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Nov

Schmoozing the brand samplers

By Kirk Closed

Categories: loyalty, research, retail and strategy

tp_h_wholecare_ppmt_5oz Next time you are practicing your oral hygiene, think about this:

Why can’t Colgate and Crest, the two top-selling toothpaste brands, achieve the customer loyalty of Tom’s of Maine?

And more importantly, if loyalty is the ultimate purpose for branding (as consultants say), why doesn’t Tom’s of Maine dominate the toothpaste category?

Are you familiar with Tom’s? In 1970, Tom and Kate Chappell decided to make and sell their own natural products in rural Kennebunk. They started with a $5,000 loan and the philosophy that their products would not harm the environment. Among other offerings, they launched the first natural toothpaste in 1975.

Tom’s of Maine sells 12 varieties of toothpaste. Crest sells 41. Colgate sells 31, not counting its Ultrabrite brand.

Tom’s outperforms its much larger competitors in the toothpaste category, according to Brand Keys‘ 2009 Loyalty Engagement Index, a list of rankings of customer loyalty. In other words, Tom’s of Maine customers are more loyal to Tom’s than Crest customers are loyal to Crest.

So why doesn’t Tom’s own a larger share of smile?

Because, although Tom’s of Maine has more loyalists, Crest and Colgate have more samplers.

You know — flip-floppers. The undecided, uncommitted, experimenting, switch-hitting, test-driving swing-voters. The people that decide our elections.

Every brand has them (or doesn’t have them), along with loyalists who always prefer the brand and rejectors who always prefer the competitors.

Why don’t the brand samplers commit?

Some simply don’t care. Perhaps they think the category is a commodity. They buy the cheapest or the nearest. Eat Kellogg’s Frosted Flakes one week, then mix it up with some Post Grape-Nuts the next. It doesn’t mean one isn’t at least a little favorable toward Frosted Flakes. Just not every frickin’ morning.

Other samplers may enjoy sampling. I know guys who can rattle off with pride the pros and cons of every make and model of sports car they have ever owned. They fancy themselves as connoisseurs who appreciate variety.

There is great value in brand loyalty. As has been famously pointed out by Kuczmarski & Associates, loyal customers, on average, are willing to pay a 20% premium for their brand of choice. And it’s common knowledge that retaining customers is less expensive than acquiring new ones.

In 2006, Tom’s of Maine was purchased by Colgate-Palmolive. (There goes that idyllic illusion of the family making their own toothpaste in the Maine backwoods.) Certainly brand loyalty to Tom’s had an impact on the price.

Achieving loyalty is the ultimate purpose of branding, but the strategies vary by audience segment, depending upon where they are on the loyalty scale. Branding should focus on:

Converting the samplers to loyalists
Converting the rejectors to samplers
And, of course, keeping the loyalists happy

Which strategies are most effective at converting samplers to loyalists?

Oct

Apparently we care about cosmetics, not banks

By Kirk 2 Comments

Categories: loyalty, research, retail and strategy

We care about cereal, not insurance. Vodka not water.

Brand Keys, a research firm specializing in customer loyalty and brand engagement, recently released their 2009 Loyalty Engagement Index, a list of rankings of customer loyalty toward 440 brands in 63 categories. In the survey, 26,000 consumers were polled about the degree to which brands were able to meet or exceed their expectations within each category.

The results reveal a number of interesting insights.

First, loyalty and dominant market share are unrelated. JetBlue and Southwest, for example, tied for the lead in the airlines category, beating the majors. Tom’s of Maine outshone Crest and Colgate in the toothpaste category.

On the other hand, Walmart easily won the discount retail stores category and McDonald’s won quick-serve restaurants.

Second, consumers have favorites in every category but feel more strongly about some categories than others. You may be more engaged with brands in the pet food category, for example, than brands of gasoline. Brands in the following categories received the highest average rankings in the survey:

Luxury cosmetics
Kids’ breakfast cereals
Wireless handsets
Luxury moisturizing skin care
Discount retail stores
Mass-merchandise cosmetics
Mass-merchandise moisturizing skin care
Luxury hotels
Vodka (the only distilled spirits surveyed)
Digital point-and-shoot cameras

Brands in the following categories are presumably less engaging to consumers and received the lowest average rankings:

Banks (If only we’d known before the bailout.)
Insurance
Soft drinks (regular)
Casual dining
Bottled water
Soft drinks (diet)
Major league sports
Pizza
Allergy medicine (OTC)
Airlines

Consumers tend to endure rather than embrace their experiences with banks, insurance companies, and airlines. However, it’s interesting that soft drink and pizza brands rank so low given the millions of dollars that are spent marketing them.

Consumers found vodka as a category more brand-engaging than all other beverages surveyed, including regular beer, coffee, light beer, diet soft drinks, bottled water and regular soft drinks.

Third, and as expected, luxury brands rank higher than economy brands, indicating consumers are more loyal to brands that provide value than brands that compete on price alone.

Robert Passikoff, Brand Keys president, says in a BrandWeek article, “There is a price-value formula consumers use to calculate brand differences and to decide which brands to buy. Shopper consciousness has shifted from just trying to ferret out deals to looking for brands that provide value.”

A case in point: luxury hotels in the survey ranked 93rd on average, upscale hotels 140th, midscale hotels 275th, and economy hotels 340th. The same is true for cosmetics and moisturizing skin care — luxury out-engages mass merchandise.

Fourth, numerous competitive brands in a category does not mean consumer engagement is high.

For example, there are 10 brands in the bottled water category yet engagement with the category runs shallow, based upon the average brand rankings.

Which categories in the survey include the most competitive brands?

Automotive (15 brands competing for loyalty)
Vodka (14)
Mass-merchandise cosmetics (12)
Wireless handsets (11)

If you’re looking to compete in a category with only a few competitors, try:

Parcel delivery (Only 3 brands, but be prepared to take on FedEx, UPS and USPS.)
Office supply stores (3)
Electronics stores (3)
Online books and music stores (3)

Why the emphasis on brand loyalty?

Loyal customers buy from you again and again.
They ignore your competition.
They refer to others.
They cost less to retain than attracting new customers.
They are more profitable.

Ask Tom’s of Maine.

Aug

“Why” uncover strategic insights?

By Kirk 1 Comment

Categories: research and strategy

Woman looking with binoculars Small children are notorious for asking “Why?”

“Why is the sky blue?”

“Why is the grass green?”

“Why does Mr. Phillips yell when I play in his yard?”

Why questions often send parents scrambling to the library or the internet.

Who, what, where and when questions are fine for measuring behavior. Who bought your product? What product? When and where did they buy it? Important to know. Fairly easy to answer.

But in order to influence behavior, marketers must know why customers bought. Or why they didn’t.

In a recent post, “It’s not a strategy unless there’s a trick,” I pointed out that marketing strategy often involves out-maneuvering the competition. In order to conduct a surprise attack or a flanking move, one must have an insight. One must ask why. Call it reconnaissance. Call it intelligence. Call it market research.

Some sample why questions to ask:

Why is the brand category expanding, shrinking or remaining static?
Why is your market share expanding, shrinking or remaining static?
Why do your customers buy your brand?
Why do your competitors’ customers buy your competitors’ brands? And why don’t they buy yours?
Why do they buy with the frequency they do?
Why is your brand made the way it is?
Why are your competitors’ brands made the way they are?
Why is your brand priced the way it is?
Why are your competitors’ brands priced the way they are?

There are several versions of a story about a piano, a Capo d’astro bar, and a copywriter who asked why. One of the least abridged tellings is at Lee Dunbar’s blog. It’s an inspiring reminder that asking why questions leads to finding insights which underpin successful strategies.

What questions do you ask?

Jun

Contrived findings from windowless rooms

By Kirk Closed

Categories: authenticity and research

istock_000009351815xsmall Imagine the call:

“Hello, this is Margo from Insightful Research. Assuming you are in our target demographic of 35-54-year-old employed female users of financial investment services, would you be available to join a group of complete strangers in a mirrored room and be videotaped spilling your unbiased opinions about our brand in exchange for a $75 incentive?”

C’mon. How valuable could the results be?

In “Lies, Damn Lies, and Focus Groups,” Daniel Gross, business columnist for Newsweek and Slate, says, “Evidence suggests focus group participants often lie.”

One reason, he suggests, is because they are simply eager to please. “They’re getting paid and fed or might have a crush on the moderator. So, they might tell her — and the marketing types behind the one-way mirror — what they think they want to hear, rather than what they really think.”

Some other reasons focus group results are questionable:

How honest can the testimony be when gathered in such an unnatural environment? Participants are often “in” on the game. They know there are marketing voyeurs behind the mirror. They know every word they say is being recorded, discussed, evaluated. They guess at the group’s sponsor and purpose, and modify their opinions accordingly.
In life, trust must be established before honesty flows. The focus group format doesn’t allow time for trust-building.
Participants are all too willing to share opinions, even when they have no relevant knowledge or experience. Gross quotes Harvard Business School professor Gerald Zaltman from his book How Customers Think: “The correlation between stated intent and actual behavior is usually low and negative.” In other words, what participants say they do and what they actually do (such as buy the sponsor’s product) may be very different.
Focus group sponsors and their consultants are often too eager to validate their own beliefs. They may hone in on one participant’s comment and ignore the rest.

Suggestions for better results:

Pay lots of attention to recruiting.
Only use facilitators who are especially skilled at drawing insights from participants and managing group dynamics.
Don’t stop with one or two groups. Conduct several to validate findings.
Don’t count votes. They are not statistically accurate.

A better suggestion:

Watch consumers in their natural habitats instead.

Do you find focus groups of any value? If so, how do you get the most from them?

May

12 things to do before the upturn

By Kirk Closed

Categories: advertising, budgeting, interactive marketing, mass media, research, social media and strategy

Sales are flat. Travel is canceled. Your budget has been cut. It’s a good time to do some housekeeping.

With an eye toward the eventual upturn, here are 12 tips to get your strategic marketing plan ready:

Take the time to retreat with senior leadership and strategize now. Think long-term.
Audit your competitors.
Talk to your customers. Conduct a satisfaction survey.
Review your customer relationship management (CRM) program. Rebuild your database. Ask for email addresses and mobile numbers. You’ll need them soon.
Update your brand positioning and message strategies.
Review and update your advertising and sales materials. Or at least get them ready to print.
Keep in touch with enewsletters.
Reuse old ads. Save on production.
Media rates are down. Buy more with less money and stand out from your competitors. Or shift the savings to other channels, such as search engine marketing.
Update your website with more functionality for customers. Make sure it is search engine optimized.
Get up to speed on the newer interactive channels–social media marketing and mobile marketing. Set up and monitor your social media channels.
Train your sales staff.

Which other ones can you add?

Mar

Fear of failing and the courage to be different

By Kirk 2 Comments

Categories: brand essence, research and strategy

A client showed me a competitor’s ad. “Why aren’t we doing this?” he asked.

“You want to promise the exact same brand experience as your competition?”

“If it works,” he said.

His question was driven by fear that somehow his competitor was gaining the upper hand. By matching the offer, he reasoned he would be eliminating any advantage the competitor may have gained. This is playing not to lose, instead of playing to win.

Copying the attributes of competitors leads to sameness within the segment. Is anyone able to distinguish between banking, insurance, gasoline, car rental, or health care brands these days?

Brands that don’t differentiate themselves fail to give customers reasons to choose them (other than cheapness or convenience). In the eyes of consumers, they become commodities.

Everyone knows this, yet few brands do anything about it. It is easier to copy than to innovate.

True brand differentiation is based upon intangibles — the emotional connection customers feel toward the brand. Intangible attributes build loyalty and compel customers to choose the brand regardless of other circumstances.

Here are some ideas to help identify a brand’s intangible differentiators:

Talk to customers. Learn how they perceive the brand and why they prefer it. Then emphasize their perception in the marketing and delivery of the brand experience.
Do some soul-searching to identify the brand’s essence and how it is manifested within the brand experience. (See the 9 criteria for brand essence.) Once identified, enhance it.
Keep the delivery of the brand experience on point. Having no focus weakens the brand in consumers’ eyes.
Study competitors’ offerings and look for unfulfilled gaps in the experience. Fill them.
Study successful models of uniqueness: e.g., Southwest Airlines, Celestial Seasonings, Ben & Jerry’s, Whole Foods, and Harley-Davidson.
Think niche. It is easier for a boutique than a monolith to be unique. Trying to be all things to all consumers usually results in blending in, not standing out.
Before duplicating a competitor’s offering, make sure the change is in alignment with your point of differentiation and doesn’t distract from or soften it.
Once a point of differentiation is identified, claim it publicly and “own” it.
Reward the practice of thinking differently within your organization.