstores to cater to local tastes providing an in-person experience – would work in the US. After all, localization was, and still is, an important driver of sales. So, Elliot Management asked Mr. Daunt to take the CEO position at Barnes & Noble.

As described in The New York Times, “His (Mr. Daunt’s) theory was that chain stores should act less like chain stores and more like independent shops, with similar freedom to tailor their offerings to local tastes.”

When asked about his plan for Barnes & Noble, Mr. Daunt stated that he was not interested in “remaking” Barnes & Noble as Waterstones: he just wanted to make Barnes & Noble a better bookshop. Along with the localization strategy, Mr. Daunt put power back in the hands of the general managers. Mr. Daunt indicated that he would not dictate to the local store managers and staff. Let the general managers select books of interest to that particular store’s customers. Barnes & Noble’s chain strategy had been to fill stores with the same books regardless of geography and neighborhood.

Mr. Daunt’s strategy for Barnes & Noble’ rejuvenation rested on three critical factors. Two of these factors are essential for any retail revitalization (1) “Nothing happens until it happens at retail;” (2) “The General Manager is the Brand Manager.” The third factor is essential for all great brands: 3) “Leveraging A Stellar Reputation.”

Nothing Happens Until It Happens at Retail

Revitalizing Barnes & Noble required revitalizing the brand’s in-store, retail experience. This meant articulating the Barnes & Noble brand promise so clearly that every employee understood what the brand stands for in the customer’s mind. Everything that happens must be focused on bringing this promise of a relevant, differentiated, trustworthy brand experience to life for every customer, every day, in every store.

According to its website, the mission of Barnes & Noble “… is to operate the best omni-channel specialty retail business in America, helping both our customers and booksellers reach their aspirations, while being a credit to the communities we serve.” Mr. Daunt counted on the desire for personal, human contact when buying books, in contrast to Amazon, which uses technology to personalize online promotions and servicing its brick-and-mortar bookstores.

As The New York Times pointed out, “Buying a book you’re looking for online is easy. You search. You click. You buy. What’s lost in that process are the accidental finds, the book you pick up in a store because of its cover, a paperback you see on a stroll through the thriller section.

“No one has quite figured out how to replicate that kind of incidental discovery online. It makes bookstores hugely important not only for readers but also for all but the biggest-name writers, as well as for agents and publishers of all sizes.”

The concept of discovery is one key reason stores such as TJ Maxx and Home Goods are so popular.

The General Manager is the Brand Manager

No one knows a marketplace locale and its customers better than the store’s general manager. It is the role of the general manager, along with staff, to deliver the brand’s great experience to customers. The general manager brings the brand to life making sure that each and every customer contact meets expectations. It is the responsibility of the general manager to assure the brand lives up to its promises.

Whether hotels, restaurants or other retail establishments, the importance of the general manager needs to be recognized. The general manager knows the customer’s needs and problems and how to solve these problems. The general manager knows the neighborhood, community and local business relationships. To localize and personalize the Barnes & Noble brand experience, the chain allowed each store’s general manager to be the real brand manager. Each store manager was, and is, in charge of localizing books for locals’ preferences.

Leveraging A Stellar Reputation

Just because Barnes & Noble was in crisis at the time of the Elliot Management purchase, did not mean Barnes & Noble had lost its positive reputation. The Reputation Institute’s 2018 US Retail RepTrak® Rankings, cited Barnes & Noble as the: “#1 most reputable retailer in America.”

Data show that brand reputation can alter customers’ preferences for products and/or services they might consider buying. Brands known for being extraordinary in their market gain customers’ confidence. Exceptional reputation distinguishes a brand from brands in its competitive set. A great reputation allows a brand to potentially secure a premium price, generate positive word-of-mouth support and be a barrier to copy-cat brands.

Reputation is based on perceptions that the brand is able to consistently meet the expectations of its stakeholders. The brand must consistently perform its activity over time in a quality manner.

In a dynamic and uncertain world, people seek familiar touchstones of expertise, authenticity and trust. Trust is an increasingly important factor in customer decisions. A strong, trustworthy business reputation contributes to high quality revenue growth.

Reputation is a source of confidence. Reputation provides customers with authoritative information and credibility. Reputation provides continuity and consistency across all platforms.

Reputation is the overarching evaluation of past performance. A brand can learn from the past and build on that past. For Elliot Management and its Barnes & Noble’s CEO, James Daunt, the key issue was not what Barnes & Noble had accomplished. The key issue was how these past accomplishments were going to drive the brand’s future. What Barnes & Noble did to move forward was not live off of its reputation, but leverage that reputation as a pathway to a profitable, enduring future.

By focusing on the individual store to deliver the Barnes & Noble brand experience to its local geography and/or neighborhood, the brand succeeded. Barnes & Noble merged its glowing, solid reputation with two other fundamental principles that drive retail, nothing happens until it happens at retail and the general manager is the brand manager.

Brands and Warnings Labels: Europe’s Nutri-Score and Lessons From The US

March 14, 2022/in Articles /by Jay York

Beginning in 2017, Nutri-Score, the European food labeling system, went into effect. Nutri-Score is a color-coded, front-of-pack labeling system created to alert consumers to the nutritional content of food. Nutri-Score is a red light-green light approach that the EU hopes will help consumers make better food decisions.

According to FoodNavigator.com, Nutri-Score ranks food stuffs from -15 for the healthiest product to +50 for the least healthy. Using an algorithm, Nutri-Score assigns a “grade” with a corresponding color from dark green (A) to dark red (F).

The algorithm merges data on fat, sugar and salt content per 100g/ml of a given product, comparing against fruit and vegetable content, fiber and protein. So, for example, cheeses, European cultural icons, are 80% of the time “penalized” with a D or an F… the dark red doom designator. According to online NewsTex Blogs, the protected-origin producers of Italian cheeses Parmigiano Reggiano, Grana Padano and Asiago are furious. Parmigiano Reggiano is allowed to use only three ingredients – cow’s milk, sea salt, rennet – and not allowed any additives or preservatives. Yet, these national treasures will be graded as dangerous.

Spain’s meat industry is up in arms, believing that Nutri-Score focuses on “negative ingredients” sorting foods into “good foods” and “bad foods”. Italy believes that Nutri-Score is a cultural tsunami designed to wipe out its cuisine. The Mediterranean Diet is considered one of the healthiest in the world according to UNESCO, as well. However, Nutri-Score rates Italian food stuffs such as cheese, cured ham and olive oil as less healthy. Spain has decided not to use Nutri-Score on its olive oil.

The stated reason for Nutri-Score is Europe’s high level of obesity. One in two Europeans are considered overweight or obese. The European Consumer Organization believes this is a public health crisis exacerbated by COVID-19, since weight is considered one of the pandemic’s biggest risk factors. Reporting on Unilever, Financial Times pointed out that The World Health Organization (WHO) states obesity has tripled globally since 1975. And, although governments are looking to combat obesity, there are “contentious” issues as with confectionary and “treats”. Financial Times quotes a financial advisor who indicated obesity is now considered an ESG issue (environment, social, governance). But, he said, to think that labeling and other initiatives will stop Lindt from selling chocolates or Diageo from selling alcohol will just not fly in Board rooms. Shareholders will not shoot themselves in the foot by eliminating the dividends.

Nutri-Score aims to change consumers’ behaviors. The hope is that consumers will see the colors and the letter grades and make healthier food choices because of the foods’ nutritional composition. With this transparent “health” information on the front of the package, consumers will compare items not just on price but on being a better overall nutritional choice.

Although dished up as a nutritional classification system, Nutri-Score is essentially a warning label. After all, if your brand is marked with a dark red F, the implication is “eat this and you are one bite away from a coronary.” This dark red F is today’s scarlet letter.

As you can imagine, Nutri-Score has engendered a lot of push back. Six global brands – Nestlé, PepsiCo, Coca-Cola, Modelez, Unilever and Mars launched their own system, an initiative that quickly failed. The common agreement among the big global food companies is 1) that there are no bad foods only bad diets; 2) that all foods have nutrients; and 3) a balanced diet has room for a Snickers bar or a soft drink. Just remember to eat in moderation.

Even with all of the push back and national indignity, most of the large food firms have signed on to Nutri-Score. Several supermarkets, such as Carrefour and Lidl have also signed on.

The European powers that be and the signatories to the labeling are quite vocal that based on research Nutri-Score is the best “labeling scheme” currently available. This caveat should be kept in mind: Nutri-Score is not perfect, but it is the best we could do. Several different warning labels were tested; Nutri-Score was the winner… perhaps the best of the worst?

The CEO of Danone said “… no system is perfect, yet the company sees Nutri-Score as the best label currently available for people to compare products’ nutritional quality at a glance. We support the call to make it mandatory in the EU.”

The CEO of Euroconsumers, an umbrella organization designed to “promote and defend consumer interests” across a wide range of topics such as freedom of choice and right to health issues, agreed. He said research from several European countries “… shows that Nutri-Score is the easiest label to understand and the best-performing scheme in aiding consumers to compare the nutritional value of foods and range of products.” Again, based on the different options tested, Nutri-Score was the easiest to comprehend at a glance: green good/red bad.

In the US, we are familiar with warning labels.

It is difficult to find a product that does not have a warning label on its package. From baby wipes (the plastic package can cause suffocation, do not flush the wipes) to vehicles (keep the visor closed so the air bag can deploy, SUVs have a high risk rollover) to Whole Foods rice pilaf products (contains wheat ingredients, may contain milk, eggs, shellfish fish and soy).

When it comes to warning labels, California leads the way. if you want to have your pants scared off, go into any common laundry room in an apartment building. You will see warning signs that washers and dryers are dangerous to your health. This warning comes from California’s Prop 65. California’s Prop 65 states that appliances may contain harmful chemicals that can cause cancer and/or birth defects or other reproductive harm. Prop 65, introduced in 1987, has a list of over 800 potentially dangerous chemicals. For example, if you were thinking of a new couch from Wayfair just remember that California Prop 65 can put a warning label on your desired product. The warning will alert you that the sofa can expose you to levels of a listed chemical or chemicals that pose greater health risks than another piece of furniture with lower levels of listed chemicals. Do I want to binge TV on a bad-for-my-health couch?

California is an extreme example. However, the issue is, do warning labels work? People still buy and use washers and dryers. People still buy furniture. Do warning labels actually change behaviors? Are warning labels good or bad for brands?

Clearly, warning labels protect the manufacturer from liability issues and PR nightmares. Peloton had a crisis this past year when a child was killed by its Tread product. Peloton fought a warning label but eventually conceded. Did the warning label stop consumers from purchasing the product? Or was it the cost? Or was it the decision to return to the gym? Or the decision to return to the outdoors?

The warning labels on cigarettes and alcoholic beverages provide some important information on behavior change.

In 1969, the US passed the Public Health Cigarette Smoking Act. This act prohibited cigarette advertising on TV and radio. It also required each cigarette pack, carton and print ad to carry a warning label: SURGEON GENERAL’S WARNING: The Surgeon General Has Determined That Cigarette Smoking is Dangerous to Your Health. The warning label was – and still is – a white rectangular box with black letters. A recent print advertisement for Lucky Strike brand, used this version of the warning: SURGEON GENERAL’S WARNING: Smoking by Pregnant Women May Result in Fetal Injury, Premature birth, And Low Birth Weight.

Kodiak Moist Snuff (chewing tobacco) runs a black box (twice the size of the cigarette warning box) with white letters stating, WARNING: This product can cause mouth cancer.

Do these warning labels work? Here is what we know. First, seeing a warning label is not the same as reading a warning label. Reading a warning label is not the same as heeding the warning label. Second, people who saw the white box knew it was the warning label. They did not need to read it; they knew it was a warning. Why bother, I know what it will tell me. Third, graphic labels of cancerous mouths, etc., such as some countries use, had negative impact on the image of cigarettes and cigarette brands but did little to affect cessation of smoking.

When the Public Health Cigarette Smoking Act was passed in 1969 cigarettes cost 25 cents a pack. Today, a pack of cigarettes costs, on average, $6.98, or about 35 cents a cigarette. In the state of Florida, smokers pay around $63 dollars for a carton of cigarettes. In 1970, the highest price for a cartoon of cigarettes might have been $3.50. Many believe that cigarette smokers’ behaviors changed due to the rapid increase in prices rather than the warning labels. There are still, 53 years later, multiple PSA TV ads advising us not to smoke. Even at almost $7 a pack, people are still smoking.

In 1988, The Alcoholic Beverage Labeling Act was passed. After November 1989, all alcoholic beverages had to alert consumers to the multiple health issues associated with alcohol including reproductive issues and fetal harm. The current alcohol warning states: GOVERNMENT WARNING: 1) ACCORDING TO THE SURGEON GENERAL WOMEN SHOULD NOT DRINK ALCOHOLIC BEVERAGES DURING PREGNANCY BECAUSE OF THE RISK OF BIRTH DEFECTS. 2) CONSUMPTION OF ALCOHOLIC BEVERAGES IMPAIRS YOUR ABILITY TO DRIVE A CAR OR OPERATE MACHINERY, AND MAY CAUSE HEALTH PROBLEMS. (Yes, the alcohol warning label is in capital letters.)

In one alcohol study, data showed that 64.3% of purchasers saw the warning label; 38.8% of purchasers read the warning label; 25.5% of purchasers said they heeded the warning.

In the US, after decades of food labeling, the results of behavior change are still unclear. A recent study by The American Journal of Preventive Medicine showed labeling “… reduced the intake of calories by 6.6 percent, total fat by 10.6 percent, and other generally unhealthy choices by 13 percent. They also increased vegetable intake by 13.5 percent.” However, these data are not reflective of other data showing that after all the decades of food pyramids and nutritional labeling, there is little agreement and little evidence that food labels affect consumers’ intakes of total carbohydrates, protein, saturated fat or sodium. Nor did labels affect consumption of fruits, whole grains, or other healthy options.

Nutri-Score may be experiencing the same lack of clarity as to effectiveness.

A recent November 2021 Belgian journal article’s data sets showed that Nutri-Score consumer purchases were mixed. There were some positive effects. However, the study concluded that “shelf labeling on its own is unlikely to significantly influence consumer behaviors.”

Other European data indicate that the degree of influence Nutri-Score has on consumer decisions is unclear. An August 2021 study showed consumers were still not clear about the color-coded Nutri-Score. A 2019 Nielsen study showed that only 14% of French consumers “noted the guidance of the Nutri-Score label.” Not surprising when you consider that beloved Brie or Camembert cheeses as well as butter are on the wrong side of the system’s health spectrum. This goes against centuries of French gastronomy.

One of the issues plaguing the Nutri-Score system is credibility. Since its algorithm factors in sugar content, Nutri-Score rated orange juice as unhealthy but rated Coca-Cola Zero healthy. In a Nestlé-generated survey, sixty-percent of consumers thought the Nestlé cereal brands would score well below a C on Nutri-Score. But, Nestlé publicly touted Nutri-Score ratings that its sugared cereals actually earn a C or above on the Nutri-Score spectrum. This is because the system has a positive bias for fiber.

Hopefully, the Nutri-Score system will evolve its algorithm to better reflect the fact that there is a benefit to the idea of balanced diets and moderation. Nutri-Score should fix the blanket rejection of products such as meat. Putting ecological concerns aside, meat does contain iron, vitamin B12, protein and minerals. Nutri-Score does not currently assess the impact of trans fatty acids, something else that meat does not contain. And, Nutri-Score should take into account that not all obesity can be affected by diet. Further, the risk to national cuisines is real and needs to be calibrated. The algorithm also must include portion sizes, a real problem in the US.

Also, algorithms do not recognize the fact we first eat with our eyes. Foods have hedonic feelings associated with taste and emotions that no algorithm can take into account … as of yet. People eat for both physical and physiological reasons. There are differences between eating when one is hungry versus eating for indulgence. Taking delight out of diets is dreary.

Warning labels are all around us, stuck on brands across all categories. We have learned over time that the effect of such labels do some good but less than expected. In many cases, the warnings are ignored, or accepted, or accepted and then ignored. Certainly, it is important to point out that some items are dangerous. For example, the plastic bag draped over your dry cleaning can cause suffocation.

Behavior change is tough. In fact, in most instances, facts, data, experts, or science make people dig in their heels. Social science research on behavior change indicates that asserting science, facts or data to change minds generates a “backfire effect”. When confronted with information that is contrary to set beliefs, some people become even more set in their ways.

This is not to say that behaviors can never be changed. Wanting consumers to change their behavior is not a losing battle: it just requires a different strategic approach. The best way to change behavior is to provide an alternative, desirable solution to their concerns. This is something that Nutri-Score does not provide.

If history is a factor than the Nutri-Score warning label will have an unclear, if limited, effect on behavior change.

Peloton’s Three Marketing Must-Do’s

November 15, 2021/in Articles /by Jay York

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

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

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

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

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

1. Stop The Excessive Price Marketing

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

2. Connect With The Brand’s Purpose

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

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

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

3. Maximize The Paradox of Inclusive Individuality

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

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

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

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