Renata Moura

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[remouraposts]

YOUR “SIGNATURE” MIGHT KILL YOU

One of the most difficult tasks in marketing is to make your brand known and easily recognized among customers. But what happens when you create such a strong and famous signature, that it becomes a threat and might “kill” your growth?

A common strategy adopted by many brands is to licensing its signature. Despite helping brands to gain market share, this strategy also presents an enormous risk, once it facilitates brands to lose the “exclusivity” effect and the control over brand associations.

Reading the Burberry case we see how clever was the decision of the CEO Rose Marie of reviewing and decreasing the licensing contracts as well as restricting usage of the notorious Check. I could not stop myself from thinking about the not so wise (my point of view) strategy of the Brazilian artist Romero Britto.

Britto is an internationally known artist, that combines elements of cubism, pop art, and graffiti into his work. His art is very vibrant, positive, colorful, and remarkably easy to recognize. This should be the dream of any professional right?! Yes, but it depends…

The issue with Britto’s strategy is that in an attempt to make his art popular and affordable to the masses exploring licensing of products like notepads, crayons, coasters, and even paper tissue, at the same time he was selling expensive canvas to a completely different customer, he lost his exclusivity effect.

Why I would want a painting in my living room with the same pattern as toilet paper?

In the short run, this strategy gave him visibility and growth, but in my opinion, he lost control of licensing and let it happen for far so long. Unlike Burberry that managed to explore different ways to use the Check or not even use it at all, Britto could not find a way to change nor adapt his style according to the segments/product lines.

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Successfully failed!

Why a product that seems to attend a consumer needs, presents good quality, great advertisement investment and adds value to the consumer, still fails?!

On  John T. Gourville's paper, we are presented with a framework that helps us evaluate and understand why failures happen, even when the idea and everything else looks fantastic! The idea is to look at the innovation and see how fast and broadly it can diffuse into the market (what are the impediments and facilitators?), identify what are the characteristics that can improve to accelerated the acceptance rate, and finally discover if it adds value to the chosen market segment.

A great example to use this framework and understand why a product fails is the 2001 “innovative” product named Segway.

When it was invented, it presented a compelling promise to help solve the problem of traffic in large cities where many people take the car out of the garage to walk short distances and alone. Imagine if these cars were replaced with something much smaller, it could be the end of long hours stuck inside your car! 

So, what went wrong? 

Diffuse into the market: Mistake #1. The product was so “innovative” that it didn’t’ fit any category of transportation. So it could not be used on the sidewalks, as it has a motor and could be dangerous to pedestrians, nor on the road as the speed was below a car or motorcycle. 

Characteristics: Mistake #2. Different than a bike, Segway was much heavier and definitely harder to move around from one floor to the other, entering places and parking.

Market segment: Mistake #3. Te market segment. The company was targeting people who use a car to ride short distances, but were those people willing to spend 5K on this? Do they really need it? Maybe if Segway decided to focus on corporate customers (security staff for instance) since the beginning the outcome for the story could have been different.

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"THE NUDGING SIDE EFFECTS - FEAR AND DESIRE"

What influences someone to keep or quit smoking? What motivates an individual to continue a habit that s (he) knows could lead to diseases and even death?

According to the World Health Organization, Canada was the first country to start using pictorial images warning to educate smokers and non-smokers about the risks of tobacco in 2001 and has been followed by 28 more countries since then. The idea was to promote awareness of all the side effects of smoking and create a sense of responsibility in individuals and communities, by adding big images on the cigarette package. The images were carefully selected to expose with extreme realism the harmful tobacco effects.

Several behavior studies demonstrated that feeling “fear” could motivate a behavioral change like quitting smoking, stopping drinking, quitting being naughty with parents, and so on. However, when fear is linked to punishment, as soon as the threat disappears, so does the fear, and you in a blink of an eye is going back to the same old habit. In the case of the anti-tobacco images on the cigarette pack, the first impression was powerfully inciting fear, but after a while, you start getting used to the picture.

Another interesting aspect of this nudging experiment was that the pictures provoked fear and consequently guilt in the individuals who decided to buy the cigarette pack, but what the government wasn’t expecting was that sometimes the feeling of guilt can make the temptations even more seductive and hard to say no. In his book “Buyology”, Martin Lindstrem used science (fMRI) to explore how the consumer mind works and discovered that those cigarette pack pictures were actually encouraging people to smoke.

So, before nudging be aware of the first effects and what it can unleash….

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WHERE ARE YOU?

To be successful in a market, a brand needs to know who its consumers are, what they want and how they see the brand. 

In the middle of the ’90s, the executives of Corona beer were facing the tough decision to change or not the brand traditional theme “Fun, Sun, Beach” in the communication, once its most relevant rival - the other imported premium beer - Heineken was starting to navigate in the same humor platform. Should they have changed the direction of a winning brand positioning ? A positioning that helped the brand in 20 years conquest the position of second-biggest imported beer in the US. The answer is NO! 

No, because Corona had a very clear vision of who was the customer, what is needed and which attributes and benefits to explore. The customer of Corona was the young Latinos and the Americans who appreciated the Latin culture, who worked really hard and just wanted a relaxing moment while drinking a beer, an “easy” beer to drink. While Corona was using its ads campaign to build emotional associations with its brand (fun, relax, beach, ocean sound, vacation, simple), Heineken was spending 3x more in marketing to promote the quality of the Dutch beer. However, quality is not a sustainable asset to advertise once it is relative to each customer, not to mention the arrogance behind the signature “Just being the best is enough”. Heineken definitely needed to change its position in order to keep its leadership on the imported beer/premium U.S market.

You might think that when Heineken changed the guidance of its campaign to the same humor background as Corona, the executives of the Mexican beer should feel threatened, it is indeed undeniable that both companies shared several points of parity which helped both brands to create associations into American customers, such as origin (imported), distribution channels, price, and so on. But, both also had strong points of differentiation which were crucial for its market like the taste and the emotional feeling that aroused.

It is easy to see why Corona should keep its strategy when we put both companies into a perceptual map, using two benefits and how the customer perceives it.

Even using the humor as its motto, Heineken occupies a different place in the consumer minds. Corona is in a relaxed moment, Heineken is at the bar, at night. Corona is to disconnect with the world, while Heineken is dive deep into the crazy world.

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“HOW ELASTIC IS A BRAND?”

When companies want to expand their business, one good alternative is to use the same brand to play in other market segments. At first, it seems a great strategy as it requires lower marketing investments and instant positive brand associations, however exploring a new segment, sometimes also means talking to a different customer with different needs. So, how many customers can a brand talk in an effective way? How far can a portfolio extension go without hurting the brand? Where is the limit to a brand keeps its personality?

Unfortunately, the answer to these questions depends on different variables and is not unique. A good example to illustrate the implications and challenges of a brand extension is the Black & Decker power tools division and its Tradesmen segment at the beginning of the 90s.

Black & Decker was the world’s largest manufacturer of industrial and domestic tools with a brand recognized worldwide and a  presence in 5 different categories (Power tools, Household, Information Systems and Services, Outdoor Products and Security Hardware). The most relevant category was the Power Tools and Accessories, which B&D had 29% of market share and revenue of $395 MM at the beginning of the ’90s. The market divided the Power and Tool category into three segments: Professional Industrial, Professional Tradesmen, and Consumer. 

The tradesmen segment was the smallest but the most promising one, with an expectation of a 9% increase in the following years.  B&D had a great relevance in the Industrial and Consumer segment, but a poor performance and market share in the Tradesmen, with only 8% of participation, losing marketing to brands like Makita with 50% of share and Milwaukee with 10%. These brands didn’t have the same brand awareness nor quality in customer service as B&D but had a better perception of product quality to the consumer of the Tradesmen segment. The tricky part here is that after performing several quality tests, B&D executives discovered the quality of their products was similar or even better than its competitors. Why then, the consumer was thinking in a different way?

To answer this question, let’s take a step back here. B&D did a good job deciding to play in the three segments (Industrial, Tradesmen, and Consumer) using different sales channels and marketing strategies once the company had the capabilities to do so (tradition, know-how, awareness, and relationships). However, D&B failed to identify the behavior of the consumers for each segment and what made them unique and different, the company assumed the consumers valued the same characteristics and didn’t need a strong differentiation among them. To better understanding, let’s look at the figure below and see the differences between the segments:

The table highlights the different perceptions the customers of each segment had in relation to the Black & Decker brand. We could start to have an idea, why the B&D wasn’t popular with the tradesmen professionals and letting other brands take advantage of it. Makita, for example, was a brand focusing its efforts on this specific segment, with a premium price, high-quality perception and high product differentiation.

But you might think, B&D could easily invest in marketing and try trough different communications approaches to change the brand image. However, it wasn’t just the communication. Black & Decker was reinforcing the perception of a “home brand” to the tradesmen segment by not creating enough product differentiation between the consumer and tradesmen products, using the same brand name and applying a very similar color (while other brands where using red vs grey or green vs grey, B&D was only black and grey).

Black & Decker didn’t notice the Tradesmen segment had created negative associations with the famous brand. As raised at the beginning of the article, B&D had decided to expand its business but wasn’t talking in an effective way with all the customers, and had achieved a point that the success in one segment was negatively correlated to the performance in the other. This is one of the cases that the Black & Decker should have to use its brand in a second plan, just endorsing another one. In this scenario, B&D would benefit from its long term relationship and trust with the trade but would have the “freedom” to play with different colors and communications.