May 02nd, 2009
By Kate Newlin
I think Howard Schultz blinked. It's understandable — when McDonald's runs ads that say, "four dollars is dumb," it's bound to piss him off. I'll be watching for the ads to see how he's responding.
BUT, I think he's missing the real value in the Starbucks proposition: He pioneered the "third space" notion — gotta go to work; gotta go home; Starbucks is the "green room" for both venues.
First up: Anyone who has ordered a cup of coffee at a McDonald's or Dunkin' Donuts knows they don't want you to linger there — and you don't want to. Their model is the old one — turn those tables, move 'em in and out, fast.
Starbucks is the place you go and feel it's perfectly okay to linger. That's a tremendous value — particularly as people get laid off and need a place to go (rather than hanging out at home in their bathrobes) to work on their resume, see people, wait for the interview or decompress after it.
I think Starbucks ought to be talking about that welcoming part of the brand DNA, that and then too, there's the less consumer-centric bits that still add up to a terrific brand personality, i.e. the professionalization of the barista — and the company's values in terms of health care and stock options for part-time workers, free trade coffee, all that.
Starbucks shouldn't be competing on price with McD's. Eeck.
Sponsored By: Brand Aid
The world of marketing has evolved, and today the companies that supply marketing communications and brand strategy are very different. There was a time when ad agencies were also the chief brand builders for their clients. It was called the 20th century. But that era is over and even big and brilliant agencies are no longer qualified to work on brand strategy.
Ad agencies should do what it says on their tin – be agents for the creation of advertising – and accept that the strategy work that feeds their creativity will be devised elsewhere and without their involvement.
As brand has become more central to the success of most major clients, it has moved further away from the core competencies of advertising agencies.
Niall FitzGerald identified this separation while he was chief executive officer at Unilever. Eleven years ago, he gave the keynote speech to the European Association of Advertising Agencies and noted the 'alarming discrepancy developing between what our brands are going to need and what contemporary agencies are good at'. His prediction has proved to be accurate.
Today, brand strategy requires a fundamental knowledge of business operations, finances, employees and internal culture – subjects most ad agencies, which often struggle even to understand how their clients make money, are ignorant of.
We have been deluged recently with stories about the amazing virtual world of Second Life and the brave opportunities it creates for brands. It is hard to believe, but it has been little more than a year since the first major brand, US retailer American Apparel, opened its doors for virtual business on the site. The store sold virtual American Apparel clothing designed to be worn by the avatars that users create to populate Second Life.
American Apparel was soon joined by other brands. In October 2006, Starwood, the owner of hotel brands such as Westin and Sheraton, premiered its Aloft hotel brand on Second Life. Starwood saw its virtual hotel as a way of generating early customer insights about its venture long before any of the hotels opened.
A month later, Pontiac, the US car-maker, launched Motorati Island. According to Mark-Hans Richer, marketing director at Pontiac, it was designed to 'empower the car community in Second Life and develop with them in a unique and meaningful manner'. From April, Second Life boasted the ultimate marketing patronage when Coke launched a 'virtual thirst pavilion', where visitors could compete to create a virtual vending machine selling not Coke, but, according to the firm's website, 'the essence of Coca-Cola: refreshment, joy, unity, experience'.
It all sounds pretty amazing, until you visit Second Life.
So that was 2007. As usual, there were a host of marketing mistakes and a few moments of genius. Let's celebrate the latter first, as they are rare gems.
My first pick is AG Lafley, chief executive of Procter & Gamble, and still the world's greatest marketer. Another stellar year for him saw P&G continue to grow profits and share price while reducing the number of brands in its portfolio. Lafley is the antidote to the financially oriented chief executives on this side of the pond. He came from marketing, and has driven P&G forward with a simple message of focus on customers and innovation around their needs. He's no slouch when it comes to organisational issues, either: the mission of absorbing the 30,000 employees and 50,000 product codes that came with the acquisition of Gillette is complete, one year ahead of schedule.
My next pick is Robert Polet, the chief executive of the Gucci group. No one expected the former Unilever executive to be able to walk into the world of luxury branding and be so successful so quickly. But by introducing leaner production systems and encouraging the great house of Gucci and its other luxury stablemates to incorporate consumer insights into their strategies, Polet is proving phenomenally successful.
A few weeks ago, about 40 Christian evangelical leaders met in Salt Lake City to discuss a branding dilemma.They believe it’s in the best interest of brand USA to nominate a social conservative to lead their Republican Party into the upcoming elections. The problem is that they’ve given up on authentically principled conservatives, like Mike Huckabee and Sam Brownback, because they’re too far behind in the polls. To have any chance of beating the amoral Democrats, they’ll have to support a morally deficient front runner, like the thrice-married, pro-choice, gay-friendly Giuliani.
It appears that evangelicals are confused, and not simply about how to vote. They’re stuck in the age of supremacy, believing that behavior is best influenced through a patriarchal approach. They see the Government as the father, which must create and enforce policy that will ultimately shape the conduct of its children. They hope to grow a strong, socially conservative brand America from the top-down, through edict and control. It reminds me of the antediluvian thinking of many of today’s business leaders: brand growth through controlled rhetoric.
Behavior as Communication
In his 1971 book Silent Messages, Dr. Albert Mehrabian revealed the importance of the verbal, vocal and visual elements on communications believability. The verbal cues – what was actually being said – were dominant only seven percent of the time, the vocal 38 percent of the time, and the visual cues were the primary carrier of trust and believability, a whopping 55 percent of the time. Communications experts subsequently grabbed those insights and played up the fact that human beings are primarily visual creatures. And that’s true. But it totally misses the good doctor’s point.
What Mehrabian’s research really tells us is that people are persuaded primarily by behavior.