Mythology - The Meaning Behind the Marketing

McDonald's Uses Differentiation to Drive Coffee Growth

As a marketing professional, I love to see companies take a bold stand and differentiate themselves clearly from competitors. All too often marketers get cold feet and won't clearly articulate who they are and who they aren't. In the process, they don't stand out from the crowd and don't attract the customers who would most likely find appeal in their brand.

That's why I have been watching the latest round of McDonald's commercials promoting their McCafe line of coffee drinks. Here is an example:

Rather than out-Starbucks Starbucks, which would clearly be a tough sell coming from McDonald's, they have positioned themselves as the anti-Starbucks. "We have great coffee drinks, but without all the smarmy hipper-than-thou trappings of you-know-who." McDonald's is going after a clear market of consumers who enjoy high-end coffee-based drinks, but who may not see themselves as elitist and who may in fact be uncomfortable in the higher-end Euro-cafe environment of a typical Starbucks cafe.

If McDonald's has done their research (and I would be surprised if they hadn't), they are positioning themselves to take a leadership role in a significant regular-guy/girl marketplace. The question is whether there are enough of these consumers to generate significant revenue and market share growth for McDonald's, which needs huge numbers in order to register on their radar.

Whether they are successful or not is yet to be seen, but it's a good example of clear brand positioning.

Ignore the Purpose, Abuse the Medium

I guess it shouldn't be a surprise, but Forrester (registration required) recently reported that only 1 in 6 people trust corporate blogs. But aren't blogs supposed to be how companies put on their human face and show the "real" brand?

Hearken back to the rise of email and database-driven marketing in the Nineties. Remember the big push for customers to sign up for company "newsletters"? It was supposed to be about producing "news" that built a long-term relationship. Instead, most newsletters turned out to be glorified spam with companies training their consumers to ignore a barage of special offers. No news, no real value. Email open rates and click-through rates plummeted over time as consumers learned this medium wasn't that new after all in terms of the value companies sent them.

It's happening again with blogs, at least among the over-managed, stylized corporate blogs that are little more than a thin veneer of "authenticity." By the time the corporate PR and legal team approve the CEO's post, it says next to nothing that a promotional email wouldn't have said.

Why does this happen?

For one reason, marketers focus on the medium as opposed to the purpose and nature of the communication. During the email marketing frenzy, hundreds of database analysis firms were there to help you determine how many emails you need to send in order to achieve a certain return. But who was focused on actually putting value in the email itself so that consumers were trained to look forward to the content?

Why do marketers focus more on spinning up a cool new medium, such as a blog, as opposed to focusing on what matters, which is what consumers need and want in order to build a long-term value-driven relationship with a company? Because it's easier.

Let's be honest. Everyone is busy. Few marketers truly understand their customers or their market as deeply as they should. Few spend enough time listening to customers' needs or desires enough to know what would be considered valuable. Therefore, it's easier to crank out a vanilla blog than it is to produce a meaningful, value-building conversation.

Building Brand by Choosing Sides

It used to be that the vast majority of corporations did everything they could to avoid offending a possible customer by choosing sides. Most major brands played it safe, and if they did publicly support a cause, it was almost always something broadly supported and impossible to be against.

Today, through the explosion of communication, the impossibility of keeping things quiet, and the focused efforts of activists of all stripes, it's nearly impossible for a company to not be forced to take a stand on any number of controversial issues.

A recent example relevant to Mythology's home base state of West Virginia: Recently Bank of America announced that they will no longer lend to companies that practice "mountain top removal", a form of mining that literally lops the tops off of mountains to get to the coal. Environmentalists have been very savvy in targeting the source of funds for this practice, and in the case of B of A, were successful in forcing the country's largest bank to turn off the money spicket.

In doing so, B of A had to make a choice: offend the coal mining companies and the workers who may get laid off, or the growing ranks of environmentalists and average citizens who are becoming more "green" aware? You would like to think these decisions are made based on principle, but it doesn't take much deliberation to determine that B of A probably gained more green-minded fans than lost coal miner business.

The list of issues and causes is endless, and even smaller companies are having to "choose who you lose" in order to position their brand effectively and profitably with the right customer segments. Many of the early adopters of more liberal "domestic partner" benefit policies were companies that made the decision practically in order to retain what they considered talented employees.

The understanding of brands as personal identity markers has fed into this dilemma. The best brands have powerful emotional connections, and the more emotionally connected a consumer is, they more meaning they want to build in the relationship. Brands that are seen as Americana and traditional (e.g., Disney) may have a lot of conservative customers who get deeply hurt when a company policy seems to support a more liberal agenda. Likewise, if a hip, edgy company (e.g., Nike, The Gap) makes a business decision that doesn't seem to support liberal or social justice policies, it can come under attack.

Even the social media activities of your employees can influence how your brand is perceived as more people speak their mind on blogs and sites such as Facebook.

CEO's and senior marketers may not have planned to get their brand directions enmeshed in politics, but increasingly they may not have a choice. Some soul (and brand) searching questions you may want to ask about your company:

• What does our company culture and mission give us as guidance on how to make tough decisions?
• What categories of decisions should be based on the moral and ethical merits, and which ones based on practical business?
• How will executives and employees collaborate on these decisions?
• What are the implications of NOT taking a stand on something vs. taking a stand, not just in terms of short-term revenue and good/bad PR, but on attracting the employees/partners that we need?

Has your company had to make a tough public choice on a moral or political issue that affected your business? We'd love to hear how you handled it and what the outcome was.

Leaping Ahead of Competitors in Tough Economic Times

Knowledge@Wharton re-affirms the notion that taking a bold, aggressive approach during an economic downturn could pay off big time for companies who continue aggressively marketing while their competitors cut their advertising budgets:

Research shows that companies that consistently advertise even during recessions perform better in the long run. A McGraw-Hill Research study looking at 600 companies from 1980 to 1985 found that those businesses which chose to maintain or raise their level of advertising expenditures during the 1981 and 1982 recession had significantly higher sales after the economy recovered. Specifically, companies that advertised aggressively during the recession had sales 256% higher than those that did not continue to advertise.

Everyone from Gold's Gym to financial services marketers have had to revise their message a bit. It is more difficult to appeal to vanity or ego during times such as these. Instead, messages centered on value and practicality seem to ring true and connect with consumers.

However, for premium or luxury brands, there is still an opportunity to market the emotional benefit of escapism. After all, who doesn't need a respite from the constant stream of bad news?

Here at Mythology, we continue to tinker with our own messaging about "building belief in your business." One of our key value propositions is to get more out of your marketing and to focus on marketing ROI. This has certainly helped us connect with new clients as senior executives question what they've been getting from their marketing efforts.

As with all difficult circumstances, it's an opportunity for brands to sharpen themselves and get to the core of their value proposition. It's also an opportunity to devise more clever, low-cost, high-yield customer engagement strategies that will pay off as the economy starts growing again.

A Giant Gulp in Cincinnati

Nielsen just reported that 72% of consumers believe private label store brands are equivalent to name brands. The study also found:

• Private label accounted for $81 billion in U.S. sales this year, up 10.2% from the previous year.
• Sixty-three percent of consumers believe private label's brand quality is just as good as name brand quality, while 33% of respondents said they consider store brands to be of higher quality than name brands.
• Price and value are the primary drivers for growth, with 74% of consumers expressing price as the key purchase factor.
• Two-thirds (67%) of those surveyed said store brands provide "extremely good value" for their prices, while 35% are willing to pay the same or more for a store brand if they like it.

What's a name brand to do in this kind of consumer environment? Well, it always helps to differentiate. Brand names were built on the idea that they represented higher quality and new benefits. Granted, it's hard to innovate in commodities, and some of the first signs of brand name demise were in categories where it became a tougher sell to convince a consumer that green beans were somehow differentiated.

Today, name brands that still succeed have found a way to infuse more than just the promise of extra functional or tangible value into their brand. They infuse emotion. They infuse the alignment of values with the product choice.

This may be tougher to do in commodities, but it's still entirely possible - and profitable - in most categories. It has to be real, it has to be credible, but Americans have proven time and again they are willing to invest their dollars (even shrinking dollars) into brands that give them a jolt of emotional value.

Marketers of the Year - What? You're Not on the List?

Ad Age has announced their candidates for "marketers of the year," which, as you can expect as long as the title of their magazine is Ad Age, has several big names who advertise a lot. But there are surprising political and viral marketing leaders as well.

The nominees are:

Apple

Coors

McCain Campaign

Nike

Obama Campaign

Zappos

Take a look at these Ad Age videos. Learning from the masters is a low-cost, effective way to strengthen your own advertising and marketing. In terms of next generation, conversational marketing, pay particular attention to Zappos and Obama. Zappos generates up to 75% of their revenue on repeat business and has focused almost exclusively on delivering a "wow" customer experience vs. investing in traditional advertising. Obama has taken grass roots, viral, word-of-mouth marketing to new levels in the political realm.

The Value of Brand

A friend of mine sent me this link with updated brand value calculations from the world's largest brands. His main focus was the rapid jump of Google (from 20th to 10th) and the slight drop of Microsoft (from 2nd to 3rd place). However, it got me thinking how few people understand what the value of a brand really is.

First, here is a view of the world's most valuable brands from BusinessWeek/Interbrand:

     

So what is the practical value of a brand anyway? Here are a few ways to think about it:

• It's the value of all intangibles outside of the actual product or service provided as measured by the premium enjoyed by the brand in such areas as earnings per share or similar profit metric.
• It's the emotional foundation of loyalty and repeat purchase.
• It's the trigger for (seemingly) spontaneous decision-making when a consumer has a split-second opportunity to make a choice between two or more products.
• It's one of the reasons the response rate for your direct marketing seems to go up.

Organizations with poorly known or poorly perceived brands have to work harder to earn the sale, leading to lost profit via cost-cutting (special offers, coupons) or increased cost of sales (extra sales reps, product samples, more direct marketing, longer negotiations).

If you really want to geek out, the Stern School of Business at NYU offers this formula:

    

On Ads About "Nothing"

Word is out that Microsoft has already bailed on their quirky ads featuring Jerry Seinfeld and Bill Gates. Is this Microsoft getting nervous about the mixed reception they've generated, or a  planned, off-beat element from Microsoft's agency, Crispin?)

Folks who care about this sort of thing have been abuzz over whether Microsoft's ads about nothing are part of a bigger, brilliant response to the devastatingly effective "I'm a Mac, I'm a PC" ads from Apple, or whether it was an expensive risk that did little to connect consumers to the Windows brand.

If Microsoft CMO Mich Matthews pulled the plug early, it begs many questions:

• Surely these ads were pre-tested and the team knew what that many folks would scratch their head. If that was going to be a problem, why did they move forward?
• If the first two ads were part of a bigger picture and "ads about something" were coming later, why pull the plug now after all the buzz (however mixed) was generated? Now it comes across as embarrassing.

Regardless of the answer to those questions, it's interesting to compare the two approaches. The Mac ads have been so effective because, yes, they come across as creatively different and hip, but also because they are incredibly straightforward and simple in their power. Mac is portrayed as knowing, relaxed, confident, progressive. PC is portrayed as nerdy, uncertain, insecure and longing to be as hip as Mac. The digital odd couple - friends, but everyone knows who they'd prefer to hang out with. Despite the Windows PC's overwhelming market share advantage, viewers came away feeling like Mac was really the leader.

Microsoft's response was way overdue in coming, leading observers to wonder about the bureaucratic process a company the size of Microsoft has to go through to get its message straight and respond to competition. And the much-anticipated launch of the Windows ads turned out to be so obtuse and abstract that few came away feeling confident that PC could start fighting back effectively.

Word is that the next round of ads will in fact be more direct. Microsoft, using its own employees, will begin to take back the brand.

A brand can experiment with off-beat, original themes - and arguably, you have to be on the edge creatively in these days of immense clutter - but if the creativity is disconnected to a powerful, simple, differentiating message about the brand, it only leaves viewers scratching their heads. And in these days of message overload, that's a costly mistake. However, if the early Seinfeld spots were in fact just an attention-getter to set up consumers for the real punch, it may still be an effective tactic.

Re-Positioning One of the World's Biggest Brands

I've been anxiously awaiting my old company's launch of its new ad campaign from their new agency, Crispin Porter & Bogusky. After getting hammered by those Apple ads featuring "Mac and PC", Microsoft is finally taking back control of their own brand position.

The first effort is generating a lot of discussion. The ads feature Jerry Seinfeld, which many see as a curious choice considering he had a Mac in his apartment throughout his show.It's a little disorienting for those expecting a traditional Microsoft ad. It's also interesting that they feature Bill Gates, who has retired (finally) from day-to-day responsibilities at Microsoft. Isn't it time to begin building Microsoft's brand on its own and not so closely associated with Gates?

The relationship between Crispin and Microsoft generated as much buzz as the advertising itself. Known for their off-beat approach to ads for Burger King, Volkswagen and Sprite, Crispin is about as far off the conservative Microsoft path as you can get.

What do you think, is Microsoft getting the campaign off on the right foot by launching the first ad "about nothing"?

When Pigs Fly: Building a Boutique Brand

Have you heard of the new Flat Earth healthy snack chips, the ones created by a "passionate group of women [who] challenged beliefs that 'tasty snacks are bad for you' and 'nutritious snacks are boring'"?

The brand has adopted a flying pig as their logo because of the belief that we would enjoy a tasty chip that was good for you when pigs fly. Flat Earth has a compelling mythology behind it, one that conjures up images of entrepreneurial women banding together to bring the world a healthier snack. The brand is quirky, upbeat, independent.

Oh, did I mention it's from Frito-Lay?

These days, major consumer goods companies are recognizing the power of an independent, story-driven brand vs. the old conventional practice of brand extension. The trend built its momentum with major brewers who wanted in on micro-brew mania in the Nineties. Frito-Lay's Baked Veggie Crisps just doesn't have the same brand impact compared to that flying pig and independent-minded group of women, does it?

Frito-Lay doesn't try to hide the fact that Flat Earth is one of their products, but the packaging is clearly designed not as an extension, but a standalone brand. When is it appropriate to live off the awareness and brand equity of a mother-ship brand vs. launch a boutique, independent brand? Here are a few scenarios:

• When the mother brand holds certain images that would be difficult if not impossible to shed- Frito-Lay = world's largest snack provider, and while they have worked mightily to introduce healthier versions of Lay's and Dorito's, the public's perception is that they just don't taste nearly as good.
• When the market is rooting for an independent voice- Sometimes, no matter how good a product a dominant brand delivers, it won't be accepted as well as a new voice. Microsoft has often suffered this fate, especially in the realm of online services.
• When a rogue innovation team produces a better chance of succes - In some cases, a skunk works-style product development team can compete with the dominant brand to the point where it just makes sense to set them apart in the actual marketing of the product, lest it be smothered by the mother ship. Microsoft took this strategy with the launch of X Box, and again with the Zune music player, although the jury is still out on the latter.