The Mysteries of Retail: Should You Lower Prices in a Tough Economy?

It’s a tough time to be in the grocery business. Walmart, which derives nearly half of its revenues from grocery sales, recently reported that February 2013 was the worst sales month they’ve had in 7 years — an absolute disaster, according to leaked internal memos. The SymphonyIRI Group, in a report entitled 2012 CPG Year In Review: Finding the New Normal, points out that consumers are shopping fewer grocery stores — 3 rather than 5— and they’re buying less when they’re there. What sales growth there has been is largely attributable to inflation. Customers are very aware that they no longer have the purchasing power they used to.

Given these facts, doesn’t dropping prices seem like a smart strategy? When things cost less, people buy more: it’s not a complex equation here.The answer seems obvious.

Obvious, that is, unless you’re Whole Foods. Whole Foods is facing the same problems as the rest of the grocery industry. Droughts and extreme weather anomalies have negatively impacted the supply chain while transportation costs have increased exponentially at the same time customer confidence in a better tomorrow is lower than a snake’s belly. Nearly 3 out of 4 subjects in the SymphonyIRI report feeling that their financial situation will deteriorate or remain unchanged in the coming year.

And Whole Foods has one problem that’s uniquely their own. Ever hear the phrase “Whole Paycheck”?

Brand Modeling: Who Does Your Customer Think You Are?

Whole Foods, understanding the heightened value customers are placing on value given the current economic situation, has begun dropping their prices. Despite some initial success, the move concerns financial experts, who fear that too significant a price drop will negatively impact the Whole Foods brand identity.  Can Whole Foods continue to offer what makes them unique—namely high-quality,  healthy, organic food—while successfully competing on price? Will the changes that must inevitably come in the wake of lower prices disrupt the Whole Foods experience so significantly that their loyal shoppers will take their business elsewhere, or will the move draw in new customers?

These are some pretty big questions to leave to trial and error. Preserving brand integrity and promoting growth during difficult economic circumstances don’t have to be mutually exclusive goals. Finding the sweet spot that allows you to accomplish both simultaneously requires the use of modeling.

A model for your brand should identify the range of beliefs your best customers have about your store. By determining how important a role each of those beliefs plays in your customer’s relationship with you, it becomes possible to predict the outcome of any operational changes you make. A mathematical analysis of the behaviors and beliefs of your customer base eliminates the need for trial and error. You won’t have to guess how much to lower prices. You’ll know.

In this instance, we’d examine how central Whole Foods’ high prices are to their brand perception. Is paying top dollar an essential of the Whole Foods experience, or is there room for those prices to come down?

What percentage of customers will be alienated by embracing a different pricing strategy? How much new traffic will you attract? An effective Brand Model can provide these answers. Armed with this information, you can weigh the costs and benefits of many different pricing strategies objectively. Choose the option that best meets your company’s needs, with the confidence that every move you make will appeal to your existing customer base.

You can strengthen existing relationships while attracting new business, even in a tough economy. Sometimes that means lowering prices, and sometimes that means keeping your prices high. What strategy is right for your company? We’ll help you figure that out.

March 8, 2013 by

Solving the Mysteries of Retail: Why Do Some Salespeople Sell More Than Others?

As a retailer, your success is almost entirely dependent upon how successful your sales team is. Not all salespeople are created equal. There are tremendous variations in personability, physical attractiveness, and understanding of human nature as well as the sales process to take into account. Some of these factors can be controlled for with hiring practices and training, and that is what good retailers do.

True brand dominance becomes possible when a retailer takes things to the next level. The reason some salespeople sell more than others is due to the way the salespeople appear to the buying public. This is an external factor that is easy to control, yet the potential here is woefully underutilized by most retailers.

Foot Locker is one step ahead in the game. The athletic footwear chain has 3,400 stores in 23 countries, and has earnings that put them far ahead in the race with their closest competitors, Finish Line and Shoe Carnival. The brand does have a preferential relationship with Nike, a superior brand in and of itself, but that is not the only reason the chain does very well.

Foot Locker’s sales team sells more sneakers than other shoe salesmen. Why is that?  Take a look at the way they’re dressed.

Retail Genius: Archetypal Images

When Foot Locker has their sales team dress as referees, they’re harnessing the power of archetypal images. Obviously, the sight of a referee is familiar to the athletically-inclined – Foot Locker’s primary market – but the referee is also symbolically powerful. Throughout the world, a referee represents authority. They stand as a person who should be listened to.

Through generations of human experience, our collective symbolic understanding has grown and evolved.  Our conditioned response to show respectful obedience to referees manifests not only when we encounter them on the playing field, but subtly extends to referees outside of the expected setting. Additionally, you don’t need an actual referee to bring out that conditioned response – it can be provoked by distinctive elements of the referee’s appearance, such as a striped shirt.

In other words, while a Foot Locker customer is in the store or even on the brand’s website, they are continually being supplied with the visual cues that tells them how to respond to messaging they receive. When a Foot Locker employee suggests a certain pair of sneakers — or perhaps a second or third pair, or a T-shirt to go with the new kicks — that customer is primed to agree, and make the purchase.

What Archetypal Images Will Help Your Sales Team Sell More?

What your sales team wears, as well as the colors, imagery, and iconography they’re surrounded by, has a tremendous impact on how much merchandise they’ll sell. Yet if you do a quick survey of the retail environment as it stands right now, you’re going to find that the vast majority of retailers have their sales teams in some variation of black pants, white shirt or khaki pants, primary colored shirt — combinations customers have been taught they can disregard without consequences.

Nobody ignores the referee.

A Brand Model can help you identify which archetypal images will command the attention of your target market.  The most appealing archetypal images are those that embody the vision our customers have of themselves at their very best.  These images draw customers in. They internalize and reflect upon these images, searching for the identifiable factors they can emulate or adopt to become more like the person they admire – the idealized version of themselves.

Having the right archetypal imagery in your store, whether that be through your messaging, marketing, employee apparel, signage or other visual elements, attracts attention and assures your customers that they’re in the right place.

It works for Foot Locker. It can work for you. Transform your sales team into the one that can’t be ignored. Help your sales people sell more. It all starts with a Brand Model. You can get yours here.

February 26, 2013 by

New York, New York: What Makes Duane Reade’s Rebranding Efforts Work

Duane Reade was facing an invisibility issue. The drug store chain was struggling in a crowded marketplace, surrounded by legions of Walgreens, CVS, Rite Aids, and Health Marts. With competition on every side, Duane Reade wasn’t giving their customers a reason to choose them—and they weren’t.

At the NRF show last month, there was a lot of buzz around Duane Reade’s rebranding. In an effort to give customers a reason to choose their drug store, Duane Reade began positioning itself as an iconic New York brand. The new tag line is “New York Living Made Easy.”

What is it going to take to make this approach work?

A Heck of a Town: Understanding the Power of Place

At the heart of Duane Reade’s rebranding efforts, we find the passionate relationship New Yorkers have with their hometown. There are at least 8.2 million people living in New York right now. Every single one of them has their own unique, complex, nuanced relationship with the city.

When we start examining this relationship, we have to begin with a discussion of animism. Animism is an ancient, universal, and persistent tendency among humanity to attribute inanimate objects with the traits, abilities, and behaviors of people. As David Hume explains it, “There is a universal tendency among mankind to conceive all beings like themselves, and to transfer to every object those qualities with which they are familiarly acquainted, and of which they are intimately conscious.”

In other words, if you want to know your customers, you want to know the places that they hold dear. The reason this is important is because people see these locations as an extension of themselves. If you know what they love about their town, you know what they love about themselves—and you can deliver that in your store.

Duane Reade began their rebranding with a bold, colorful new look, as well as private label products featuring New York-themed packaging, such as Morning Rush Coffee. That’s a good beginning, but in order for this approach to work, the chain needs to demonstrate that they have an authentic, genuine right to claim status as an iconic New York brand, things need to go further.

One way in which Duane Reade demonstrates they get what it means to be a New Yorker is demonstrated in their store design and layout. When New Yorkers are getting to know each other, one of the very first questions they ask is “What neighborhood are you from?” It is understood that a person from TriBeCa is going to be a very different person than a person from Red Hook, and both of them are going to be very different than someone from Liberty Park.

Neighborhoods are a fundamental form of social organization in New York. Rather than putting stores into neighborhoods, Duane Reade brought the neighborhood into their stores. Traditional category organizations went out the window, replaced with three distinct product zones: How I Look, How I Feel, and What I Need Right Now. This set up demonstrates an understand of their customers’ worldview and life experiences; a tangible demonstration of why they are a store for New Yorkers.

Will the approach catch on, or will we see this campaign losing steam in a New York minute? We think it’s got legs, provided Duane Reade remains committed to maintaining a deep understanding of their customer base. Putting their customers first is going to make it easier for Duane Reade to stand out in a crowded field.

February 20, 2013 by

The Mysteries of Retail: Why Aren’t My Customers Interested in This Great New Merchandise?

It’s one of the most common, frustrating, and expensive mysteries of retail. You start carrying a new line of merchandise—products that you’re genuinely excited about, high quality stuff that you can offer at a competitive price—and your customers just don’t care. They walk right by your carefully designed displays, not even slowing down long enough to give them a second glance. They ignore the line completely, yet your competitor is having a hard time keeping the exact same merchandise in stock.

What’s going on here?

This is more than an rhetorical question. Being able to predict how your customers will respond to merchandise ahead of time is one of the Holy Grails of retailing. If you can, with a reasonable degree of confidence, consistently identify the merchandise your customers really want and will actually buy—well, then you’re on the way to being Walmart. You’re on the way to being Target. You’re on the way to being Trader Joe’s, or AutoZone, or Amazon.com.

If you can’t? Well. You know how that story ends.

Solving Retail’s Mysteries: Choosing More Appealing Merchandise

When a particular line of merchandise isn’t moving in your store, the almost universal and immediate reaction retailers have is to try to identify what’s wrong with the stuff you’re selling. Is the quality in alignment with the rest of your offerings? Is there some external reason, not directly connected to your store, that impacts the appeal of the brand? Are your price points completely out of whack?

These are all good questions to ask, and answering them can, sometimes, solve the mystery of why a particular line of merchandise just isn’t moving. However, there are going to be times when there’s absolutely nothing wrong with the merchandise—if you can set aside the fact that your customers just don’t seem to care about it.

It’s at this point that far too many retailers stop their investigation. They throw up their hands, caution their buyers to avoid that manufacturer like the plague in the future, and move on. If it takes deep, deep discounts to get the duds off the sales floor, so be it—that space needs to be freed up for more profitable, appealing merchandise.

That doesn’t really solve the mystery. Worse than that, you have no guarantee that it won’t happen again. You have no methodology or mechanism in place to prevent your buyers from choosing another non-starting line. You could be in the exact same spot six months from now.

Unless, of course, you have a Brand Model. The truth is that your customers don’t really know why they don’t like your great new merchandise—or why they’ll happily buy the exact same item from your competitor but turn their nose up at it when they find it in your store. Up to 90% of all customer purchasing behavior is unconscious. Your customers shop on auto-pilot: they move through your store guided by deeply ingrained habits and steered by collective cultural pressures that they’re not even fully aware of.

When merchandise sells for your competitor, but not for you, it’s because your competitor is presenting that merchandise in a way that is in alignment with the ingrained habits and cultural pressures of their customers. Your customers might have a completely different set of ingrained habits and cultural pressures influencing them. You won’t know, until you do the hard work of delving into your customer’s psyche and discovering what drives them. Armed with this information, you’ll make better buying decisions, and your customers will buy more from you.

Mystery solved!

Want to learn more about how this works? See how all the pieces come together here.

February 12, 2013 by

You Can Get There From Here: L.L. Bean’s Sure Footed Approach To Social Media

L.L. Bean has been very successful in the mail order business for one hundred years. Founder (and namesake!) Leon Leonwood Bean would be proud — and probably absolutely dumbfounded by the latest role the familiar catalog has taken on in the marketing and promotion of his business.

Earlier this month, Liz Pride, who hails from Leon’s neck of the woods, took the L.L. Bean catalog and used it as the basis of her creative endeavor, a quirky Tumblr called “Your LL Bean Boyfriend.” On the site, Pride pairs images from the catalog with short snippets of copy that could have come directly from the pages of your favorite romance novel.

For example:

Nathan quietly opened the door and brought in a tray with a bowl of chicken soup over to me. “Let’s kick that cold you have,” he said, “I know how much you want to go skiing next weekend.”

The combination has been in a hit. In a little over a week, Pride has collected over 7,000 followers, including the L.L. Bean team.  Carolyn Beem, a spokesperson for the sportswear and outdoor gear retailer, told AdWeek, “We’re just going to watch it like everybody else,” she says. “We think that it’s a load of fun. It’s well written, and it’s funny.”

L.L. Bean has done more than watch the popular Tumblr. They’ve even participated, adding their own comment to the site: Elizabeth- we at LLB are loving this. Most of us never thought of LLB and sexy in the same sentence. It is the talk of the office!

A Humanistic Approach To Social Media: Joining The Conversation, Not Controlling It

We have to applaud L.L. Bean for skillfully navigating one of the emerging challenges of social media: the brand-centric conversation in which the brand itself is not the driving nor primary voice. If Clay Shirkey’s right about the cultural and social changes we can expect to see in an environment of cognitive surplus (Not familiar? Watch Clay’s TED Talk on the topic here!) there will undoubtedly be more and more of these types of creative projects being developed by Brand Lovers.

The challenge we have as brand managers is complex. Becoming aware of conversations, assessing them, and determine what role, if any, we have in their progress, is not a process that we, as an industry, have articulated particularly well to date. It is unsettling for leaders who believe they have the ultimate control over what their brand is all about to discover that that’s not true at all: it is customers who build brands, not brand managers and marketing departments.

If one were to speculate on the reason’s L.L. Bean’s leadership believed that their customers chose them before any other brand, it’s not unreasonable to expect that the values of high quality merchandise, rugged outdoor aesthetic and trustworthiness (backed by an almost legendary guarantee) would rank very high on this list. What Liz Pride’s work is doing is revealing another layer of psychological associations Brand Lovers have with L.L. Bean. In Liz’s world, the L.L. Bean customer is sexy, caring, and nurturing. It’s an expansion of L.L. Bean’s key marketing message that evidently has great appeal and the brand didn’t have to lift a finger to benefit from it. The fact that they did, engaging in the conversation in good faith and with good humor, has further endeared the company to those drawn in by the hunky models and romantic prose.

The tenets of Brand Modeling remind us that listening to the customer, completely and on a number of levels, is the route to success. LL. Bean, by abandoning the all-to-common typically litigious, controlling response to creative endeavors with a more humanistic, welcoming, and responsive approach, has gained access to new insights about what their customers value most about their brand. We’re sure they’re going to capitalize on those insights.

Your organization can do the same thing if you’ve got the vision and courage to commit to putting customers first.

January 29, 2013 by

Putting Your Brand Values to Work for You: Walmart’s Promise to Hire Vets

When Walmart  promised, earlier this month, to hire any recently discharged veterans who want a job, it made headlines around the world.  Veterans have had a disproportionately difficult time finding employment after finishing their military service: the Huffington Post reports that unemployment rates among veterans who served in Iraq and Afghanistan was 10.8 in December, compared to a 7.8% general unemployment rate.  Homelessness has become rampant. According to the National Alliance to End Homelessness, nearly 63,000 were homeless on an average night in 2012.

This crisis situation was cited by Walmart as part of their reasoning behind the pledge. CEO Bill Simon also said, “Hiring a veteran can be one of the best business decisions you make. Veterans have a record of performance under pressure. They’re quick learners and team players. They are leaders with discipline, training, and a passion for service. There is a seriousness and sense of purpose that the military instills, and we need it today more than ever.”

These are all good reasons to hire veterans. But it’s hardly a comprehensive list. Other commentators have been quick to point out that Walmart, with its 37% annual employee turnover rate, has a gigantic, ongoing need for new hires. Adding 100,000 veterans over five years to the payroll, incredible as it may seem, doesn’t even make a meaningful dent in the face of that need. At the same time, Walmart will be entitled to specific tax incentive payments for hiring veterans.

Understanding Brand Values: Why Walmart Is Doing The Right Thing

What we’re interested in is what this pledge means for the Walmart brand. Walmart is a polarizing entity. The store has ardent fans; legions of them. There’s just as many critics out there, commenting on Walmart’s problematical sourcing, international bribery scandals and labor practices. One identifiable trend that has emerged over the course of Walmart’s recent history is the values-oriented response: when the critics have gotten too loud, the company responds with a headline grabbing initiative that puts the retailer in the best possible light in the eyes of its best customers.  It hasn’t been long since we’ve heard about Walmart’s efforts to go green and promote sustainable choices. Now we’re seeing Walmart step up and offer employment to the nation’s veterans.

What’s going on here, and why is it working?

As we said in Customers First, there’s a reason that Walmart is among the world’s most successful retail businesses. They have spent a tremendous amount of time, effort, and energy developing a comprehensive understanding of who their customers are. This understanding transcends simple demographics: it is by understanding their customer’s core motivations—the psychological factors that drive all behaviors, including purchasing decisions—and presenting their organization as possessing and in alignment with those motivations that a brand gains a prominent place in a customer’s worldview.

Walmart knows, definitively, that their customers are patriotic. They want to support America, and by extension, her troops. Look at the core of Walmart’s audience. Generally Millenial-aged and older, these customers came up during or shortly after the end of the Viet Nam war. Soldiers returning at that time were not greeted with open arms: the social fallout from this resulted in the codification of a uniquely American value. No matter how ideologically reprehensible a military conflict may be, we hold the actual combatants blameless for their participation in it.

Walmart’s pledge is perfectly in alignment with the values of their best customers, who want to support the troops but heretofore have lacked a meaningful mechanism to do so. Conflating shopping at Walmart with supporting the troops allows shoppers to feel as if they’re making a positive difference while they’re doing something they’d already ordinarily be doing. The positive emotions evoked will strengthen the already strong brand between Walmart and their customer. This was a smart move that came out of understanding their customer’s psyche. Would it work for every brand? That’s an interesting question. We’d love to hear your thoughts.

 

January 22, 2013 by

Being Smart About Story Time: A Humanistic Approach To Marketing

What are your competitors going to be doing to attract their customer’s attention in 2013? Many of them are going to attempt acting less like advertisers and more like publishers, according to this Adweek article focused on the digital marketing trends to expect in 2013.

Strategic product placement within narrative text or video pieces designed primarily to offer value to the public (in the form of information or sheer entertainment) is a formula that has proven to have some traction. The lines between editorial content and advertising content are blurring across all platforms. Journalistic objectivity, a once-sacred cow, is rapidly becoming something we worried about yesterday. In the evolving ethical environment, it’s okay if your content has an agenda – provided you’re honest about what that agenda is.

It’s pretty easy to extrapolate an explosion of brand-created content in the near future. People like and respond to stories, both the informative and the entertaining. Digital content is easy to produce, and relatively low-cost. Given this information, shouldn’t every brand be telling stories?

Well, yes. And therein lies the problem. When you have a tool that works, and it appears both easy to use and cheap, you’re going to see that tool adopted with a wide-spread enthusiasm. The result? A glut of content flooding into an already swamped marketplace. There are already millions of places for your customer to get their information and entertainment. Why are they going to choose yours?

Toward a Humanistic Approach To Marketing: Finding Content That Resonates

The great news is that your brand doesn’t have to try to create content that appeals to all of your brand’s customers and potential customers, past, present, and future. If you want to be smart about content marketing, it’s essential to identify and articulate only those stories that are going to be relevant to and resonate with your very best customers. Your very best customers are those who do lots of business with you, who ardently recommend you to their family, friends, and colleagues, and who choose your brand before any other. (These are the folks we call Brand Lovers: you can read about them in Customers First)

Your Brand Lovers are a fantastic source of stories and content about your organization that other customers (current and potential) will find very compelling. Spending time with your Brand Lovers, listening to and learning about them, is an essential way to identify the types of cultural narratives they find irresistible. These stories may be distinct from those tales that win admiration and approval from society as a whole.

For example, Pepsi Max is currently running a campaign that features three young men tricking their boss in order to get free time off to watch the Big Game. The technique they use (also known as gaslighting) is very frowned upon in socially-aware circles, but Pepsi Max is clearly confident that their customers will find it side-splittingly funny — something that they wish they could do themselves, if only circumstances permitted. Their Brand Lovers can envision themselves within the entertaining narrative, taking on the role of the clever trickster for their own. It’s a little bit of empowerment that they can tap into every time they choose a Pepsi Max.

That’s a smart use of story telling. Because it is very specifically targeted, psychologically, we think it will be an effective campaign. Other stories that are crafted without the focus on understanding who the Brand Lover is and what they enjoy are likely to fall flat.

January 7, 2013 by

Would You Like Fries With That? Examining The Value of Humanism in Employee Relations

First, it happened at Wal-Mart. Then it was employees at numerous NYC McDonald’s staging a one-day strike.

Both groups of strikers were advocating for better wages, health care benefits, and the ability to organize. The typical striker makes less than $8/hour. At approximately $1,280 a month, before taxes, if they can get full time hours, these workers will make just around $15,000 a year. This is a few hundred dollars more than the Federal Poverty Guidelines for an individual. Employees of both organizations report being encouraged to supplement their wages with governmental assistance programs.

Wal-Mart and McDonalds are among two of the richest brands in the  world. Wal-Mart, the world’s largest brand, reported an increase in global profits in 2011, while McDonald’s dominated the fast food sector with $24,074 million in revenues.

The disparity between the two group’s financial situations is readily apparent: the employers are fabulously wealthy, while the employees are perpetually teetering on the edge of destitution. Is this situation ultimately sustainable? Let’s consider the question from a humanistic perspective.

What Makes Someone Go To McDonalds?

McDonald’s may be the dominant player in the fast food industry, but they’re hardly the only game in town. Even the smallest municipalities generally offer a suite of fast food dining options: Pizza Hut, Subway, Taco Bell and KFC are nearly as ubiquitous as the Golden Arches. Given the choice, why do people decide that they want to eat at McDonald’s. What makes the chain so popular?

The principals of Brand Modeling teach us that an organization’s best customers (the Brand Lovers who loyally return to an establishment time and time again, doing a significant amount of business, while enthusiastically and spontaneously promoting the brand to their family and friends) are those who feel that the organization’s values and vision are in alignment with their own worldview. McDonald’s, which has spent decades urging customers to ‘Come as you are’ with a diverse rainbow of faces saying “I’m loving it” has done an effective job convincing the public that their restaurant is a place where they’d feel welcomed and valued just as they are.

The introduction of labor problems into the picture creates a tension in the relationship McDonalds has with its best customers. It is very easy for McDonald’s customers to identify with McDonald’s employees: many of the people who visit McDonald’s most often are suffering disproportionately from the economic downturn. The same can be said for Wal-Mart’s customers. The customer sees themselves as having more in common with the employee than the employer, and that sense of commonality can have an economic impact, if it becomes clear that the employees are being mistreated or dealt with in bad faith.

Truth In Humor: Monty Python: The People Are Revolting

In an organization that uses a humanistic approach, it is recognized that all parties to a company’s success have needs and wants that must be satisfied. Employees that are worried about food security, the ability to pay for housing, or how they’ll buy their children’s school clothes are not employees who are capable of delivering a top notch performance for the organization. Cost-containment through excessively low wages inevitably results in a situation where performance and customer satisfaction are compromised.

Organizations have the choice between deciding exactly how much quality they’re willing to sacrifice in order to keep costs low, or explore the increase in motivation and performance that would accompany a more complete meeting of their employee’s basic  needs. The humanistic approach would favor the latter. Ultimately, this is the only sustainable option over the long term. Employees who have their needs met in a satisfying fashion are not employees who strike in a highly visible fashion, endangering the strength of the customer-brand bond. Putting customers first means being willing to listen to and be responsive to your employees.

December 27, 2012 by

Is Profit the Most Important Thing?

What would you say if you learned that everything you learned in business school is wrong? Not just wrong, in fact, but fundamentally and fatally flawed, rotten to the proverbial core? How would that knowledge change how you function as a business leader?

These fascinating questions were featured during The Aspen Institute Presents, a new PBS series featuring leading entrepreneurs, politician, and thought leaders discussing philosophical questions and practical challenges. The segment that really captured our attention centered on the premise that increasing shareholder value is the most important thing to any corporation, and the accuracy of that premise.

As proponents of a more humanistic approach to business, this is the type of conversation we want to see happening in every business class, everywhere. As expert after expert reported (and you can watch the entire segment here), organizations that focus too relentlessly on shareholder value as the only meaningful metric consistently fail. They’re less profitable and enjoy a shorter organizational lifespan than organizations that consider shareholder value only one of a number of relevant factors that go into determining overall profitability.

The Proven Value of A Humanistic Approach

This is consistent with what we’ve learned through our own research into Cult Brands. Dominant organizations are those organizations that clearly and concrete demonstrate their devotion to the greater good. Shifting the company’s viewpoint from a narrow focus on the immediate bottom line to a longer range, more global perspective that takes social and environmental concerns into account yields significant results in terms of customer loyalty and ongoing organizational profitability.

Don’t get us wrong. Making money is important. But it’s not the only important thing. Even in commodities industries, today’s consumer is expecting more and more from the brands they do business with. Organizational transparency and community involvement are more important than they’ve ever been. It’s especially important that a brand’s internal values be in alignment with customer expectations.

Starbucks CEO Howard Schultz has been a vocal proponent of this concept, and he shares some of the reasoning behind his philosophy here. The message that the mighty chain rose up in response to a need for community and a place to connect is one we’ve heard before, but it’s one we need to hear again and again. It is by understanding on a deep and fundamental level the needs and psychological hungers of the marketplace that we can best create products, services, and especially brands that succeed.

Starbucks maintains an enviable place in the market because Schultz views all of his decisions through a humanistic lens, asking himself if his employees would be proud of and happy to implement the decision he makes, and if he’s acting in terms of the greater good. We’ve seen the chain make some great moves along this line, such as sourcing all of the chain’s mugs from a domestic producer rather than a cheaper Chinese source. Sacrificing some measure of immediate profitability to do the right thing has proven to be a profitable model for Starbucks. It’s a replicable model that begins by understanding who your customers are and what they want the most from your brand.

December 18, 2012 by

The Power of Narrative: After the 2012 Election

If there’s one story that bears examination in the wake of the 2012 Presidential election, it’s why so many people were so profoundly shocked by the outcome. This is a tale about the power of narrative, and how the stories we believe shape the way we interact with the world.

Jonathan Martin provides us with a vivid illustration of the concept in his Politico article, The GOP’s Media Cocoon. There are several points in there that are vitally important for those of us who are brand managers to understand.

Prior to the election, there was a significant portion of the American electorate that was absolutely confident that Mitt Romney was going to win in a landslide. This confidence was based almost entirely on what people were hearing from the media.

As Martin points out, today people can customize their media intake. They have a range of television stations to follow. There are countless websites, blogs, and internet pundits to adhere to. Those folks who still read newspapers can choose their favorites.

What we’ve learned here is that people have an overwhelming tendency to choose those media sources that present the stories they like best; the tales they find most in alignment with their own values and beliefs. This tendency is hard-wired into us. One of the fundamental aspects of cultural formation is the sharing of a common narrative among many individuals.  It is not inherently a good thing nor a bad thing; it is a human thing.

Where the train goes right off the rails is when a widely shared narrative diverges significantly from observable reality. These situations present a crossroads for the individual. Do they trust in evidence presented by their own eyes and ears, or do they cleave to the narrative that mirrors their own personal belief system?

Cultural Stories: What Do Your Customers Believe?

This is not a quandary unique to Republicans. This conflict comes up time and time again throughout an individual’s life. Do Nike sneakers make you a faster runner? Will riding a Harley-Davidson make you a bigger badass? Does choosing Ikea furnishings for your home really make you a more stylish individual? One hopes for the best, but at the end of the day, we are who we are.

In individual situations, the stakes are relatively low. If you’re jogging a 22 minute mile before you buy your new Nikes, and you’re jogging a 22 minute mile after you buy your new Nikes, no one’s going to know this but you. Your relationship with the narrative Nike presents can continue unchanged. Or you might lose faith in Nike. Or you might become an even bigger believer and decide you need even more Nike gear to reach your personal athletic goals.

What happens when we scale the concept up? Group dynamics are complicated things. The more prominently and heavily invested someone is in continuing a particular narrative, the more vehemently they will cling to it, even in the presence of direct evidence to the contrary. This phenomenon explains Karl Rove’s now infamous meltdown when confronted with poll results that ran counter to his expectations. A narrative can be so compelling and central to one’s existence that having it disrupted or disputed creates great tension in the individual.

As Brand Managers, we need to know what narratives are central to our customers’ lives.  More importantly, we need to know how they see themselves relative to these central driving stories, and where these tales fit into the larger collective experience of reality.

Our job is to resolve, rather than create, internal tension in our customers. Brand Modeling presents the most efficient way to identify the points where the tensions can be eased. The Republicans have left their base with a significant amount of tension, and it could be that their brand suffers significantly as a result. Given a roadmap that more accurately predicts human behavior, everything could have been different. We’ll see if the party has a greater understanding of the power of narrative the next time around.

November 29, 2012 by