Branding Blog

Stephanie Boulger

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Peloton: A Victim of Their Own Success?

In the Burberry case, Bravo notes that Burberry cannot become a victim of their own success. The brand is very popular and widely known, however, this presents new challenges. For example, Burberry was positioned at a very delicate place in the market making the landscape of competitors large and difficult to manage.

While reading the case and understanding the issues Burberry was and will be faced with, I was reminded of my group’s branding lab project. Peloton, in some ways, has become a victim of their own success.

Not all press is good press – Peloton has become a household name, which means that when crisis strikes, it is front page news. The company has had multiple crises in the past months including the recall of the treadmill and an unfortunate feature on HBO’s And Just Like That…

Unpredictable demand – After unprecedented success during the early months of the pandemic, demand for Peloton’s products has decreased. This decrease even caused Peloton to halt production in early 2022.

Fierce competition – Competitors have emerged from all sides of the home fitness sector, not only in the form of bikes but also rowers, weight machines, and boxing equipment. The problem with being the best is that others will try to catch up - and might just be successful in doing so.

Peloton is still able to turn things around, but it won’t be easy. Perhaps Peloton needs to be reinvented, just as Bravo did with Burberry.

Sources: (1) Youngme Moon, “Burberry,” Harvard Business School, April 2004. (2) Edward Segal, “Peloton Faces Challenges Before It Can Recover From Their Latest Crisis,” Forbes, January 2022.

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Applying the 5 Factors to Four Products

Sliced Peanut Butter

Relative Advantage – Compared to typical peanut butter, this product provides a cleaner and easier solution. However, this product likely creates more waste than peanut butter from a jar, which may not sit well with consumers.

Compatibility – This product is very compatible with typical uses of peanut butter.

Complexity – This product is not very complex to use.

Trialability – The product has low trial costs.

Observability – Grocery stores could display and sample this product, and if used in kid’s lunches, it would be very visible to consumers.

Collapsible Wheel

Relative Advantage – Compared to typical bike wheels, this new wheel allows a bike to fold which would make it easier for consumers to travel with or store their bike.

Compatibility – Unfortunately, end consumers cannot purchase this product, as it needs to be installed when a bike is manufactured. Therefore, this product is not compatible with current bikes.

Complexity – There is likely to be a learning curve with the wheel, as people are accustomed to their wheels always staying in one position (and likely feel safer when that is the case!).

Trialability – It is not easy for people to try this product because (as mentioned above) it can’t be put onto existing bikes.

Observability – This innovation is less observable than many, as it will take longer to adopt and, when adopted, the innovation is only visible when a bike is not in use.

Stave Puzzle

Relative Advantage – For puzzle experts, this product provides an extra level of difficulty. However, for the average individual, this product does not provide any substantial advantage.

Compatibility – This product is easy to introduce into the current market.

Complexity – This product is complex by design.

Trialability – Unfortunately, trials of this product take hours to weeks. Therefore, it would not be easy for a consumer to stop in the store and quickly try out this product. However, the product can easily be displayed and might leave consumers wanting more after they spend a few minutes with it!

Observability – Because of the high cost of the product (and because puzzles are many times done alone) this product is not as easily observed.

Polytrack

Relative Advantage – Provides a softer track which is safer for horses and is not damaged by weather.

Compatibility – Given that racing is time-based, and this product produces slower times, it is not very compatible with the current market. Participants might get frustrated with the inability to set records on this surface.

Complexity – Once installed, this product is not complex to use.

Trialability – Unfortunately, it is not easy for a racetrack to try out this surface in their own space. They can, however, go to other racetracks to try the surface.

Observability – Now that one racetrack has adopted the product, its benefits and drawbacks are relatively easy to observe.

Sources: (1) Gourville, John T. “Four Products: Predicting Diffusion,” Harvard Business School, 2008. (2) Gourville, John T. “Note on Innovation Diffusion: Rogers’ Five Factors,” Harvard Business School, 2005.

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Brand names and their impact on consumer preferences

The Concha y Toro case discusses many facets of the wine industry, one being the fact that how consumers perceive wines is many times not in line with true quality markers. For example, the case describes multiple blind taste tests where consumers and top wine-tasting experts preferred wines from non-European countries, despite the fact that “France, Italy, and Spain were the guys to beat.” These countries had high quality wines, but consumers also associated positive attributes with the country, giving these producers a head start against other wine makers.

There are many markets where a similar scenario plays out. Stakeholders in the clothing industry are heavily reliant on the perception of brand names. If a consumer is blindly shown two dresses, for example, they might indicate a preference for one over the other. However, if later it is revealed that the second dress is from a prestigious designer, the consumer might perceive the dresses differently. This phenomenon is proven when consumers would rather purchase a low-quality purse that is a brand name duplicate, rather than a well-made bag that is not from a known brand name.

My brand lab group will need to keep consumer perceptions in mind when thinking about Peloton’s brand. Despite recent issues, they have been able to distinguish themselves as a luxury option, and our group should take advantage.

Source: “Concha y Toro,” Harvard Business School, Professor Rohit Deshpandé; Gustavo Herrero, Executive Director of the Latin American Research Center; and Senior Researcher Ezequiel Reficco.

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Understanding Consumers Through Market Research: Key Elements to Keep in Mind

1) Secondary data can be misleading

Today’s article discussed secondary data, or data not collected for the purpose of understanding a certain product. Instead, the data is collected to understand broader trends and can be purchased by brands and applied to their products. However, brands need to remember that this data can sometimes be misleading (e.g., the Market Research Corporation of America data showed cereal consumers had no distinguishable characteristics, but Life consumers had more children and higher incomes than average).

2) Market research takeaways can quickly become irrelevant

While not discussed in the article, it is important to understand that takeaways from market research can quickly change with current events, the passage of time, etc. For example, prior to the 2022 Super Bowl, it might have been the case that a phone survey of consumers would have resulted in low awareness of cryptocurrency companies. However, Coinbase’s popular “bouncing QR code” ad was extremely popular (it crashed their app!) and likely increased consumer familiarity with all crypto companies.

3) Importance of data visualization/presentation should not be ignored

After spending countless hours and a valuable budget on high quality market research, it is important to display the takeaways in a clear and accurate manner. Managers and C-Suite executives who will be interested in the outcomes do not have time to sit with excel sheets full of data. They will want to be shown a few graphics that summarize what we have learned, paired with succinct next steps. It is important to spend time thinking about what type of graph/table to use, what colors will be most clear, and in what order results should be presented.

Sources:

(1) Robert J. Dolan, "Market Research", Harvard Business School.

(2) Susannah Sudborough, "That minute-long QR code Super Bowl Commercial for Coinbase crashed the company's website," Boston.com, https://www.boston.com/culture/entertainment/2022/02/13/coinbase-super-bowl-commercial-qr-code/.

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The Black & Decker Corporation: Power Tools Division

When a powerful brand name and high quality are not enough

In the 1990s Black & Decker (B&D), a portable power tool company, had a well-known brand name and had established the highest quality in the industry. B&D’s business had three main segments: professional-industrial, professional-tradesmen, and consumer tools with segment shares of 20%, 9%, and 45%, respectively. What was causing the out of place 9%?: Tradesmen saw B&D tools as “not for them” and thought of them mainly as tools for “do-it-yourselfers” at home.

B&D’s VP of sales and marketing for power tools was faced with a difficult problem. One potential solution: drop the B&D name from the professional-tradesmen segment. Even if, in the long run, this strategy is successful, there might be short-term risks.

First, significant R&D goes into developing a new brand name. To spend extra time and money on a segment that is already a financial burden is certainly something to think twice about.

Second, the product might temporarily be overlooked on shelves, if the new name is not yet recognizable. In a market where performance and safety are so important, consumers will likely gravitate toward household names.

Picture Source: Out With the Facebookers. In With the Metamates. - The New York Times (nytimes.com)

Third, there will always be those that criticize the alternative choice, both internally and externally. For example, when Facebook renamed itself “Meta” some employees were confused and uncertain about the shift (Source: Out With the Facebookers. In With the Metamates. - The New York Times (nytimes.com)).

A drastic change like dropping the B&D name from the professional-tradesmen segment might be necessary, but B&D should ensure they get it right.

Case source: Professor Robert J. Dolan, The Black & Decker Corporation (A): Power Tools Division, Harvard Business School Case.