Economic turmoil is creating brand turmoil

The top brands are more likely to lose their top position in this economy than in “normal” times.

The economic disruption is creating an upheaval that threatens to overturn many brands.

This is the story told in BAV research conducted by the good folks at BrandAsset Consulting — Ed Lebar and Anne Rivers — and presented to the NYAMA last spring.

Before the recession 78% of brands in a leadership position were still in that position one year later.  Not a whole lot of movement there.

Now, that has dropped down to 71%.

The chances of a Niche brand to move into a mass market leadership position has just gotten worse.  And niche brands are even more likely to slip than before.

Brands in Motion

 

These changes have come about for a combination of reasons.  Some reasons are external, outside the control of any one company.  For instance, the downturn has changed people’s values and purchasing patterns.  Other reasons are internally driven.  For instance a company may have cut too far back in their marketing as a response to the downturn.  Or they may have seen this as an opportunity to increase their marketing and launch new innovations.

A picture-perfect example is Hyundai in 2009.  At the very start of the year, during the Superbowl, they introduced their buyers’ assurance program.  While the overall car category tanked, Hyundai ended with strong increases in sales and market share.

From this we can draw two conclusions:  1.  The economic turmoil creates a situation where consumers are more receptive to trying something different.  2. Companies seeking to move up have a greater opportunity during times of economic turmoil.

So why don’t more companies reach for those opportunities during bad times?  Sometimes they can’t due to a lack of resources.  Sometimes they can’t due to risk aversion.  Sometimes they can’t due to internal pressures where any increase in marketing spend is seen as taking away dollars from some other part of the organization.

It is also a case where the brand managers of a leading brand have a difficult business case to make.  “We can reduce the risk of losing market leadership by investing more, now” doesn’t grip you by the shirt collar and scream.  Look at the logic — do nothing extraordinary and you still have a 71% chance of being the leader next year.  But if you spend more during the downturn, people look at you and say — “What, are you crazy?  You were the leader before and you are still the leader now.  What was the benefit of that extra spending?”  Avoiding the downside isn’t always so intuitive.

 

 

 

 

 

The Art of Market Research

Why is so much market research wrong?

My love of market research does not blind me to its flaws.  Perhaps it makes those flaws more visible to me.  Even so, poll numbers are just irresistable, particularly in this election season.

The area where typical market research is typically weakest is the realm of inspiring great new ideas.  Traditional market research is deductive.  It surveys the world as it exists, quantifies the attributes and allows us to find the “gaps” between what people have and what they want.  Almost always the gaps are obvious.  The findings of the research is expected.  The ideas traditional market research uncovers are by definition derivations of pre-existing ideas.  After all, the ideas didn’t already exist, then how could someone think them up and put them into a survey?

So I will continue with my posting about how 2 artists, Komar and Melamid, used quantitative research in the 1990s to guide their creation of The People’s Choice — the most wanted and the most unwanted paintings of countries around the world.

It is a picture perfect example of how the literal use of market research can produce some very un-perfect outcomes.

Some background. Vitaly Komar and Alex Melamid are two Russian emigres who moved to the US in the 1970s, with a short stop-over in Israel along the way.  They quickly became well-known within the insular art world with a series of increasingly provocative shows and projects.  By the 1990s they became “famous” with The People’s Choice project.  Interviews in The New Yorker, The Daily News, etc.   Famous?  Well, they have not yet really crossed over into the mainstream to become household brands the way Warhol or others have.

Using other people’s money Komar and Melamid enlisted highly respected researchers to conduct qualitative focus groups and quantitative market research studies in the US and a dozen other countries.  Market research in so many countries is a geographic scale far larger than many “global” studies done by multinational corporations.

Here are examples of some questions and answers:

“Do you prefer seeing bold, stark designs or more playful, whimsical designs?”
“bold, stark”: 39%
“playful, whimsical”: 49%

What is your favorite color?
Blue: 44%
Green: 12%
Red: 11%
Black: 4%
Purple/Violet: 4%
Brown: 3%
Pink/rose: 3%
Beige/Tan: 2%
White: 2%
Grey: 2%
Yellow: 2%
Mauve: 2%
Fushia: 2%
Maroon: 2%

How important is the appearance or design of the following products in your decision to purchase the product?
new car: very-59%, somewhat-28%, not very-8%, not at all-5%
underwear: very-19%, somewhat-28%, not very-32%, not at all-21%
tv set: very-33%, somewhat-40%, not very-19%, not at all-8%
winter coat: very-51%, somewhat-38%, not very-6%, not at all-4%

It is comforting to know that design is more important in the decision process for a car than it is for underwear.

From the results of the surveys and focus groups, the two artists then created the “most wanted” and the “least wanted” painting for each country.  You can see the handiwork at Dia’s online gallery Diaart.org

In ArtForum Andrew Ross wrote:

Diagnosing the poll’s disappointing results for the Daily News, Komar & Melamid pointed out, “Maybe everyone is wrong in this country. We are not wrong because we are the artist. But we are wrong like the whole country is wrong. Products, politics, art created from polls is wrong. If using polls for art is wrong, then everyone is wrong…”

Vitaly Komar and Alexa Melamid used a deductive approach to market research, which leads to a derivative work of “art”.  The lack of creativity and inspiration in the outcomes is directly related to the use of a quantitative poll.  In the words of the artists themselves:

[Nation Magazine interviewer] N: But there were some surprising results from this poll, yes?

AM [Melamid]: Actually, what shocked me was that it was not surprising. I thought there would be much more interesting–I mean, much different results. Because my small experience talking about art with the people of Bayonne gave me quite a different impression of what the people want. They couldn’t exactly say what they want, but seeing artists working gave them ideas of what was possible. The problem is they don’t have examples. Maybe they can’t be asked, maybe language doesn’t work. I was expecting great discoveries, a real vox populi, a high opening. But I think it was the fault of the poll, not the people. It’s the fault of all polls. Maybe people have to be shown. Maybe we have to buy a van and go around the country working on art among people–van art. From Vanguard to Van Art.

So they point us in the right direction after all.  Using inductive methods of market research are perhaps the most effective ways to really use research for creative new products, new brands, new campaigns.

Consider this.  Turn the typical branding process on its head.

Have your agency develop the creative concepts first.  Then take the richest ideas out to consumers. And watch and listen to the way people respond.  Does the concept resonate deeply?  What are the stories that people co-create with the concept?  How do they tell the story of the new ideas?  Explore and expand on those ideas.  Work with the consumer to turn those stories into mini-movie scripts right there on the spot.

Then go to work on deepening, revising and polishing the richest, most robust creative concept.

Be inductive.

Otherwise you might end up with a brand that looks like America’s Least Wanted Painting:

"America's Least Wanted Picture" by Komar and Melamid

Branding by the Numbers

I find great inspiration in the work of two artists, Komar and Melamid.  They have much to teach us in the branding world, about the ways we can use market research to better understand what consumers want and how to transform that into compelling brands.

Komar and Melamid led the way in the art world.

In the mid-1990s they conducted cutting edge quantitative market research to understand what Americans consider the ideal painting.  A quantitative study of 1001 Americans was fielded by Martilla and Kiley.  It was funded by The Nation magazine’s Institute.

Their market research, including qualitative research, along with the resulting artwork were printed by Farrar Straus & Giroux at “Painting By Numbers” in 1997.  You can also visit the images of The People’s Choice here.

Guided by the research results, Komar and Melamid created the ideal painting for Americans.  For instance, 44% of respondents said that blue is their favorite color.  Therefore 44% of the canvas is blue.  And no great American painting is complete without George Washington, trees, and some deer.

They titled it, “America’s Most Wanted Painting”

America's Most Wanted Painting by Komar and Melamid

It seems to me that we should be developing a proposal for Komar and Melamid  to create America’s Most Desired Brand, as well as The World’s Most Desired Brand.   Stay tuned!

GAP Analysis Part 2 – or – The Little Square That Didn’t

This post contains documentary evidence of the Gap logo recall.

Exhibit #1:  Ad Age blames the whole thing on…me!  Wow, I was surprised!  But there it was, as you can see below.  Of course I had nothing to do with it at all.  Some people have pointed out that perhaps they meant something else by “the ringer”.

The scrapping of the design — which re-created the retailer’s name in a bold Helvetica font with a blue gradiated box perched atop the P — comes after Gap was put through the ringer last week for its new look. [Emphasis added]

Ad Age article on Gap Logo Recall

Exhibit #2:  The fake Twitter account capitulates, with a final shot at “crowd sourcing”

“…it’s ok, as i am just the GapLogo.  I’ll change to whatever corporate wants me to. Begrudgingly”

GapLogo fake Twitter account

Exhibit #3:  The real Gap Facebook posting.  Back to Square One:  Wedged between two denim posts is the acknowledgement that the old Gap is back.

Highlighting the influence of the designer community, Gap explicitly acknowledges the crowd sourcing issue:

So instead of crowd sourcing, we’re bringing back the Blue Box tonight.

Another important point to note — contrary to what AdAge reported, Gap did not blame “the ringer” for any of this mess.

Gap Logo Recall Announced on Facebook

Exhibit #4:  Marka Hansen, Gap’s president, posts on the Huffington Post her announcement of the Logo Recall.  This is the second time she’s addressed the issue through the Huffington Post.  Interesting to note that the Huffington Post is dated 7:35 pm — a full 7 minutes the before Facebook posting.

My hypothesis is that because Huffington Post is widely followed by journalists, it is a more effective communications platform to influence the media itself than traditional press releases or through Twitter or FaceBook.   It is a good example of how smart marketers can use the media to deliver their message directly instead of through the intermediary of a reporter or blogger.

Gap Logo Recall Announcement on HuffPo

Exhibit #5:  The traditional media is slow.  It is not until the next day that the New York Times posts the announcement of the Gap Logo Recall.  Even so, it is hard to shake the impression that this is the first time that most readers of the NYT are hearing that the Gap had even changed their logo in the first place.

Stuart Elliott weighs in on The Gap Recall

Exhibit #6: Instant Experts:  below is a chart from  research done for AdAge by Ipsos that raises questions about the market research methodology rather than shedding light on the Logo Recall issues at hand.  Ad Age commissioned Ipsos to do an overnight study among consumers on the matter.

There are unstated assumptions in the survey questions which need to be examined.  For instance, in the first reported questions the language is ambiguous to the point of pointless.  It assumes that the company and the product are under the same name and logo.  If P&G changed their logo, do you think it would effect the purchase of Tide?

The second item is vague — what is meant by “public input”?  Does that mean showing it to the whole world?  Or does it mean conducting some type of customer research?  There is also the assumption that Gap did not conduct any market research of their own.

The third item is revealing — 17% of people were aware that “the Gap Store” changed it’s logo.  It was a trick question, of course, since the logo was not changed on the store signage or advertising, only on the website.

Fourth, was the logo shown in context?  People see logos on products, on storefronts, on tv ads.  Rarely do they just see a logo sitting on a piece of paper or a computer screen with nothing else around it.  Our own experience as well as plenty of academic studies show that context is king.  Research on the logo alone, without context, is a poor predictor of actual in-market results.

Therefore, if the AdAge/Ipsos study showed the logo in context, then we can have greater confidence in their findings. If, as seems likely, they only showed the logos alone, then the findings are open to question.

Ad Age Study on Logo Recalls

Exhibit #7: The circle is completed as Armin at Brand New presents another Gap logo, this one for Gap Body Fit, along with their design critique.  Indeed it seems that there is a lot more to the whole Gap narrative than simply the Gap Logo Recall episode.

Just when you thought you had heard the last of Gap, we bring you… more Gap!

This time we get to see the new system, with products and labels and other applications.  And it opens up questions about the larger narrative of Gap.  How will it all play together?  How does the post-recall Gap logo fit with the new lines, the new products, the new strategy?  If presented in context with Gap Body Fit, the recalled Gap logo probably would have a completely different reception.

Gap Body Fit Logo

GapBodyFit Online

Will the Great Recession have an lasting effect on consumer attitudes?

Okay, this post is a bit nerdy and not the typical brand blogging kind of stuff.  It looks at some of the deeper economic and psychological issues involved in the on-going Great Recession.

Since the beginning of 2010 I have been asked by clients and friends, Is this downturn really going to make a permanent, generational shift in consumer attitudes?  Or will people just return to their old habits once the economy picks up more?

Are we in a state of a “new normal” where the changes are fundamental and profound?  Or is this just another swing in the on-going see-saw in response to the business cycle?

The answer to this question has serious implications for businesses.   To make a broad generalization, if a company believes the changes are temporary, then they will not make dramatic changes in their product lines going forward.  If another company believes there is a fundamental change in attitudes and behaviors — a lasting change — then they will move quickly to capitalized on that new trend.  They will align their offerings and their brand with the shift in consumer values.

The question comes up whenever there is a downturn.  Usually the answer is that people will resume their previous patterns.  Here are two examples:

Following the oil shocks and inflation of the 1970s, many people predicted that Americans would make a generational shift to smaller cars.  The price of a gallon of gas rose to $1.35 by 1981 — which is equivalent to $3.24 in today’s dollars, adjusted for inflation.  Source: Inflationdata.com, based on BLS statistics.  Fuel economy was the catch-word of the day.  Gas rationing was fresh in everyone’s minds.  [A short detour into history of the times.  During the 1970s OPEC companies put an embargo on oil to the US.  One result was that people could buy gas only every other day, depending on the last digit of their license plate being an odd or even number.]  Within a couple of years the cost of gas dropped back down.  The American love affair of minivans and then SUVs soon knocked out any serious discussion of changes in consumer attitudes and behaviors.

Inflation_adjusted_gasoline_price

On a Monday in October of 1987 I was standing at a window on the 21st floor of 1515 Broadway, watching the news ticker on the Times Square Tower.  The news was astounding — a drop of over 22% in stock prices during just one day.  My client at the time, The Prudential and Prudential-Bache was concerned that this signaled the end of people buying mutual funds and other investments closely tied to the stock market.  Was this going to be a generational shock like the crash of 1929?  We conducted market research among mutual fund and stock owners.  Rather than rushing to sell their mutual funds, most said they were going to hold and see what happened.  That was when the stock market high was 2,700.  We all know what happened next — that more and more people put more and more money into the stock market in the years that followed.

Based on past experience it is reasonable to assume that attitudes and behaviors will return to “normal”, that the disruption in purchasing behavior is just temporary.

However, this time really does appear to be different.  This time there is considerable evidence that the severity of the Great Recession is deeper and longer lasting than previous downturns in the US and Western Europe.  Go beyond the typical measures of employment and GDP and look at price inflation.  Or, rather, deflation.  In this downturn prices have actually dropped across the board for almost everything.  Down for home prices, down for commodities, down for goods and services.

In my opinion, it is price deflation, or negative inflation, that makes this downturn different from all others.  And that is why we can expect a longer lasting shift in attitudes.  A generational shift.

What is price deflation?  It is the phenomena of falling prices.  What is expensive today is cheaper tomorrow.  Sounds like a great idea, since everyone wants to pay less for what they are buying.  In practice it is far from a great idea.  It is the exact opposite of a great idea.  Price deflation is dangerous for businesses.

Here is a simple hypothetical example of how deflation works:

The price of a toaster oven is $100 this week.  In a stable price environment it will be $100 next week and so on.  You can but it today or tomorrow and it will make no real difference.

In a slightly inflationary environment it may rise to $102 within a year.  That gives you an incentive to purchase the toaster oven today so that the price doesn’t rise tomorrow.

But in a deflationary cycle the cost will drop from $100 down to $90 (hypothetically speaking).  Therefore you will not buy today or tomorrow.  You will wait for prices to fall further before you buy.  Your demand for the product has now declined.  Why buy a toaster oven today when it will be cheaper in a few months?

This sets a trap for marketing.  Advertising price drops should, in a normal economy, stimulate demand.  So many companies will continue with the price promotions from the recent past.  In a deflationary period it simply reinforces the belief that prices will decline, so consumers will continue to wait before purchasing.

Pushing hard on pricing also de-values a brand.  So now you have a price deflator attached to your brand.

In a deflationary time, marketing has to work harder than ever to stimulate and support consumer demand.  It needs to stimulate desires that counter the consumer psychology of deflation.  Easier said than done, however.

So how real is the threat of deflation?  Very real.  Below is a chart on inflation rates.  Real price deflation has already happened.  And we are on the verge of a long term slide into more deflation or, at best, virtually no inflation.  This is not just an academic exercise or something for politicians and Paul Krugman to argue about.  It has a real effect on stock prices, on the ability of people to buy goods, on income levels on the overall demand for goods and services.

inflation rates

So, yes, this time there is good reason to believe that changes in consumer attitudes are real and lasting.

Branding tools people use vs. branding tools that are useful

I thought this was rather fascinating.  We did a simple cross-tab of marketers who use a variety of branding tools on one axis and how useful they thought the tool was on the other.

Rather revealing.

Seems that many marketers are using tools that they don’t find to be particularly useful.  At least that is the read from Frank and from my team members.  It aligns with all of the other signals that we are getting from marketers — they want breakthrough branding methods that are designed for today’s world.

I just keep going back to the book Chaotics by Kotler and Caslione — where they make a very clear point that we can’t go back to marketing-as-usual because that world doesn’t exist anymore.  I’d actually quote the book but I’m in Frankfurt at the moment with a very limited library of  Wallace Shawn essays.  He’s a marvelous playwright and a very funny actor.  His more serious work is the play “Aunt Dan and Lemon” and his acting has included everything from Woody Allen movies to being Jon Stewart’s therapist on The Daily show.

But I digress.  Back to the business of branding.

The chart below is from our study of 130 CMOs and marketing decision makers that was fielded in January.  You can get a more detailed copy of the study in earlier posts.  And we are putting this together with the 2009 data for a more in-depth look at the state of marketing as we move into this brave new decade.

So how do you think branding should be reinvented?

CMOs on branding tools: Use vs. Useful

The impact of the economic crisis on brands: talk on 3/24

Next Wednesday, 3/24, Ed Lebar is going to share new research from the BAV.  This will give us insight into how the economic “dip” has effected the images of brands — and how some brands managed to stay ahead despite the economy.
“The Impact of the Economic Crisis on Brands: Some Winning Strategies”

As part of its “New Thinker” series of events, the NYAMA will present a  program focused on the application of innovative brand research strategies to create winning marketing programs during recessionary times. The date of the event is March 24th at 6:00 p.m. And will take place at The Tai Group, 150 West 30th Street, 14th Floor, in New York.

Ed Lebar, CEO and Anne Rivers, SVP Director of Brand Strategy at BrandAsset Consulting will be presenting and taking questions. Ed Lebar is co-author of the best-selling business book, The Brand Bubble.

Mr. Lebar will present new research from the BrandAsset® Valuator study (BAV), a proprietary model of measuring brands based on brand strength and brand stature.

The student discount price is $25.

Register for this event at http://www.nyama.org <http://www.nyama.org> .

Is Marketing being marginalized in B-school?

The world has changed dramatically in the past 30 years.  Consumers and customers have changed dramatically in the past 30 years.  Media has changed dramatically in less than 10 years.  The actual practice of marketing, by corporate marketers, is changing as people adapt to the new realities — some more successfully than others.

But what hasn’t changed is the most popular theory of marketing — brand positioning — and the way that it is taught in B-School.

Several professors, including Wharton’s Gerry Wind, have now said that the teaching and study of marketing is so narrow that it is in danger of being marginalized at business schools.  The title of their article gives it all away: “Is Marketing Academia Losing It’s Way?”   While they don’t single out brand positioning in particular, they make the very clear point that just at the time when new theories are marketing are most needed, they are least likely to be found in the great universities.

There is an alarming and growing gap between the interests, standards, and priorities of academic mar- keters and the needs of marketing executives operat- ing in an ambiguous, uncertain, fast-changing, and complex marketspace.

There are now several alternative theoretical models to replace the traditional brand positioning approach.  Only one of them was developed by an academics.  The four I am most familiar with — and which are true frameworks — are 1) Professor Doug Holt’s Iconic Branding; 2) Marc Gobe’s Emotional Branding; 3) Larry Light and Joan Kiddon’s Brand Journalism which they created for McDonald’s.  The fourth is our own Narrative Branding approach.

The article was published in The Journal of Marketing last summer.  A copy of it is here.

AcademicMkt_LosingitsWay_JofMrktg

Trends in marketing, Part 2

Some more insight from our new CMO study into marketing tools and techniques.  We surveyed 130 CMOs and marketing decision makers about marketing methods, tools and techniques.  In this post and some earlier posts I have been sharing topline findings from the research.

I compare marketing last year to a deep freeze.  Budgets were frozen, projects were frozen, innovation was frozen.  Last year pretty much everyone was focused on retrenchment.  They need to justify marketing spend with quantifiable ROI, cutting out costs, re-organizing the marketing functions.

Our study shows that marketing is clearly thawing.  But it isn’t even.  Some companies have moved forward to take advantage of the situation.  And others are still in a deep freeze.  We are now seeing 2 distinct segments of marketers.  [A special acknowledgement to Frank Woei of Bellwether Interactive for uncovering this].

One segment is the “Evolvers”.  This group is maximizing the situation by seizing new opportunities.  They are prioritizing evolving their marketing to match evolving business strategies, and preparing for the economic upturn by improving their brand image and reputation.

The other segment is the “Re-organizers”  This group is still frozen in place. They are analyzing and re-evaluating everything, seeking that measurable ROI and cutting marketing costs everywhere possible.

In past recessions we have seen that some companies have a great resilience and come out relatively stronger than going into the recession.  We are now seeing evidence that the pattern is repeating in this recession.  Hyundai and Apple immediately come to mind as winners emerging in a changed marketplace.

Marketing trends for 2010

The marketing landscape is shifting.

The big news is the growing importance of corporate social responsibility to improve brand image. That has jumped 13% points from 19% to 32% in 2010.  While it is not a top 3 trend, it has not been stopped by last year’s economic pressures.

The growth of social media is now the #1 most important marketing trend for 2010.

That is up +6% from last year and replaces last year’s “shifting from traditional media to digital media” as the most important trend.

More to follow as we dig deeper into the data and find knowledge.

Again, thanks to Frank Woei at Bellwether Interactive for their great work fielding this study (bellwetherinteractive.com).