Announcing New Study: Millennial Trendsetters, Food & Wine

Brand Amplitude is partnering with Outlaw Consulting, a leading domestic Gen Y trendsetter research group, to study the habits and preferences of Millennial Trendsetters when it comes to what they consume, where they consume it and why.

Today’s young adults grew up in an era of unsurpassed affluence and unprecedented parental attention. They were exposed to education, dining and travel experiences earlier than previous generations and have grown up with purchasing power that exceeds that of adults of past generations. As a result, Millennials – roughly defined as young consumers age 18-30 – are more sophisticated than previous generations in their appreciation for food, beer, spirits and wine. They are already exerting a disproportionate influence on casual restaurants, wine, and beer marketing, an influence that will continue to grow as they age and increase their income.

One of our Millennial researchers, Marty Predd of Portland, OR and his girlfriend, Sarah, are good examples of food involved Millennials. While doing taxes they "discovered a shocking amount of money was spent on dining in and out for just the two of us last year." In March, they travelled to Ireland. They record their meals in area restaurants in a blog, knowourvelocity.com and regularly post reviews on yelp.com.

For Millennials, being on trend is an attitude and way of approaching their lives. They are hungry for newness, and want to know what is emerging and coming next. Because of this mindset they don't get stuck being literal and instead thrive on new ideas and can envision how or why something not yet a part of their world might fit in. Here's how Marty describes his desire to stay on trend:

Whether we're eating out or I'm cooking, the underlying motivation is almost always avoiding boredom...hate doing the same things again and again. I think there's a related tendency to want to avoid things (brands, idea, anything) that seems too mainstream. SEEMS being the key word. We've actually shifted our grocery shopping away from Whole Foods for that very reason, in part. All the excitement over 'natural' and 'organic' foods was new and exciting at first, but after awhile it seemed a little too..typical...like we were doing it just because it was the thing to do. Why do I want organic chicken again? What does that even mean? Why do two small chicken breasts cost me $15?

According to Mintel, Sarah and Marty are typical:

• Two out of three Millennials are "Cooking Enthusiasts" who make an average of 4.4 ‘elaborate’ or ‘gourmet’ meals every six months.

• Millennials’s spend a disproportionate amount of their income on food, food away from home and alcoholic beverages.

• Millennials are driving growth in the beer, wine and bourbon categories. They tend to prefer premium / imported brands.

• Millennials are trading up from fast food in their restaurant choices: 18-24 year olds were the only age group to show a decline in the average number of meals eaten at QSR’s between 2007 and 2008.

• 18-24 year olds are 17% more valuable than the average customer to the leading seven chains of casual restaurants.

With their absolute size and aggregate income expected soon to exceed that of Baby Boomers, it is critical to understand how Millennials think about their food, beer and spirits choices. But learning about Millennials, and especially trendsetters, can be tricky. They are unlikely to respond to traditional surveys, and their answers are likely to be superficial when they do. By definition, their tastes can change rapidly. Often the most useful way to learn about Millennials is to study the ‘trendsetters’ who tend to be highly networked ‘Connectors’ and thus more likely to lead social trends. Their behavior may not always reflect their values, because their values are ‘progressive’: they aspire to new definitions of family/home and work.

A Unique Approach to a Unique Group

This study will be unique both in its sample and method. For starters, we plan to tap Outlaw's proprietary panel of 200 Millennial trendsetters. All display a strong passion or expertise for one or more of the following: technology, fashion, pop-culture / music, alcoholic beverages/socializing, or emerging media. The study will use a Web 2.0 online journal and photo collage building tools to gather detailed consumer observations. Unlike conventional in-home ethnographic research, this approach allows us to interact with our target consumer group over an extended period of time without invading their privacy. We can request diaries, give assignments, ask questions and provide other forms of stimuli. We capture trendsetters’ experiences and emotions literally as they unfold through a user-friendly web interface.

Assignments will be designed to reveal overall interests, lifestyle and motivations as well custom exercises focused on categories of special interest to project sponsors. The study will be designed and run by two researchers who are themselves Millennials. Areas of special interest include:

• What motivates their interest in new tastes, flavors and experiences? What is emerging in terms of new tastes, flavors and experiences? What motivates these desires?

• Where do they learn about new food, restaurants, recipes, wine and distilled spirits products? What is the role of word of mouth, on premise consumption and off premise parties? Who do they look up to for recommendations?

• How important are characteristics such as ‘organic’, ‘locally grown’ and ‘hormone free’ in their food and wine choices? Everyone talks about it, but do they do more than make more than token gestures? What exactly what are they doing? What more would they like to be doing?

• How interested are they in travel shows, cooking shows, celebrity chefs and other food and wine media? Which ones are most influential and why?

• What are their different restaurant eating occasions? What drives or triggers a night out?

• What do they look for in a restaurant experience and how does that vary by occasion or who they are with? How important is the dining experience relative to the food? What would get them to eat out more often?

• Which brands do they love and why?

• How is the economic downturn influencing their overall spending and brand choices? Where are they cutting back and what are they holding ‘sacred’? If they had more money, how would they spend it?

For more information on how you can participate in the study, contact carol@brandamplitude.com or judy@brandamplitude.com

Resonance Scanning: How to Right Size Your Brand Portfolio

Brand Resonance Scanning, April 09

View more presentations from Carol Phillips.

Brand architecture is one of the least sexy topics in branding, but one of the most important. Having too many or too few brands can cause marketing inefficiencies, customer confusion and waste valuable retail or web space. Brand extensions are often too easy to implement - got a new feature, give it a name! Left unsupported, these orphan brands collect like kudzu.

Over the past few months we have been helping several companies 'right size' their portfolios. Usually this means culling underperformers, but on one occasion it also meant finding some overlooked jewels, opportunities for fighter brands and new subbrands.

Optimizing the brand portfolio should begin with an outside in look at your business. How does the customer view your offering? What stands out? What is invisible? How do they see the competition?

Brand resonance scanning is one way to get that critical customer perspective.

The Case for Tracking Research

Managing brand equity requires consistent metrics. Without a sense of where a brand has been, it's difficult to make good decisions about where to take it. Our first step when we have a new client is to audit their existing customer and brand information, often only to find sporadic and inconsistent brand measurement. The best analogy is a doctor's annual physical. would be for a doctor to make a diagnosis prescription without understanding trends in temperature, blood chemistry or blood pressure.

With the advent of online surveys, and high penetration of Internet in most households, tracking research does not have to be expensive. Here are some of the questions tracking research can help to answer:

1. How is my brand doing versus competition?

2. Where does my offering stand in relation to what the customer wants?

3. How are loyal customers defined? What behaviors need to be encouraged for the brand to become ‘healthier’?

4. What is the contribution of loyal customers to creating revenue and profits for my brand and for the category as a whole?

5. What elements of the marketing mix will make my brand stronger?

6. What are the leading indicators for problems with my brand?

7. How can I optimize my positioning and other strategic marketing decisions?

Our approach to brand tracking is highly customized for each client. But we are guided by best practices and a few overriding principles. To learn more about what we consider the 'essentials' of brand tracking, see our whitepaper, "Brand Vitals: Essential Principles for Monitoring Brand Health".

A Research Value: Customer Databases

Does your firm have email addresses for at least some of its customers? Customer databases can be a great way to learn more about why your customers like your brand. We have completed dozens of projects involving customers surveys, and have found them especially useful when paired with surveys of category users. Comparing profiles, perceptions and behavior of customers to that of prospects yields valuable insights for targeting, messaging and media strategies.

We've learned a lot about conducting customer research through these studies across categories as diverse as higher education, window film, home appliances, spirits, and fast food. Encouraging customers to participate requires extra thought and attention; response rates can be as low as 1% and as high as 12% depending on the invitation language and incentive offered (tee shirts and coupons work best!). Over and over, we've found the effort is worth the investment.

Here are a few examples:

The Michiana Family YMCA The YMCA had many years worth of member satisfaction data, but knew little about prospects. A market-wide survey revealed there are a lot of home exercisers who would consider a YMCA membership if they only knew more about it. Prospective members want information and assurance on affordable individual fitness programs, while members are more interested in family-oriented programs. We are working with the YMCA and its agency, Chicago-based Kauffycan, to craft messages specifically designed to bring in new members, while reaching members with more ideas about how to get the most from their membership.

Westlake Ace Hardware By comparing findings from its 'Ace Rewards' database with survey data on homeowners in its trading areas, Westlake is gaining insights about how proximity and brand perceptions about selection and service work together to influence visit frequency. This information will help direct media and merchandising strategy, as well as allocate marketing resources across markets.

Harlem Globetrotters Our work helped the Globetrotters and its agency, WONG DOODY of Seattle, to understand the differences between their core fans and more casual ticket purchasers. And there is a difference! The learning was applied to make 2009 an attendance record shattering year. In fact, they have been so successful, Sports Illustrated featured an article about their phenomenal success:



Harlem Globetrotters featured in 3.25.09 Sports Illustrated: "Still Crazy After All These Years"

In just the past year, we have also helped Carhartt, JC Penney, Admiral Nelson Rum, Whirlpool and more leverage their customer database for research. Is there a treasure lurking in your email database?

Do's & Don'ts of Stretching a Brand in a Down Market

Hooters Airlines. Harley cakes. And who can forget Maxim Haircolor?

Even in the best of times, the relationship between branding and innovation can be tricky. Generally speaking, they work together, with the brand strategy providing the ‘face’ of the business’s growth strategy. Brand strategy helps companies bring innovation to the market. Innovation returns the favor by enhancing brand reputation.

It sounds simple in theory, but in practice the partnership can be an uneasy one. The difficult choices imposed by hard times forces managers to confront the challenge of ‘brand stretch’ even more acutely. Balancing the need for brand focus with the need for innovation is the essence of the dilemma. Staying inside the confines of existing brand boundaries risks missing opportunities to meet emerging market needs. At the other extreme, stepping too far outside the brand’s comfort zone risks dilution of brand meaning -- the dreaded “everything-to-everyone syndrome”.

Every company aspires to a brand extension success, but at the same time they also fear the warning provided by brands that expanded too aggressively.

Among the many reasons for conflict between innovation and branding, two stand out:

• The goals of innovation and branding can be contradictory. Branding is about establishing trust through consistency; a brand is built by giving customers what they expect. Brands that change their messages too frequently, or extend too far into unrelated businesses risk confusing their customers and diluting their meaning. Innovation is about giving customers what they don’t expect. Innovation builds excitement and interest by delivering something new.

• Both innovation and branding demand resources. Unlike Apple and Virgin, most brands find it difficult to sustain a reputation for continuous innovation. Instead they build a brand by doing one or two things really well. For these brands a tension often exists between the desire to extend the brand beyond its expected horizons and maintaining brand focus. Innovation puts pressure on both branding budgets and brand architecture. Should the new brand be given a separate name, or sub-brand name? In our current economic climate, the answer to this question is likely to be “no”.

Finding and maintaining the right balance can be tough. It requires constant vigilance. As Lucas Conley pointed out in his book, “Obsessive Branding Disorder”, the branding path can be seductive. Innovation is difficult and doesn’t always line-up neatly with branding’s first commandment of ‘consistency’.

Our experience with firms that understand the need for balance, during good times as well as bad, is that they adhere to several best practices:

1. Don’t Take What Customers Say Too Literally. While carefully listening to the voice of the customer is key, it is even more important to reach into the mind of the customer, by looking for the motivations that underlie their behaviors and expressions. Good innovation decisions are unlikely to come from what consumers can articulate about their immediate rational needs. They are more likely to originate from their emotional desires or future needs. ‘Rear window syndrome’ can lead to preoccupation with solving today’s or even yesterday’s obvious problems and limits innovation to the incremental variety. When Apple introduced the iPod, Virgin launched Virgin Atlantic Airways and Amazon introduced the Kindle, these companies reached outside their existing brand competencies to address new markets and unfulfilled customer needs.

2. Don’t Be Overly Protective of the Brand: Fear of tarnishing brand reputation with customers, or employees and suppliers can suppress the desire to pursue ideas that promise to ‘stretch’ the brand. Most brands can stretch; the real question is whether it makes business sense, not whether stakeholders will accept it. ‘Brand stretch’ research can be misleading since customers are only able to answer questions based on what they already know. When marketers rely on customers to tell them whether a new offering can fit within their understanding of the brand, we again fail to see what is possible and limit ourselves to what is probable.

There are many examples of unlikely brand stretches that succeeded (at least from a market acceptance standpoint). BIC moved from pens to lighters to razors and Jeep from cars to strollers. We don’t know if Starbucks and Tide did ‘stretch’ research before moving their brands into new categories, or if they did what consumers thought of the ideas. If we had been working with them, we may have argued against the research, or at least against listening too closely to what consumers had to say about the ideas. Both companies no doubt already had ample evidence that the moves made business sense (licensing in the case of Starbucks, and superior product performance in the case of Tide-to-Go). Whether consumers would embrace the idea was probably a matter more of spending and awareness than brand ‘fit’.

3. Don’t Think of Brand Stretch as an All-or-Nothing Gamble: Sometimes we are reluctant to stretch the brand too far because we imagine a calamitous reaction from brand loyalists that permanently dilutes brand meaning, destroys our brand equity and erodes hard-earned market share. In fact, this risk can be managed through in-market experiments.

Best Buy’s expansion into musical instruments and music training provides a useful example. Recently, Best Buy announced it is opening six 2,500 square foot store-within-a-stores in South Florida. It is a stretch for Best Buy to deliver an artsy, high-touch service like music training, and they no doubt have research that suggests the market is unlikely to already believe that Best Buy can deliver high quality music instruction. Some of this is reality -- there is an internal capability gap that will need to be addressed. To Best Buy’s credit, though, they have decided to move forward. Whether or not this ‘innovation’ is ultimately successful will depend more on how much investment they make than any predetermined level of ‘brand fit’ or misfit. The key for Best Buy is that it is a relatively low risk experiment that will not broadly impact their national brand equity.

We have developed a simple grid for helping companies weigh the trade offs of stretching the brand or sticking to what the brand does best. To learn more, read our whitepaper, "Innovation and Branding in a Down Market". Note: This post was co-written with Brian Christian, Daso Innovation Consulting.

The Purpose of Branding

Peter Drucker famously said, "The purpose of business is to create and keep a customer". The same can be said of brands (because after all what are brands but the outward expression not the business strategy?)

Today I shopped at Aldi, my new favorite store for groceries. Like Wal-Mart Aldi's purpose is to save customers money, and the savings is remarkable - I got what would have been easily $120 worth of groceries for $70. Every thing about the store and the people in it reinforced my savings, from the quarter I deposited to rent a cart, to the $.06 I paid because I neglected to bring enough bags, to the necessity of paying in cash. Do I feel good about my experience? You bet. They made a customer today.

My associate, Amisha Sinha, brought a great article to my attention using Twitter. It is from Media Post, "The Re-Purposing of Marketing", by Roy Spence and Haley Rushing. Spence's book is "It's not what you Sell It's What you Stand For: Every extraordinary business is driven by a purpose." They point out that many brands are hanging up or 'going out of business', but ask 'how many of those brands will be missed'? How many made 'a real difference to anyone'?

As an industry, we're often too good for our own good. We can use the power of our creativity to take an ordinary, commodity product and make it seem extraordinary to a particular market - but not for long. As good as our creativity may be, it can't ultimately compensate for an unremarkable product or service. The customers will ultimately notice and move on; signaling a call to the agency to 'change the campaign - the old one is no longer working.'.

The purpose of marketing has to be higher than moving 'product through the pipeline'. Great brands aspire to a higher purpose and consequently inspire employees and other stakeholders to reach higher to serve their customers. It's not an accident that the most admired 'iconic' brands have nearly cult-like followings. These brands put serving cusotmer needs at the center of all they do. Their commitment to providing meaningful value to customers is tangible, not just talk. It allows them them to outperform competition in good economic times and bad.

Why is that? According to authors Spence and Rush:

"When you have a genuine purpose at the heart of an organization, it takes marketing to an entirely different level... you are actively collaborating with every facet of the organization to bring the purpose to life in the business model, product development, customer experiences, environmental practices, loyalty programs, employee training, social causes, any and every avenue for manifesting the purpose of the brand is "marketing.". Take Ikea -- the revolutionary furniture company that offers well-designed, functional home furnishing products at prices so low that many can afford them. Their purpose is to democratize modern design for all.

Fulfilling that purpose requires everyone at the company to think about how they can help fulfill that promise in the marketplace - revenue, R&D, operations, environmental design, training, IT - everyone in the organization thinks like a "marketer" and the official marketers have an abundance of genuine stories to tell to the world. Every ounce of creativity can now be used to make sure that the customers you are trying to serve know that you're the best brand in the world for fulfilling a legitimate need that they have.

Brands have sometimes been referred to a company's North Star. It links the corporate mission and values with the needs of the customer. That's why we are so convinced that brand strategy is bigger than marketing. As they say, it's just too important to leave to the marketers.

The Brand Bubble? Why Brands May Still Be Overvalued by Wall Street

So far, brands have not been called into question for their role in the stock market meltdown of 2008, but I suspect it won't be long. Who can look at the GM bankruptcy option and not see it, at least partly, as a failure of brand management? In my Brand Strategy MBA class last semester we discussed Al Reis' contention (GM=General Misery, Ad Age 2.2.08) that GM tried to support too many undifferentiated brands and ended up straining its resources and confusing its customers. With the recession now at full tilt, many companies are heeding the lesson and trimming underperforming brands.

Several articles in the Spring 2009 edition of the AMA's Marketing Research magazine (not yet online) provide further evidence that brand strategy is contributing to our economic woes. They link inflated stock market valuations to data on brand value and conclude that the stock market is overvaluing brands' contributions to company valuations relative to more tangible assets. Many companies have models designed to quantify the contribution of brand value to market capitalization, most notably Interbrand, Y&R, and CoreBrand. Each has consistently shown that while the relationship is generally small and varies by industry, it is nonetheless real. So real, in fact, that CoreBrand this month is launching an investment fund that based on its model, in conjunction with BelRay Investments.

In the article by John Gerzema, Chief insights officer at Y&R and author of 'The Brand Bubble: The Looming Crisis in Brand Value', there is a comprehensive look at all three brand valuation models using data in the U.S. as well as globally. Looking at all the data, he reaches the conclusion that the stock market has valued brands more highly than consumers do, leading to an acceleration of decay of brands. Here's a key passage:

"Emboldened by the tools of the new digital world, consumerism is drastically and profoundly changing, which is rapidly accelerating the decay of brnad. Fragmentation, social media and digital acceleration are causing a widespread attack on brand value. Consumers are quicker to punish uninteresting and undifferentiated brands. Today, brand equity is decaying in compressed periods of time. Brand equity is not the protective insulation it once was. After all, brand equity is only what a brand has achieved up until this point. What consumers are telling us is that past reputation seems to mean very little. Consumers are fatigued more quickly with brands that can't adapt and evolve. The clutter of the marketplace combined with the "old models" for brand management that strive to build awareness and reputation are actually backfiring in that they are slowing a brand's ability to keep pace with a consumer who is moving faster than their marketing strategies. And the emergence of a new digital consumer only amplifies the "d" problem: differentiation in a brand (or lack thereof)."

I've lived long enough in my career to know that the imminent death of brands has been forecast many times, but the concept of brand equity has proven more endurable than each subsequent challenge. There is always a place for brands since a brand is simply a contract between a company and its customers. That will never change. But I do agree with Gerzema that the pace of change among consumers may not be matched by changes in perceptions of the stock market investors. If true, that means the recovery may be longer than we thought, and that the skills involved in brand building in a digital world will be even more important.

Brand Architecture: The Link Between Business Strategy and Brand Strategy

Brand Architecture Toolkit Final2.25.09

View more presentations from Carol Phillips.

In our work with clients, it is rare to encounter a brand strategy issue that doesn't somehow involve an architecture issue. Architecture designates the relationship between different brands in the portfolio. A well-designed architecture has many benefits, the most important of which is including making your brand offerings clear to customers. From a marketing perspective, architecture helps optimize marketing by allowing some brands to build equity (driver brands) while others draw equity, riding in the slipstream of the driver (subbrands). Architecture also permits the development of 'brand distinguishers' that work across portfolio brands. These are sometimes called 'ingredient' brands or 'energizers'.

Developing a brand architecture that supports the business strategy and makes sense to consumers can be complicated. There are no easy research shortcuts. Exhaustive searching also shows that, like most issues in brand strategy, there isn't even a common language or terminology to facilitate the discussion.

We developed a set of tools and organized them into this presentation to help our clients understand the importance of brand architecture and how it can help their business. It also describes the process of optimizing the portfolio and naming brands. The key? Specifying the relationship of every TM'ed item to every other one and to the overall busines strategy. It's not easy, but well worth the effort.