CONNECTING WITH CONSUMERS

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Thursday, January 12 2012

50 Brands That Connect With Consumers

What is the secret to creating more meaningful relationships with consumers and experiencing significantly higher growth as a result?  According to a recent Stengel Study of Business Growth, the answer is no more complicated than this: develop a strong brand promise.

Using Milward Brown's Optimor technique (explained in the box at the end of this discussion), the Stengel analysis was performed over a ten-year period spanning 31 countries and 28 categories. The top 50 brands--that is, those that outpaced their competition in brand value over the past decade and formed “unusually strong connections with consumers” are listed alphabetically in the following chart.  The so-called the ‘Stengel 50’ grew three times faster in financial terms during the period studied than their competitors and the overall universe of brands.

The Stengel 50 reveals quite a disparity in brand categories, ranging from luxury brands like Hermès, Louis Vuitton, Moët et Chandon, Hennessy and Mercedes-Benz to e-commerce brands like Amazon.com and Zappos to consumer goods brands like Coca-Cola, Sensodyne, and Red Bull.  Among these brands we see some of the usual suspects, ones that have been identified in other analyses, particularly engagementdb's social media engagement study of the top global brands (which compared Business Week's top 100 global brands according to number of channels and depth of engagement), as well as assessments of company's performance on Facebook and Twitter.  Albeit with differences.  For example, the top three brands that emerged from the engagementdb analysis were Starbucks, Dell, and eBay.  The top three Stengel brands were Apple, Google and Pampers, growing as much as 10 times faster than average company growth between 2001 to 2011.  Both studies found that connecting with consumers was associated with financial growth.

Looking a little more closely at the Stengel study, however, the basic question is what exactly does it mean to 'develop a strong brand promise' or identity?  Insight into this question is provided by the study's director, Jim Stengel, former CMO of P&G.  According to Stengel the high ranking brands were built around a central ideal that clarified their core purpose, such as IBM's goal to 'create a smarter planet' and Jack Daniel's 'maverick independence.'  In marketing jargon we call these central ideals  'brand essence' - the essential and intrinsic nature of the brand; its spirit and soul; a single thought that captures that soul.

The man behind the research – high profile US marketer and former CMO of Procter & Gamble, Jim Stengel – suggested all of the high ranking brands were built around a central ‘ideal’ that fostered a tight focus on their core purpose.  As described in his book Grow. How Ideals Power Growth and Profit at the World's Greatest Companies, Stengel elaborates on brand ideals:

 “A brand ideal is not social responsibility or altruism but a programme for profit and growth based on improving people’s lives.”

“Maximum growth and high ideals are not incompatible. They’re inseparable.”

As an example, Stengel points to Pampers, a brand that lost sight of its core ideal by focusing too narrowly on the dryness of diapers.  Market share continued to drop until Pampers successfully redefined its brand ideal as ‘helping mothers care for their babies’ and toddlers’ healthy, happy development’. Anybody can talk about dry diapers, but helping mothers care for their newborns is a message that helps distinguish a winning brand from the also-rans.  The best-performing businesses, according to Stengel, are driven by ideals that touch on one of five human values: eliciting joy, enabling connection, inspiring exploration, evoking pride or having an impact on society.

Source: http://www.millwardbrown.com/Sites/Brand_Ideal/The_Study.aspx

The Stengel study adds another notch to Starbucks' growing collection of successes in outperforming just about everybody else when it comes to connecting with consumers.  That I've admired Starbucks' strategy and tactics in the past is certainly evidenced by my extensive discussion of the company in my book, Connecting With Consumers, and in the many lectures I've given on the topic.  Nonetheless, based on some recent experiences associated with my forthcoming book, Psychological Foundations of Marketing (Routledge, June 2012), I'm beginning to reassess my image of Starbucks.  I'm now beginning to think their 'connecting' is nothing more than a lot of smoke and mirrors.  More on this in a subsequent installment.  Stay tuned.

Friday, July 30 2010

Apple's Bad Connection

By now, most people are familiar with the problems surrounding Apple's iPhone 4 launch, but let's consider how Apple failed to connect with consumers and some of the still evolving repercussions. It's one thing to dissect the great cases in which companies do something phenomenal to connect, but it turns out that the misconnections can be equally informative.

The new iPhone's antenna problems, which resulted in mounting complaints about dropped calls and poor reception, was initially treated by CEO Steve Jobs as a non-problem.  As Slate's Farhad Manjoo pointed out in his July 15th column, titled to strike a chord with dissatisfied purchasers, 'Steve Jobs Owes Us An Apology':  Jobs' first instinct was to insist that the phone is perfect, and that it's the users who are crazy. "There is no reception issue."  Great way to endear your company, product, and brand to consumers who have shelled out cash to purchase your offering - product great, user stupid.  Citing a basic law of physics that afflicts not only Apple's app phone, but all its competitors as well, Jobs simply focused on how users weren't holding the phone correctly in their hand, and that people like to go after the top dog, which is why Apple was receiving the brunt of the criticism. 

The company initially offered a single fix, the promise to improve the accuracy of the phone's signal bars. But when the independent Bible of consumer product ratings in the US, Consumer Reports, begged to differ, and advised consumers not to purchase the flawed device, Apple had to quickly turn to Plan B.  (Apple apparently deleted references to the Consumer Reports' evaluation from its support forums.)  Plan B as a course of action probably couldn't have been more misguided.  This was the press conference in which Jobs appeared on-stage, obviously pissed that he had to descend from his lofty heights to address such a picayune problem, and offered everyone a free case, which could serve as a kind of bumper against the antenna problem.  If you haven't seen the announcement, click the link below and you'll understand why Manjoo in his July 16 follow-up piece at Slate ('Here's Your Free Case, Jerk' ) referred to Jobs as 'condescending' (and I'll add, 'arrogant')
http://www.youtube.com/watch?v=aiifsX0iv0Q

                                                

The fallout from Apple's strategy has been pretty brutal for a company that in the past could do no wrong.  I think the consequences were pretty accurately summarized in a  Chapatte editorial cartoon appearing July 22 in the International Herald Tribune.  This is a clear example of negative publicity for Apple. The message is very clear: Apple doesn't listen.  Forget about having a conversation - when Apple 'converses' it means that Apple is talking at us, not with us, which is the polar opposite of the key message of Connecting With Consumers.   



Now, imagine what that message communicates about Apple's brand identity, which in the past has been all about innovation, passion, creativity, empowerment through technology, people-driven product design, and you can fill in the rest.  But first have a look at how the Sydney (Australia) based firm, Marketing Minds summarizes Apple's brand personality:  '. . . about being a really humanistic company with a heartfelt connection with its customers. The Apple brand is not just intimate with its customers, it's loved, and there is a real sense of community among users of its main product lines.'  Ouch!  It doesn't take a genius to conclude whether that characterization of what Apple stands for was written before or after the iPhone 4 snafu, and it certainly doesn't jibe with Chapatte's cartoon.  Take away that heartfelt connection and intimacy with customers, as Jobs seemed to be doing with his reaction to the iPhone 4 antenna problem, and all of a sudden, Apple isn't so special anymore.  Innovative?  Sure, but so are many other tech companies who must now be learning, you would think, from Apple's IPhone 4 misstep.

So what should Apple have done in response to the iPhone complaints, and is it too late to make amends?  Once again, I refer back to Manjoo's July 15 Slate column, where he enumerated some courses of action (this before the Jobs press conference).  Manjoo correctly predicted that Apple could think small, assuming that people probably weren't going to return their phones en masse, and simply offer free 'bumpers' cases for the product that seem to reduce the antenna problem. (By the way, Apple sold 1.7 million phones the first weekend of the launch.):

  •   That would be the easy thing to do. Nothing major—no product recall, no apology, no admission of error. But I hope that the out-of-nowhere press conference signals a shift for Apple—a revolutionary decision to kill off the company's critics-are-always-wrong philosophy. I also hope that Apple will finally offer a credible explanation for what's wrong with the iPhone. And I hope Jobs says just one more thing: I'm sorry.

  • It's time that Apple admits what has become obvious to everyone: It made a mistake. There is more than enough evidence to suggest that there is a real design flaw in the iPhone.

Manjoo's latter recommendations are what engagement is all about - admitting a mistake, perhaps going to consumers for solutions in the spirit of  a collaborative relationship, and apologizing to the customers whose relationships Apple surely wants to nurture.  As Manjoo correctly observed, this hasn't been Apple's modus operandi, especially in times of crisis:  'when controversy erupts, it is rarely transparent with reporters, customers, federal regulators, or anyone else. Instead, Apple prefers to create its own reality.'

And though some may argue that the damage is done, I think Apple's customers are so appreciative of the firm's constant innovation and quality products that they would quickly forgive and forget.  Admit the mistake, ask for solutions, fix it, apologize, throw in some added value (the free case without the smirk, free applications, etc.), invite dissatisfied customers to return the product for an exchange or full refund.

In the meantime, Apple remains a large target for firms like Motorola (see above ad) and creative entrepreneurs, like Szymon Weglarski and Jonathan Dorfman, whose iPhone fix, the multi-colored adhesive strips known as Antenn-aids,  started as a joke and quickly evolved into a phenomenon: