Category Archives: Perception

Brand Promise, Brand Strategy, Perception

Starbucks from Coffee to Wine to Food to Focus ?

Starbucks is the miracle story of a US-based company becoming the expert globally in selling quality coffee. The company gave us the concept of an extra living room, or as Starbucks says,’ the third place between work and home.’ The coffee is not cheap, but the perception (supported by the price) is that you get a quality cup. The company has tried several times to break out of the Coffee category but time after time realises that Focus on the Core remains the best strategy.

Back in 1971, the company was all about Coffee, Tea, and Spices. In 1987 the founders sold the company to Howard Schultz. Under Schultz, the company focused on coffee. It created a new logo, and gone were the Tea and Spices. The new logo linked the brand and category. Starbucks = Coffee. As a result, the company went through massive growth. Between 2005 and 2011, revenues increased from 494M to 1,246M, a staggering 152%.

By the end of 2010, the company was ready for more growth. The company took the thinking of a ‘third place between work and home’ to a new level. Their customer-led research revealed that ‘Starbucks customers are also wine enthusiasts’ and ‘Starbucks customers love beer too’. There was a demand for a casual meeting environment in the evening hours. Starbucks was going to fulfill that role and serve the customers what they enjoy: wine and craft beer. Starbucks became so much more than coffee alone. The logo was updated to reflect that. ‘Starbucks Coffee’ was removed.

The Starbucks website introduced the Evenings program :

‘Starbucks customers are already enjoying coffee at our stores in the evening, and now, they have more menu options including wine, craft beer, and small plates.’

‘Rachel Antalek, Starbucks in-house sommelier, led the Evenings team as they explored the world of wine, looking for the most interesting assortment that’s not only delicious, but a great value as well. The team evaluated different varietals of wine to offer the complex and unique flavors that customers expect from Starbucks.’

The menu consisted of ‘Savory small plates’ and ‘Perfectly paired wines’. Some tasty examples from the menu :

Truffle Mac & Cheese
Chicken Sausage & Mushroom Flatbread
Meatballs with Tomato Basil Sauce
Truffle Popcorn
Wines – Sparkling, White, Sparkling Rosé and Red
Craft Beer

The program grew eventually to 400 stores in the U.S. and locations outside the U.S. The 2015 annual stakeholders meeting listed the Evening Program as one of the seven strategies for growth :

‘By the end of 2019, we will double food sales in the Americas through breakfast, lunch, snacks and the Evenings program. We will grow our food business in the U.S. from 18% to 25% of revenues by the end of 2019 adding an additional $2 Billion to our base business.’

In 2016 Starbucks stopped the program. It failed. The official reason was a ‘counter service format’ issue:

‘It appears that this strategy did not work, especially since table service in the evenings conflicted with the counter service format in the mornings.’

Of course the Evenings program did not fail because of the counter service format. The Starbucks company forgot that the position of the brand in the minds of people is just Coffee. It was never about Evening food, wines, and craft beer. Just imagine people saying, ‘Let’s get a glass of wine at Starbuck’. Starbucks is not going to replace wine establishments or bars.

Once companies have put their minds to something, they do not give up. So Starbucks decided to take all the learnings from the Evening Program to create high-end Roastery stores. In 2019 Starbucks introduced six Reserve Roasteries around the world, in Seattle, Chicago, New York, Shanghai, Milan, and Tokyo. The Starbucks Reserve Roasteries serve ‘unique food and beverage experiences’. Once again everything is directly connected with Starbucks the coffee brand.

Starbucks keeps trying because food is a huge growth area. The mistake the company makes is to enter the food category with a coffee brand. Starbucks could have done a couple of things. First, it could have reinforced its leadership position in coffee by bringing the unique Reserve and Barrel-Aged Coffee from the Roasteries to some of its locations. Additionally, Starbucks should have expanded outside the box with the Conquer Strategy. Launch a new brand to grow in the evening food and drinks category. The new brand should operate in new locations, closer to where the bars and restaurants are.


This article is from the book Win With What – the first category-led growth book for anyone who wants their business to thrive and survive.

Get your preview at WinWithWhat.com

 

Brand Promise, Brand Strategy, Perception, Portfolio, Positioning

The End of Facebook

Meta is running the last leg of its once so-popular social media platform Facebook: Facebook is on its way out.

In 2013 the Facebook CFO already warned of upcoming problems in the Q3 2013 earnings call “We did see a decrease in daily users partly among younger teens. … This is of questionable significance.”

In 2015 I concluded that Facebook, the brand leader of the extensive category social network, will eventually face issues with focused brands taking small bites out of the big pie and capturing users from the leader (link).

The combination of brand decline with the youth (= looking for another brand than Facebook) and new brands coming in (Snapchat, Insta, TikTok, and many more) eventually will lead to the end of Facebook. Facebook is not attracting the youth and grows along with the old.

In 2018 while teaching second-year students, I learned that the Facebook issues were more significant than I had thought: a few of the100 students used Facebook very specifically to browse posts. They did not post anything themselves.

Recently I decided to recheck the Facebook status with a large group of students. The trend has only gotten worse: Facebook is hardly in use with the group <25 years – not even to browse posts.

The generalist category “social network” is disappearing; with it, the brand Facebook will eventually disappear.

The company’s rebranding from Facebook to Meta was a vital move. Under Meta, each product brand can flourish without a link to the fading Facebook brand.  

Brand Promise, Brand Strategy, Perception, Portfolio

Birkenstock – from “sandals and shoes” to “sleep systems” (Part II)

Birkenstock makes moves outside the perceptual category of “comfortable and stylish quality sandals and shoes”  

I discussed the Birkenstock Natural Skin Care line extension in the previous post. After sharing it on LinkedIn, I learned from Ruben Lekkerkerker that Birkenstock had already extended into sleep systems.  

To recap: Birkenstock is known for its quality sandals and shoes, and Google confirms its strong positioning. Yet the company wants to be known for: sandals, shoes, socks, bags, cosmetics (creams, cleansing, oils) and belts, mattresses, frames, beds, and pillows.

 

Birkenstock also saw the opportunity in sleep systems and connected the world of a Shoe with Sleeping. In their words:

“Taking a great idea one step further: Just like the original BIRKENSTOCK footbed, our anatomically designed sleep systems also adapt to the shape of your body. This enables our mattresses, slatted frames and beds to support and ease the strain on the human body in an ideal manner when lying – helping you sleep as comfortably as possible. Feel refreshed from tip to toe.”

If you think this sounds like any other sleeping systems brand, then you are right – it does. Great mattresses adapt to your body and all great sleeping systems help you sleep as comfortably as possible, so you can feel refreshed when it is time to wake up…   

The thinking inside the company must have something like this: we are known for our “anatomically shaped cork-latex footbed” – this is all about adapting. In which growing category can we extend this thinking? SLEEP SYSTEMS!

The question is: will consumers buy Sleep Systems from a high-quality shoe and sandal brand?

Turn it around, would people buy Shoes or Sandals from sleep systems brands like Tempur or Hästens because they have great nights of sleep?

I seriously doubt it.

The secondary problem with these many line extensions is that Birkenstock signals that they are not so serious about what the brand is known for: shoes and sandals. Shoes and sandals are now part of the many other things the brand does.

In other words: if you have to make a call on buying shoes and you can choose between a brand that is only designing, manufacturing and selling shoes or one that does shoes, skincare, bedding and more… which one would you pick? Most often, the specialist wins over the generalist.

The best path for Birkenstock would have been to do exactly what Google and Facebook recently did: sell products with different target audiences or purchase intensions under different brands. The product looks so great that it would be a shame if they do not succeed because of the position Birkenstock has in the mind of the buyer: Birkenstock = Shoe/Sandals.

Brand Promise, Brand Strategy, Perception, Portfolio

Birkenstock sandals and shoes going natural skin care

Birkenstock stands for comfortable and stylish quality sandals and shoes. With Birkenstock Natural Skin Care, the company moves into a new category. 

Birkenstock is known for its quality sandals and shoes, using the legendary footbed, providing support and comfort since 1774. A quick search on Google confirms the strong positioning.

The brand is moving in many directions. Its 1774 line is taking a position in the luxury sandals and show segment. Birkenstock joined forces with, for example, Maison Valentino, “Dior by Birkenstock” (reread the last three words again…), and other high-end brands.

At the same time, the brand is moving into a new category with “Birkenstock Natural Skin Care”

Birkenstock line extensions
Birkenstock line extension logos

 

While the 1774 product line is connects to the Birkenstock core, Natural Skin Care is an actual departure into a new category.

The product development team connected the world of sandals and shoes with skin care  using a cork cap on all-natural skin care products.

The question is: will consumers buy natural skin care products from a high-quality shoe and sandal brand?

Like any other professional company, Birkenstock has probably done all the research to answer the question with a firm Yes.

My experience is that consumers who purchase the core product are often asked whether they would buy the line extended products as well.

The answer is often Yes, simply because the people who were asked the question already like the core product. Never mix the intention to purchase with an actual purchase decision. People buying skin care products will do so in the context of the skin care category. Birkenstock competes with brands like SkinCeuticals, CeraVe, Kiehl’s, and Rituals. A tough one!

To answer whether Birkenstock Natural Skin Care will be a huge success inside the skincare category, we could turn the question around. Would Kiehl’s “Finest Apothecary Skincare” ever be a success as the finest shoe and sandal brand? I doubt it.

What Birkenstock could have done is to apply the Conquer strategy: growing a new brand in a new category. Using a new brand gives freedom to operate and grow into currently impossible areas. At the same time it is also easier to stop without harming the brand in the original category. The Birkenstock Natural Skin Care products look great on the paper – it would be a shame if they do not succeed because of the “wrong logo”.

Brand Promise, Perception

Apple understands how to (not) do discounts

Black Friday is the day many brands offer discounts. Strong brands, like Apple, never discount the core products.

For companies, sales discounts are a great way to boost short- term sales. It is an approach with guaranteed success. Even people who do not need the product right away might buy because of the great discount. Like with everything, there is a flip side to discounts.

1. Postponing purchases
Consider carefully discounts for products that are not fast- moving consumer goods but substantial investments for consumers. Consumers can often wait to make the purchase when it is not highly necessary. It is not uncommon for people to sleep on the old bed a few months longer and wait for a good discount.

2. Creation of artificial purchase cycles
Some companies run discounts during specific times of the year. When consumers know about the cycle, they will wait for the following discount round. The brand has unwillingly created an artificial purchase cycle.

FujiFilm is a company with artificial purchase cycles. The company runs pretty steep discounts on its cameras and lenses in spring, summer, and winter. People who are in the FujiFilm camp make purchase decisions three times per year. If the desired products are not on sale in the current round, chances are the dream kit will show up in the next round.

3. Abandonment of retail prices
Discounts reduce the suggested retail sales prices of products in the mind of the consumer. Once buyers have seen a printer in a special offer for US$69, they won’t pay the US$99 suggested retail price ever again. Getting the product cheaper has now become a real possibility. The discount helped the short-term sales but made the brand and product positioning weaker.

 

The alternative to discounts
The best alternative to discounts is to provide perks around the core product. For example, a brand known for its leading Music composition software should not discount the core product, the What of the brand. Instead, it should provide extra perks around the core product like giving a plug-in or sound bank for free.

Apple follows this strategy. The company hardly ever gives direct discounts but turns discounts into Apple Gift cards. Of course, the Gift Cards are to be used in the Apple Stores.

Perks are a great way to give people ‘a good deal’ while in their minds, the value perception of the core product has not changed.

——
This post is taken from my new book Win With What – the first category-led growth book.

Perception

And so much more…

It is the Apple WorldWideDeveloperConference time of year again! Traditionally the moment that Apple showcases significant changes to all their operating systems: macOS, iOS, iPadOS, WatchOS.

This year was a mixed bag. The announcements were mostly a list of Apple app updates. Clearly, Apple is a fine-tuning mode and has difficulties coming up with breakthrough features in the current platforms and usage scenarios.

Engadget stated for MacOS “With macOS Monterey, Apple is trying to polish its desktop operating system even further.”

What is worrying is that on the Apple.com front page there is just a sheer amount of features listed under every OS.

iOS 15

Connect with family and friends while watching and listening together in SharePlay. Be more present in the moment with Focus. Explore the world in unprecedented detail with a reimagined Maps. And use powerful on‑device intelligence to do more with iPhone than ever before.

iPadOS 15 update

Do more things even more easily with powerful new multitasking tools. Create notes from any app using Quick Note. Add new widgets that let you see information at a glance right on your Home Screen. And enjoy many of the great features also coming to iOS 15.

MacOS Monterey

Share your screen with friends and coworkers in entirely new ways with SharePlay. Explore a more immersive, customizable, and streamlined Safari. And with Universal Control, you can now work seamlessly between your Mac and iPad.

Watch OS8

Give your Portrait mode photos from iPhone a starring role on a dynamic new watch face. Unlock your door from your wrist with home keys. Work out with tai chi and Pilates. And center yourself with new Mindfulness experiences.

Now – tell me quickly….
What is the key reason to upgrade your iPhone, iPad, Mac, or Watch?
or What is iOS 15, iPadOS15, Mac Monterey of Watch OS 8?

I know that the answer is not going to be a crisp one. Apple is not communicating the one reason to get completely excited about any of the updates, or the one reason you would want to have the updates running on your devices today.

Even when categories mature consumers need incentives to upgrade.  While difficult it is better to pick that One Feature to steer all communications and PR than having massive feature lists leaving consumers and media wondering where to focus on or determining which one is really important.

Brand Promise, Perception

Credibility is lost when you do not live up to what you stand for

When you repeatedly go against your mission and values, you lose credibility, and your position is in danger. The audience will start to drift – first, slowly towards other platforms. Drifting will accelerate once a critical mass through worth of mouth is reached. Then there is no way back. 

Brands are like people.

If you for example do not like how a friend behaves, you can simply decide to no longer hang out with your friend. The same goes for brands. If a brand behaves terribly, you can decide to stop engaging, buying, or using that particular brand.

It gets tricky when your friend says that living according to noble values is essential and even points the noble way of living out to others. It comes then as an unpleasant surprise when you learn that your friend is everything but living up those dearly hold and communicated values. We get confused because the friend’s behavior does not match the perception we have about the person. The person is no longer credible.  If the friendship continues, it will be an unhealthy one based on disbelief and issues with trust. If a brand stops living the values, the same reaction of disbelief and distrust appears. And over time, we will look for alternatives.

Today I encountered a trust issue with YouTube, the brand that has brought video sharing to the masses. YouTube helped to accelerate the growth of humans by bringing immense knowledge to the fingertips of everyone.

Already for some time, YouTube is actively censoring freedom of speech by removing videos or channels about medical information, science, scientists, specific news channels, or simply videos containing an opinion (how scientific it might be) that is going against a set of guidelines, therefore stopping the debate and opportunity for humans to learn.

Earlier this morning, I decided to take a look at the About YouTube page (link, archive ) to understand what the company is all about and the brand credibility with me.

The first thing you encounter on the about page is a clear mission statement. Unfortunately, YouTube is actually actively going against their own mission. For YouTube not everyone is the same, some deserve to  have a voice, while others unfortunately do not.

When we look at the values we see a similar pattern.

The Freedom of Expression is striking:

We believe people should be able to speak freely, share opinions, foster open dialogue, and that creative freedom leads to new voices, formats and possibilities.

If YouTube in the last year has shown one thing it is that it is not a real advocate of Freedom of Expression.

I have therefore one simple question for YouTube:

—-
Dear YouTube,

You have given me a lot of opportunities to enrich my knowledge on virtually any topic. I thank you for that.

Unfortunately, I am distrusting you and as your friend I see two options going forward:

  1. You live up to your values,
  2. You update the values to reflect your behaviour.

Either way is acceptable because strong brands provide clarity regarding what they stand for and consistency in execution using company values as a steering compass. Only this way, they remain credible.

Make your choice.

—-

Photo by Adam Fejes from Pexels

Perception, Positioning

Reddit Nailed It

Jep… Reddit nailed it with the first-ever JPG(!) SuperBowl Commercial. 

The actual message – that one slider – was nicely wrapped in a short reel controlling placement and impact. The total commercial was 5 seconds only. 

Reddit did a great job, and with only 5 seconds of airtime, the commercial generated a maximum impact. Those interested in learning what the message actually said had to go online to find out, and once online, the step to visit the Reddit platform to learn what it is all about is easy.  

In essence, Reddit tells us that “powerful things happen when people rally around something they really care about”. The old Nokia slogan “Connecting People” is still alive and well. This time, according to Reddit, the platform to connect is their online platform.  

The 5 second commercial:

The key message (JPG):

Perception

Marimekko, do not buy the rights!

After Kristina Isola acknowledged the plagiarism of a design, it has been very interesting to see the various reactions of Marimekko, media, marketing and branding professionals. However, the most important and defining factor for the Marimekko brand going forward has been left out: managing the associations that consumers have with the brand Marimekko.

In the end, brands are merely associations in the minds of consumers. For example, Coca-Cola is associated with the real Cola drink and Snickers is associated with a peanut candy bar. Brand associations are very difficult to change. That is, until something disastrous happens and the brand owner does not deal with it properly. We have seen that happening to BP after the oil disaster in the Gulf of Mexico in April 2010. The share price has still not recovered.

For Marimekko, the most important thing should be to ensure that consumers do not change their brand association. For example, if a consumer believed before that Marimekko equals “iconic Finnish fabric design”, Marimekko should do everything it can to avoid a change of association to “iconic Finnish fabric design and possible copies”.

The decision of the company to buy the rights to designs of Maria Pryimachenko will only give more opportunities for consumers to change the brand association. Why? Because it allows the discussion to continue and most importantly, it gives a constant physical reminder of the copy scandal. The continuous opportunity for consumers to change their brand associations is very harmful and can even be fatal for a brand.

If you are convinced that buying the rights to the designs of Maria Pryimachenko is the best thing to do, I invite you to go to a Marimekko shop and imagine you see those designs. Then be really honest with yourself: what do you think and feel about Marimekko? Has it changed? How?

What could Marimekko have done to ensure that consumers would have little opportunity to change their brand associations? They should have started with a different outcome in mind: a zero change in the brand association. As a result, the company should have been very firm and confident with consumers and media.

Don’t fight the facts, but deal with them. Don’t wait and see, but act. Don’t blame, don’t dismiss but take full responsibility and publicly end the relationship with Kristina Isola. By not distancing itself strongly from her, Marimekko indirectly indicates that ‘it is not a big deal’. From the moment this crisis started Marimekko should have followed its corporate value “fairness to everyone and everything” and actively reached out to the copyright holders.

When all of the above happens in an open and transparent way, a way that consumers can come to terms with and think ‘I understand and I would have done that too’, the brand is OK and brand associations have little opportunity to change.

This post appeared in Markkinointi & Mainonta

Brand Promise, Brand Strategy, Perception, Portfolio

Netflix buys DVD.com, what’s next in the branding saga?

Netflix, once known as one of the most successful dot-com startups is going through a rough time with some serious branding mistakes. Today I read on engadget.com that Netflix bought DVD.com… why would they do that?

Seven years ago the world looked great for Netflix. In 2005 it was shipping 1 Million DVDs per day to its subscribers. Wow! Netflix had an amazing position: it simply was #1 in the DVD rental. Netflix was nicely riding on the DVD player sales. There was one problem though… the DVD player was eventually going to be replaced by digital distribution.

The Netflix folks saw that coming and in 2007 they introduced streaming under the same Netflix brand. The service became successful but times changed and in Q3 2011 Netflix lost 800.000 subscribers.

The Netflix folks saw that one coming too and decided that the strong brand Netflix should live on in the streaming business, making place for a new brand called Qwikster for the DVD rental business. A couple of months later the idea was buried.

Or… was it? Netflix has now bought DVD.com. I am sure one of the ideas of the folks at Netflix is to use that for the rental business, moving Netflix over to the streaming business forever.

Now… what is going on here? Is this really the smartest move? No it is not!

Firstly, Netflix should have retained the Netflix brand for the DVD rental business only. The brand was the number one in the category. Even though the category is dying (and with that the brand) it would have been the best thing.

Secondly, for the streaming business a second brand would have been appropriate. It is a substantial new business / category in which the company could have been number one again. This brand should have been positioned as the streaming service.

Thirdly, buying a generic domain “DVD.com” is really a waste of money. Consumers are not thinking “I’d like to rent a DVD so I go to DVD.com”,  they think “I’d like to rent a DVD so I go to Netflix.com”. The DVD.com “brand” is a waste of money.