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The Personification of Brands Via Values (but does this always work...?)

According to the AdvertisingAge article, “Ignore the Element of Marketing at Your Own Peril…” we have reached the end of the consumer era. The authors argue that, despite the digitalization of much of communication and relationships, people expect brands to be more human, not less.

While this may seem like a novel notion relative to the preceding age of marketing brands to consumers, there are some enduring factors that shape the way that people engage with brands. For example, brands are – and have been since the beginning – co-created by companies and consumers alike. This co-creation has not changed, though the power dynamics of people and companies has dramatically shifted. Specifically, social media like Facebook and Twitter have provided people with a platform that makes their voices, in many cases, more powerful than corporations’.

In addition to providing a compelling communication platform for people to actively engage with and influence brand identity, the digital era has also ushered in unprecedented optionality for consumers that has dramatically reduced search and switching costs – bestowing even greater power upon people, rather than companies. Further, the free platforms in which millennials more or less live, (combined with tremendous optionality), has anchored the demographic with the greatest purchasing power to expect “free” – challenging companies to seriously justify the reason why millennials should open their wallets rather than download or share free content.

Enter the importance of corporate values that permeate culture, strategy and marketing communication. Whereas previously brand loyalty was earned through quality and reputation, we now live in an age in which greater credence is placed upon values and “transparent and honest practices.” Ironically, in a time when physical person-to-person interaction is rapidly diminishing as technology expedites and expounds upon communication channels, consumers demand the personification of brands. In other words, despite decreasing human-interaction, consumers demand the humanization of brands, particularly as communicated through values (or, what the AdvertisingAge article terms, a brand’s “essential self”).

What might explain this change in consumer expectation, and this premium placed about authenticity, transparency and humanity? Perhaps this is can be explained by the fact that nearly all millenials exist in the digital sphere, and they themselves have evolved to develop online personas, or personal brands. As a result, they view the person as a brand as much as the view the brand as a person.

In addition to the co-creation of brand identity and value, social endorsement is also a persistent trend despite shifting customer expectations. Social endorsement has long been valued by customers, but less visible in the pre-digital age. With the advent social media, social influence has become more prominent, as we can now actively consume, copy, purchase and promote the brands that our friends’ advocate for. Importantly, given the magnitude and reach of social media, one’s network no longer equates to intimacy. Indeed, the digital world has enabled us to connect with, learn from, and be influenced by a broader swath of people. The most vocal, prolific, or curated personalities typically command the greatest influence, and can be critical shapers of a brand’s identity and communicated values online.

Increasingly, brands are representing their “essential self” as values and purpose. Take, for example, Pepsi, who has recently launched, “Performance with a Purpose,” conveying a renewed commitment to nutrition, wellbeing and environmental sustainability. 

This purpose may seem to be at odd with many of Pepsi’s most popular products, including Pepsi cola or Doritos (or any other kind of “’os”); however, with strong leadership at the helm, the company is publicly committed to living these values throughout its internal organization, product ingredients, supplier relationships and marketing messages. This permeation of purpose, beyond just external perception but also internal to the organization, is critical to the conveyed authenticity of a firm’s values. As is stated in the AdervtisingAge article,

“What companies have available to them at all times… is corporate purpose. If you can identify why your company exists and what values it embraces, and if you live by those values across all aspects of your enterprise – from hiring to choosing suppliers to acting on civic responsibility – then you have the foundation for values-based relationships that command loyalty and trust” (p. 8)

Equally important is understanding what resonates with customers. Values that are disconnected from what is important to a company’s target population will be less impactful than those that relate to the needs, desires, passions and moral compass of one’s core demographic. Dawn Zier, CEO of Nutrisystem and Sloan alumnae recently visited MIT and echoed this message. Dawn stressed the importance of emphasizing authentic values that resonate when she described Nutrisystem’s choice to message meal plans based on “leading a healthy lifestyle” instead of “weight-loss associated with vanity.” As Dawn explained, a mother of two children who manages a budget is more inclined to spend her discretionary dollars on her health and wellbeing, rather than vanity. Thus, representing honest values that are shared with consumers is critical for brand purpose to resonate.

Interestingly, one can also find examples of brands that demonstrate a lack of strong values, and yet retain a strong following. Uber is one such example that, after employee complaint regarding sexual harassment and controversial decisions following recent immigration policy, received harsh criticism on social media that prompted the #deleteuber campaign. And yet, despite public outcry, negative effects on Uber ridership appear to be short-lived. In fact, Uber retains its top 10 slot among all free apps in the App Store, and is ranked far ahead of rival, Lyft (a rival ride-sharing company that has enjoyed far more flattering PR). This begs the question of whether or not authentic values are universally critical for all brands. Are there certain instances in which consumers value something other, such as convenience or price, such that the premium for authentic, transparent, and humanistic purpose is diminished?

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American Well: Marketing and Targeting Challenges of a Health-care Start-up in the US

As a technology start-up in the healthcare space, American Well faces a number of targeting and marketing challenges. The American healthcare landscape is highly complex and fragmented, populated by patients and providers as well as public and private payers. In addition, healthcare in the US is governed by strict regulation, and therefore introducing any new service or change to the existing system will likely need to undergo intense scrutiny and approval. This is particularly true for a company like American Well, which is built upon transmitting sensitive patient data electronically in order to deliver remote, real-time care. Thus, American Well faces the challenge of overcoming regulatory obstacles and privacy restrictions, particularly related to HIPAA, before even considering its target customer and developing its marketing message.

When considering its target customer, American Well faces a number of options, each with its own challenges. The start-up considers a Direct-to-consumer (DTC) model, as well as a B2B model in which the company would transact with payers, or insurers, as part of a licensing arrangement. While the DTC model enables American Well to exert more control over the end-customer experience, the start-up elects a B2B model, as this will enable the company to more efficiently scale and generate recurring revenue. While American Well is able to offer a compelling economic incentive for insurers, particularly related to cost savings, American Well faces the challenge of the current economic and political climate, as the company is launched amidst a recession at a time when insurers are semi-paralyzed by uncertainty regarding the future of healthcare reform.

American Well has some success in securing pilots with insurers, however, the company’s marketing efforts are challenged by the many stakeholders involved in the US healthcare system. In addition to securing buy-in from insurers, American Well must also market to and attract providers to participate in the platform, as well as market to end-users, or patients, to ensure adoption. Employers represent a further important stakeholder, as end-user adoption is also dependent upon the healthcare options that employers provide to employees. The messaging that American Well employs must differ based on the needs of each of these populations. For example, for providers and insurers, American Well must emphasize the efficiencies delivered as well as cost-savings. Additionally, American Well must guarantee compliance with existing regulation and flexibility to adapt given impending regulatory change. Though American Well is not selling directly to patients, the company must also market to patients as end-users, and reassure people of the reliability and effectiveness of the system.

Ultimately, given that American Well operates in the healthcare space, the start-up must convey trust and reliability to all stakeholders. This is particularly challenging in an industry that is based upon personal interaction. American Well must essentially encourage stakeholders to alter their mental model of what it means to seek healthcare, and this is quite a challenge. This challenge is amplified by the fact that American Well itself is a start-up, and therefore must earn the trust of customers based upon not only its brand, but the altered behaviors that the company creates. Further, operations in the healthcare space is tremendously high-stakes. Any misstep that the company makes regarding customer experience could have dramatic effects on the company’s reputation and therefore sustainability.

Although American Well is recently launched in the US, the company is also considering product extensions. One refers to expanding the platform to include specialists, a project co-named “Team Edition.” Additionally, American Well is considering adding physical locations to sites where people already seek service as an additional revenue stream and means of increasing end-user adoption. Of the options considered, it is recommended that American Well pursue the development of kiosks in Drug Stores with walk-in clinics such as CVS and Walgreens. These kiosks can be used to alleviate demand on the providers that staff these locations (and potentially reduce costs) as well as help diagnose or troubleshoot individuals seeking assistance. This application will add value to patients, providers as well as the businesses in which the kiosks are located, and, most critically, aid in marketing American Well as a trusted brand. By located branded kiosks in these facilities, American Well can “borrow” the credibility of the retail brand such as CVS, as these retail stores offer a “halo” effect for American Well. Additionally, it is recommended that American Well pursue “Team Edition” and incorporate specialist providers into its system as it expands its footprint in the US. Although this additional service will add complexity when onboarding new customers, ultimately, it simplifies the end-user experience and offers patients a fully comprehensive healthcare solution. Satisfied patients will create stickiness on the platform, which will filter up and encourage increased adoption among providers and payers.

One final note: It is interesting that American Well is founded in the US and named with the national title, “American.” This is particularly interesting given the co-founders origin in Israel. I wonder what motivated their decision to found their company in the United States (other than perhaps that it presented the greatest financial opportunity), and what drove the decision to incorporate “America” in the name. I wonder if the founders were attempting to establish some credibility as outsiders to America themselves. Further, the national title could refer to “heritage” and “trust” and national loyalty, and in this way appeal to new customers despite the fact that the brand is new and the service is unproven.

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Are some brands immune to brand manifold?

Brand manifold describes how brand value is unavoidably dependent upon context, including people, place, past perception and future vision. While it is hard to deny the assertion that brands are “evolving” symbols that are constantly negotiated between stakeholders, such as companies and consumers, it is also important to consider brands that strive to be consistent across context.

This summer I interned in product operations at Apple, and specifically worked on the iPhone team. I was drawn to this role in part due to the functional opportunity, but also due to the brand equity I had ascribed to Apple as a consumer myself (an example that employees, as well as consumers, can be important co-creators of brand equity). I was, and remain, fascinated by Apple’s product and marketing strategy (which are closely intertwined). As a company that offers famously few products, Apple strives for simplicity both in design and user experience. Aside from certain accessories such as iPhone cases (which are also limited in SKU), there is very little variation or customization of Apple products. In addition to offering little variety, Apple does very little in the way of market research when launching new products. While some brands speak extensively to consumers before releasing a new product or feature, Apple instead relishes on “surprising and delighting” consumers by offering consumers with technology that had not yet known they needed. By both offering limited product variety and excluding consumers from market research to inform new product development, Apple seems to “prescribe” to customers, rather than “negotiate” its brand story.

It is important to note that Apple’s brand is based upon both its hardware (which has become iconic) as well as its software. Both aspects contribute to Apple’s brand identity and how consumers engage with Apple as a company and its products. Given its more rapid development cycle, it is possible that Apple’s software is more responsive to customer needs than prescriptive, and thus, in this way Apple does include consumer feedback and needs when developing new features or software updates. That said, Apple products are the same throughout the world. Largely, Apple’s advertising is consistent globally, and its marketing efforts (spanning everything from print to in-store) convey a consistency that evokes the quality and iconic nature of the company.

Thus, does brand manifold apply to a company such as Apple, that appears to be ubiquitous and uniformly experienced across the globe? Does Apple negotiate and constantly evolve its brand, or does it prescribe to consumers what products they need and how they should use them? In other words, is Apple’s brand equity irrespective of context?

While Apple has become one of the most highly valued brands in the world, I would argue that Apple is not immune to brand manifold, and that it is becoming increasingly important for Apple to be attune to the contextual forces that shape its brand identity. Though simple and unvaried, Apple products provide consumers with technological tools to express their own unique identity. Therefore, Apple’s internal brand message in terms of “meaning embodied by products and employees” may not always match the company’s external brand meaning, as individuals’ experience with Apple products can be highly varied and unique. That is to say, though the products themselves are not customized, how people use and engage with Apple products can be highly individualized, and is an important factor in shaping Apple’s brand equity.

Despite Apple’s rise to the top rungs of brand equity and market capitalization, the Apple brand is not immortal. Brand manifold “helps managers understand that a brand’s impact varies according to who is valuing it, in what context and at what time.” For Apple, the element of “time” is increasingly important when considering how the company must evolve its brand strategy. Increasing competition, changing consumer tastes and the threat of commoditization due to the ubiquity of its products threaten Apple’s identity as an “iconic” and innovative brand. As a prescriptive brand, Apple has educated consumers to expect new and exciting products from Apple, and if the company cannot deliver on this innovation, its brand equity will be seriously eroded. Additionally, as consumers and in particular millennials expect increasing individualization and personalization of experience, Apple must evaluate whether its limited product range will continue to sustain the company and its image going into the future.

No brand exists in isolation, and as brand manifold makes clear, companies must embrace external and internal factors that influence brand identity and value. Perhaps it is time for Apple to be less prescriptive and more receptive to consumer influences when introducing new products and developing marketing messages and experiences for consumer. If not, Apple risks losing its relevance and therefore value among its many stakeholders – including consumers, investors, suppliers, and employees.

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[aeburns-blog]

Singapore Airlines: Service as a Competitive Strength, The Power of Culture in Sustaining Brand Strategy, and, a short rant on Brands’ Moral Obligation to Consumers

“SIA was not a transportation company; it was a unique travel experience.” (p. 5)

Image source: stuff.co.nz

Early on, SIA understood that brand equity is created through human experience and is based upon brand mythology that comes to life through customer interactions with the company’s product and people. In many ways, SIA’s brand is predicated upon people, as its commitment to service combines attention to both customers and employees.

While SIA benefited early on from low labor rates given Singapore’s status as a third world country, SIA invests heavily in its people, requiring training for new employees as well as retraining for existing employees so both hard and soft skills are acute. In addition to tactical skills required of staff, SIA also focuses on “cultural” training, and even screens applicants based on their “poise” and “confidence” as they participate in a tea-party with senior executives. In class, we discussed how cultural capital leads to social capital, and thus through its training strategies SIA aims to impart cultural capital to its employees, which in turn earns them social capital among customers. Emphasizing superior experience in terms of both service and “comfort” aboard its aircrafts, SIA caters primarily to business and first-class customers. Customers’ comfort level on the airline is supported by their perception that SIA airline attendants understand them (i.e. demonstrate cultural capital) and are even like them (earning social capital). Social capital contributes to customer satisfaction (i.e. I feel understood and comfortable), and satisfaction leads to loyalty, strong word-of-mouth praise and repeat customers.

In addition to service, SIA also emphasizes the importance of appearance in creating brand equity among customers. For example, in many cases, SIA’s approach can be directly compared to that of Southwest, which also emphasizes service and customer satisfaction. Given strong training and emphasis on teamwork, Southwest’s highly efficient operations has enabled the airline to achieve healthy margins, similar to SIA. An important difference between the two airlines, however, is that Southwest chooses to minimize the importance of appearance and comfort, and focuses exclusively on service. This trade-off, of not offering classes or meals aboard flights, allows Southwest to operate as a low-cost carrier. By comparison, SIA targets higher-income individuals (likely many business fliers) and emphasizes service along with comfort and appearance. SIA has evolved its brand to represent status and appeals to customers who value status and who wish to be associated with an airline of status in order to garner increased status themselves. SIA maintains its appearance of status through its modern fleet, stylized interior and meticulously groomed staff (i.e. teeth whitening, no public smoking in uniform and posture are emphasized; the “Singapore Girl” is typically very beautiful, with standardized looks – SIA also appeals to employees who value status, see comments on the “Singapore Girl” below). In this way, customers’ experience of status is supported by a high level of service as well as the tangible experience of a sophisticated airline, from the aircrafts themselves to the appearance of the attendants.

SIA has been able to leverage customer service as a competitive advantage through the system that it has developed to support and continuously improve its service. In so doing, SIA has created a company culture of commitment to customers and service, and has therefore developed a sustainable, customer-centric approach. SIA’s “system” is based upon the assets it has acquired, including its people and its aircraft. SIA’s hiring practice is highly selective, as the airline screens potential employees for poise, confidence, a positive attitude and strong communication skills. As mentioned, SIA also dedicates many resources to training and retraining employees. This enables the airline to offer a standardized and consistently high level of service. Simultaneously, SIA also empowers employees to react to customer feedback and provide personalized experience. Interestingly, given the diversity of people within Singapore, as well as the largely international customer-base that SIA serves, SIA has evolved its system of service to adapt to the cultural norms of the different countries that it serves – balancing consistency of service with personalization. Importantly, SIA also involves the customer in its brand positioning and is dedicated to collecting and responding to customer feedback. In this way, the SIA brand is co-created with customers who both relate to and aspire to the lifestyle and prestigious experiences that the airline represents.

A comment about the morality behind the brand choice to promote the Singapore Girl:

It is important to note that the “Singapore Girl” is a cornerstone of the airline’s mythology. Featured prominently in advertisements, the Singapore Girl represents sophistication and mystique, a person who seems to allure people into travel and adventure. The Singapore Girl, projecting “beauty, grace, charm (and) good taste” (case, p.5), represents an aspirational and alluring persona – someone that customers want to be with, or want to be like. As is stated in a video report from CNN, the Singapore Girl is iconic to those in Singapore, a representation of sophistication, class and cultural capital: 

http://www.cnn.com/videos/business/2013/04/25/gateway-singapore-airlines-girl.cnn

To the airline, the Singapore Girl (who undergoes 15 weeks of training), is an embodiment of “Asian warmth” (CNN video) and service. While the Singapore Girl has been a highly effective marketing symbol for SIA, I cannot help but question the decision to utilize a female to embody service. SIA employs both male and female flight attendants, and yet, it is the woman who is represents the airline and not as a woman, but as a “girl.” In class this week, in the context of placebo affects and the power of association, we reviewed the case of the “Dove Beauty Patch.” The patch, which was basically just a sticker, resulted in women feeling better about themselves, despite learning that the patch contained “nothing” after wearing it for two weeks. While self-confidence is certainly a positive outcome, I take issue with brands manipulating consumers through disingenuous associations. Similarly, I believe SIA is leveraging stereotypes and sexism to appeal to its customers (men and women alike) and for this reason, I find it difficult to support the “Singapore Girl” aspect of the airline’s brand strategy. The Sinagpore Girls exploits the compatibility of consumers’ (perhaps subconscious) perceptions of gender roles, and of the woman, rather than man, as someone who serves. Ultimately, I believe that brands have a moral obligation to be honest with consumers and to be respectful of all people – irrespective of appeal or profit.

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Innovation Diffusion: Predicting who will win and lose in new markets.

In the “Note on Innovation Diffusion: Rogers’ Five Factors” product-driven forces related to new product introduction are compared to people-driven forces. People-driven forces describe how different groups of people influence the rate at which new products reach mass appeal, identifying categories of adopters from “innovators” and “early adopters” to “early majority” and “late majority” and finally to “laggards.” Additional theory suggests a simplified version of this, in which new product adoption is aided by only two groups of people, namely “innovators” and “imitators.”

By comparison, product-driven forces rely less on the groups of people who influence product adoption, and rather on the attributes of the product itself that can either aid or impede diffusion. In particular, Rogers names five forces that influence new product diffusion: 1. Relative advantage, 2. Compatibility, 3. Complexity, 4. Trialability and 5. Observability. While no one force can absolutely predict new product adoption, considered together, these five factors can help us evaluate the likelihood of new product diffusion, and determine whether diffusion to new markets will be relatively fast, or slow.

I will apply Rogers’ five factors to evaluate the relative speed of market adoption for four different new product introductions, as described in the case, “Four Products: Predicting Diffusion.” While I believe all five forces are influential in new product diffusion, I assert that there is a hierarchical element to the importance of each force, per the ranking noted below:

#1. Relative Advantage: At its most basic level, new products must present some advantage relative to existing options. If there is no advantage over the alternative(s) (related to features, price, social status etc.), the product will fail.

#2. Compatibility: Unless the relative advantage is extraordinarily high, it is very difficult to change user behaviors, values or expectations. Products that aim to reorient consumers should focus on one area of innovation rather than multiple (i.e. a product may change user behaviors but meet user values/expectations, i.e. Apple Watch). Importantly, the new product should be perceived as relatively non-threatening and accessible, as though the user can master the product rather than the product master the user.

#3. Trialability: Try before you buy. This is particularly important for very new tech/products (i.e. VR/AR), as people need to try, experience, and engage with new tech/products on their own terms.

#4. Complexity: Typically complexity has an inverse relationship with product diffusion (i.e. greater complexity, slower/less likely diffusion); however, if the relative advantage is quite high, users are more likely to be receptive to education and willing to accept complexity given the relative benefit of the product.

#5. Observability: Observing others use or engage with new products can be risky, and therefore, observability is not always a positive influence on new product diffusion. For example, if perception not good (i.e. people perceived “Google Glass” as looking dumb/unnatural) early adopters could be punished via social rejection and therefore fail to become promoters/ambassadors for brand.

Individually Wrapped Peanut Butter Squares

Relative Advantage (Low): The problem the product aims to solve is the effort of spreading peanut-butter on bread for a sandwich. The alternative to the new product is simply spreading jarred peanut-butter with a knife. The inventor claims the product is “easy for kids” and makes life “less stressful;” however, the relative effort of the alternative is low and therefore the product appears to be gimmicky rather than solve a pressing market need. Prices of peanut-butter can vary, particularly given organic versions; however, peanut-butter can generally be acquired for $2-5 (as confirmed via quick google search), therefore it seems there would be limited cost advantages of individually packaged peanut butter slices.

Compatibility (Low/Med): Given the ubiquity of individually wrapped slices of cheese, consumers are generally familiar with using “slices” of ingredients when assembling sandwiches. That said, peanut butter is predominantly used in peanut butter and jelly sandwiches, and jelly is typically spread on the sandwich rather than applied via pre-packaged slices. Thus, current user behavior is to spread complementary products.

Complexity (Low): The product is very simple, which is a positive for new product diffusion; however, given that the relative advantage of the product is low, the lack of complexity will do little to aid adoption.

Trialability (Med): Presumably it is relatively easy to offer samples of the product in grocery stores etc. While this may promote initial awareness and curiosity about the product, given that the product offers relatively low advantage vs. existing options, any initial interest due to product demonstrations or samples will be likely to fade.

Observability (Med): The target consumer is likely children, who cannot or are not allowed to use a knife and who benefit from easy sandwich assembly. School lunch-time provides a good opportunity for the new product to be shared among students, and thus, the product could benefit from social pressure if it is used by children who are “high profile” i.e. popular/perceived to be trendsetters in a school setting. That said, there is a risk that the product will appear “gross” when it is observed given its incompatibility with norms regarding peanut butter, and thus observability may have a negative effect given initial product perceptions.

Verdict: Fast to enter, fast to fail. Given simplicity of product, assumed relatively low cost, ability to trial and observe, the product will be quick to the market but also quick to fail. The product does not solve a critical market need, and while may initially generate interest given its “novelty” will not generate sustainable demand given that it does not create meaningful value relative to alternatives and that it is not compatible with user expectations regarding how to use peanut butter/assemble a PB&J sandwich.

Silver-Coated Adhesive Bandage

Relative Advantage (High): The silver-coated adhesive bandage, with the “power to kill more than 150 different kinds of bacteria” appears to offer a number of healing benefits that exceed the capabilities of existing products in the market. While scientists and healthcare professionals have recognized the healing benefits of silver for many years, the bandage as a vehicle for delivering silver to the wound/affected area is a novel application of the metallic element. Given the already low cost of adhesive bandages, it appears the product could offer little to no cost advantage relative to existing options.

Compatibility (Low): Adhesive bandages are widely used and represent a large and growing market. That said, while consumers are willing to experiment with new bandage design (i.e. “Tattoos” for children) it remains uncertain as to whether or not users are willing to experiment with new materials. While professionals recognize the healing properties of silver, consumers are likely not to have the same knowledge. Therefore, significant education would be needed to compel consumers to alter their expectations of silver as not only a decorative metal, but one that has significant healing properties. Given the healthcare application, it is expected that consumers will be very conservative regarding new technology introduction, regardless of the communicated healthcare benefits. Because the concept of silver as a healing mechanism is so at odds with consumer expectation regarding the utility of silver, product adoption will be quite slow, if it occurs at all.

Complexity (Med): While bandages are easy to use, educating consumers about the healthcare benefits of silver may be more complex. A more effective means of new product introduction may be to begin by offering healthcare professionals with the product, so professionals can demonstrate and communicate the utility of the silver bandages to otherwise skeptical consumers.

Trialability (Low/Med): Though it may be relatively easy to provide consumers with samples, either in-store (i.e. at CVS or Target), or via healthcare professionals, consumers’ skepticism could supersede the benefits of trialability. That is to say, although the product may be made readily available to consumers, consumers may still be resistant to try the product due to low compatibility/fear of the unknown.

Observability (Low/Med): Wounds or cuts are generally (if not subconsciously) perceived as sensitive or a source of weakness, hence various “skin-toned” adhesive bandages. While it may be fruitful for consumers to observe healthcare professionals/providers such as nurses or doctors using the bandage, the product may be difficult to observe in the general public, as bandages are typically under clothing, concealed or not “shown off.”

Verdict: Slow to enter, better off B2B. While the product has the potential to offer a high relative advantage vs. existing adhesive bandages, lack of compatibility with consumer expectations regarding materials used in bandages, as well as the uses of silver, are too great and will thus impede rapid diffusion. Such low compatibility may mean that the product will be unable to enter the mass market, and instead may be a better solution for professional/institutional environments. Rather than aim for mass appeal, makers of this product may decide to abandon a B2C approach and instead take on B2B by working with healthcare professionals to introduce the product to new consumers.

Satellite Radio (XM and Sirius)

Relative Advantage (Med): Satellite radio creates value by eliminating (mostly) ads from listening time, and offering more specialized programming for various listeners. These are two features that are highly valued by consumers, and therefore the product offers a compelling new solution for listeners and benefits from an advantage relative to traditional radio. That said, satellite radio is not without a cost, and therefore, while it offers an advantage relative to radio based on new feature innovation, it does not offer a cost advantage, and this will limit its diffusion in new markets, as users dually value quality programming and free access.

Compatibility (Med): Both satellite radio options require consumers to “retool” their equipment and purchase new products that enable them to access the satellite programing. This process of “retooling” is a hassle and can be costly. The new product does benefit from compatibility with complementary products, such as automobiles; however, the longer lead-time of new automobile development may counteract the benefits of complementarities and thus delay market adoption.

Complexity (Low/Med): Satellite radio benefits from a relatively simple value proposition – users are not required to undergo education or change behaviors to utilize satellite radio. That said, the purchasing process does suffer from some complexity, as consumers will have to purchase specific equipment/technology to access satellite radio, and then work with providers to manage a subscription.

Trialability (Med): Given integration with automobiles, satellite radio could benefit greatly from trialability. As is currently the case (hindsight is always 20-20!), new cars could come equip with a free trial of satellite radio so listeners can understand first-hand the value of reduced commercials and more specialized programming. Technology to access satellite radio is specialized, and therefore the cars that come equip with this technology could be limited (at least at the time of the case). Therefore, access to a free trial would be dependent upon users’ access to cars that are equip with the proper satellite radio, which may limit the benefits of trialability.

Observability (Low): Though listening to the radio can be a social activity, typically listening to the radio is done via commute or during the workday. Thus, listening to the radio is more commonly a solo activity, and one that is passive (i.e. does not involve a “performance” or activity that can be observed by others). It is not obvious to others what radio station/products different users engage with, and thus, the positive effects of observability in aiding diffusion are minimal.

Verdict: Slow to enter, highly specialized. Satellite radio solves for the consumer need for quality programming with limited interruption. It does not solve for the need for free-access to programming, and instead introduces a cost to access more specialized content. Additionally, satellite radio depends upon specific technology for its distribution. Thus, diffusion will depend upon the access of complementary technologies. Given its cost, the new product will appeal to a specific segment of the market that can access/afford complementary technologies and that values specialized program and is willing-to-pay for it.

Odor-Generating Computer Plug-In (iSmell)

Relative Advantage (Low): The odor-generating computer plug-in addresses no observable need in the market. While smell is highly linked to emotional response, taste and overall human experience, consumers do not demand that smell is associated with their engagement with technology. This product represents a novelty or fad, rather than a tangible market need.

Compatibility (Low): Technology users do not expect their technology to generate a specific smell. Humans have sufficed for centuries by experiencing images through sight and no smell. To supplement images shown on the computer with a complementary smell could create cognitive dissonance: users recognize the image as non-reality, and yet experience the instant sensation of smell as if the object shown in the image were actually present. The dissonance that results could create confusion/repulsion, similar to users’ reaction to virtual reality (i.e. the eye sees movement/activity, but the body does not feel similarly).

Complexity (Low): The product seems relatively easy to engage with (though would require installation with existing technology). The benefit of simplicity is outweighed by the low relative advantage of the product.

Trialability (Low): To experience the product, it appears as though users would need to purchase the apparatus that disseminates the smell. It would be difficult to trial this privately without actually purchasing the product (though the makers could conceive of a free trial in which the user could return the add-on at no cost if it did not prove satisfactory). It would be very difficult to trial the product in a public space, such as a store, as the product could create conflicting smells which, when comingled, create an unpleasant/confusing smell to users.

Observability (Low): Personal computing equipment is typically just that – personal. Therefore, it would be difficult to know whether or not others have this add-on installed in their personal desktop. Perhaps the makers of the product could leverage bloggers to review the product and provide their expert endorsement; however, this would not permit potential users to actually experience the product for themselves. There is very little social benefit from the product, given the divergence and diversity of people’s preferences for smell.

Verdict: Non-enterer. The product doesn’t solve a real market need, and is not compatible with people’s expectations of their personal technology products. Further, given that it is incompatible with expectations and a very “new” technology, it would be important for users to trial the product before purchase; however, this would be challenging. Given these factors combined, this product appears to be a non-starter and is expected to see little to no mass-market adoption.

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Corona vs. Heineken: The Marketing Advantage of Supply Chain Control and a Multi-Sided Brand Strategy

The Corona Beer case demonstrates the importance of strong alignment across all factors that influence brand reputation. As Grupo Modelo expanded from Mexico into the US, the storied brewery maintained close control over supply, importation and distribution. As is stated in the case, “selecting a good importer is like choosing a good host family to send your children to overseas”. Implicit in this comment is the understanding that the importer has as much influence over the reception and success of the brand as Modelo does as the supplier. Importantly, Modelo selected importers with complementary product lines to avoid direct competition with the Modelo brands, helping to further align business goals. Modelo’s establishment of a local presence, Procermex, further aided the brewery in monitoring the actions of importers, Gambrius and Barton. 

The alignment of Modelo and its two importers further affected the efficacy of the wholesalers, or distributors, down the chain – a critical component of Modelo’s supply chain in the US, given wholesalers’ management of product merchandising. As is stated in the case, “Our strength lies in that we combine a consistent advertising message with excellent sales fieldwork, good point-of-sale promotions, a fresh product and reliable pricing” (case, p. 10). Although Modelo did not own the end-to-end supply chain in the US, Modelo established relationships with importers and distributors such that the Mexican brewery could exert sufficient influence to maintain consistent brand imaging and messaging to the end consumer. This also provided Modelo with a direct feedback loop to understand which aspects of branding resonated with the customer, from the simplicity of its marketing message, to its emphasis on “fun in the sun,” to its authenticity as a Mexican import.

By comparison, Heineken exerted less control over its supply chain, and thus, this lack of influence over importation and distribution proved to be a significant vulnerability for the German brewer. Heineken experienced conflict and lack of effective communication with its long-standing importer, Van Muching, ultimately deciding to bring US importation in house. Van Muching, which had served as Heineken’s US importer since 1930, controlled much of the brewery’s advertising decisions in the US. Van Muching’s difficulty in working with outside ad agencies to deliver messaging that resonated with consumers demonstrates Van Muching’s (and by default, Heineken’s) lack of closeness to the customer. While Modelo’s influence over importation and distribution allowed the brewery to affect varied geographic strategies as well as localized in-store and on-premise promotions, Heineken’s distance from the supply chain caused the company to overlook that its emphasis on product quality created dissonance with consumers who viewed the German brewery as “arrogant” (p. 12).

A consistent decline in sales forced Heineken to confront its shortcomings, which ultimately led to a focus on marketing, regionalized efforts and an injection of humor to counteract haughtiness in advertising. Heineken’s slacking sales demonstrated that the company was “out of touch” with consumer preferences, and thus ultimately stemmed from the brewery’s poor relationship with its importer and resulting lack of influence over the US supply chain.

To protect against such vulnerability in the future, Heineken should consider tactics that increase its influence over importers and distributors, such as founding a local supply chain management subsidiary, in order to ensure that Heineken’s marketing message is effectively relayed to consumers. Perhaps most importantly, Heineken should establish a clear feedback loop with consumers to better understand how branding efforts are received by customers, and assess positioning vs. competitors, such as Modelo. Heineken can accomplish this through user surveys, interviews, focus groups and greater in-person, on-premise presence at restaurants, bars and retailers to collect and respond to user feedback. This type of involvement is particularly important for a foreign brand entering or growing business in a new market, as cultural assumptions or traditions that resonate in one place may not be as effective when applied elsewhere. Finally, Heineken appeared to confuse advertising for marketing, and thus paid less attention to tactics related to pricing (aside from maintaining a premium status), customer support and market research. Influencing all of these functions such that they are aligned with consistent business goals and brand strategy could further enable Heineken to protect against its vulnerabilities in the US and elsewhere.

Though Modelo and Heineken both compete in the US as imported beer brands, the two breweries represent different symbols in the minds of consumers. For example, Heineken steadfastly clung to its “superior” product quality and status – so much so that the company was slow to realize when this “turned off” consumers. By comparison, Modelo made an early decision to maintain its Mexican roots and authenticity, committing to 100% production in Mexico and crafting brand messaging around the accessibility and drinkability of its beer, as well as the lifestyle or feelings that a trip to Mexico represents to US travelers. In this way, Modelo “borrowed” the brand recognition of Mexico as a place when promoting Corona as a product. While Heineken focused on the product itself (i.e. superior quality, #1 imported beer), Modelo emphasized the experience of drinking a Corona, and played to the positive associations of a Mexico vacation, including beach, sun, relaxation and fun.

The two companies’ advertising campaigns support the brand symbols that each brewery aims to create. For example, in Exhibit 8 of the case we see Modelo’s advertising copy highlighting the beach or vacation experience, and the Corona beers depicted are just a natural complement to the broader experience that is conveyed. By comparison, we see how Heineken’s advertising is focused on the bottle of beer itself, depicting the product color, head and condensation to reinforce product quality. The commentary in one ad states, “Come to think of it, I’ll have a Heineken,” an attempt to convey that Heineken is a symbol of elevated status or beer expertise. Although Modelo competes with Heineken in the premium price segment, the beers shown in Modelo’s ads are not depicted as premium products and thus aspirational in price. Rather, Modelo’s advertising focus is on the premium, aspirational experience. By comparison, Heineken’s branding strategy is more one-sided than Modelo: consumers can make the “right choice” to drink Heineken, or not. Conversely, Modelo’s strategy is two-sided: consumers are invited to engage with the experience of having fun, relaxing etc. and drinking a Corona can enhance this already desirable experience. Modelo’s strategy leads to a co-creation of branding (i.e. consumers start to squeeze lime into their Corona bottle) that is not available to Heineken given its one-sided focus on product rather than experience, places or people.