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Copec in the Relationship Era

As Bob Garfield and Don Levy said on their 2012 article "Ignore the Human Element of Marketing at Your Own Peril", we are currently living the end of the marketing “consumer era” and entering to the “relationship era”, an era in which relationships of trust with consumers are the most important marketing asset that a brand can have. Some important reasons for this change are the collapse of the traditional mass media due to the hyper-fragmentation of on-line media, the unsustainability of advertising (if advertising stops, sales will go down), and the high speed with which word of mouth is having effect.

Many companies still have their marketing strategies based on the “consumer era” principles. However, a better way to focus marketing efforts would be to place efforts on building strong relationships of trust with customers. How to do it? Generating loyalty and advocacy on clients, through an authentic sense of purpose, and living according to that principle without exceptions. This is the proper way to generate trust, and asset that cannot be purchased, it must be earned through consistency with principles over time.

One Chilean company that has been able to build strong trust relationships with its customers is Copec. Being the largest fuel distributor in Chile, Copec has always acted consistently with its core principle, “Primera en Servicio” (First in Service). This principle is not a simple slogan, but a true statement of what drives its strategy and actions. Some examples of this are that Copec invests a lot in training all its employees on customer service. Also, to measure success, Copec uses customer service KPIs, being as important as sales KPIs for all the organization. In general, there is a culture of service inside Copec in which all the employees are encouraged to take the initiative to solve any customer issue beyond normal responsibilities.

Copec has also been genuinely committed for many years to service Chilean society beyond its own business. Copec is involved in many non-profit social activities, such as “Viva Leer” (an initiative to build libraries for poor communities) or “Teleton” (foundation to that helps children with disabilities). This kind of actions are not isolated events, but regular initiatives that Copec has been doing since its beginnings. Below can be seen a short advertising showing Copec involvement in “Teleton” and encouraging people to participate.

All these consistent actions led to strong relationships of trust between Chilean population and Copec. Nowadays consumers intention of stopping by a Copec service station to refuel a car is much higher than that of competitors, and much higher than the actual consumer choice (due to location constrains). Finally, this has led Copec to be recognized as one of the tree most valuable brands in Chile, what without any doubt is building the way to its future success.

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Burberry Challenges in 2003

It is impressive how Rose Marie Bravo and her team turned around Burberry brand. In the 90’s they took a brand that was not well managed, with poor licensing control and an inconsistent distribution network with its promise of quality. The result was a customer base that was concentrated among older males. Bravo wanted to transform Burberry into a luxury lifestyle brand, that was aspirational, stylish and innovative. The strategy to attract younger customers, while retaining the existing customer base, was to position Burberry between Polo and Armani in apparel, and between Coach and Gucci in accessories. She wanted Burberry to become accessible luxury, so its point of difference from luxury brands was functionality.

Some important strategic decisions that Bravo and her team made were, among others, updating the product line to generate a consistent look across products, taking more control over the distribution network, and opening flagship stores to display the full product line and test new concepts. At the same time Burberry Prorsum was launched to reinforce the brand positioning on the luxury market, and advertising campaigns were made to associate the brand with a trendy modern look. With all these changes, there was quality improvement and a decrease on inconsistent availability, raising the expectations of Burberry’s customers.

In the early 2000’s, Bravo’s actions resulted in a successful turn around of the brand, but there were still many challenges to sustain its success over the long run. Burberry’s targeted customers were young people who were looking for a classic but chic and fun brand. Within this setting, one major issue to take care was that the brand became popular among non-target customers, such as urban youth and hip-hop musicians. This could result on alienating core customers from the brand, since it could lose its classic and chic appeal.

I think that there are two main actions that Burberry could take to protect its brand over the long run. First, based on the brand resonance model, they must launch something to generate resonance, a strong relationship between Burberry and its customer. Burberry already had a clear identity, meaning and response. A perfume like Burberry Brit could generate what it was missing to create the appropriate closeness between the brand and the customer. We can see in the following video that Burberry is still using Burberry Brit perfumes to strengthen its brand.

Second, there would be a good idea to restrict the use of the Burberry check only to classic apparel and accessories, such as jackets and scarfs, or subtle applications, such as interior lining. This could prevent non-target customers from using the brand since they wouldn’t signal its use so obviously, protecting Burberry’s core and targeted customers form leaving it. We can see in the following video that nowadays Burberry is producing campaigns even without any use of the Burberry check.

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Predicting Diffusion of Autonomous Driving

The speed of an innovation’s diffusion has been highly focused on understanding the impact of people differences. Everett Rogers offers us a very useful framework to analyze the potential diffusion of an innovation based in the product characteristics; relative advantage, compatibility, complexity, trialability and observability.

Below, we can see how using this framework applied to autonomous driving technology can provide us valuable insights to predict its speed of diffusion and take adequate actions. Every dimension of the autonomous driving technology is classified as good (+), not good (-) or indifferent (+/-).

- Relative advantage (+): there are many advantages that autonomous vehicles have over traditional vehicles, such as no wasting time behind the wheel, less car accidents or the more efficient use of fuel.

- Compatibility (-): it is too different from the way uses their cars today, it could even result on scary experiences, such as this example on video:

- Complexity (+/-): it is difficult to understand how it works (neuronal networks, lidars, etc.), but it is very easy to use (very friendly interfaces).

- Trialability (+/-): it is difficult to test. The only way to try it is accessing to a car that is equipped with autonomous driving. Some car makers offer the possibility to try this technology, but it is not available everywhere.

- Observability (+): it is very easy to identify when someone is using this technology, you see it only looking inside the car.

After doing this short analysis about autonomous driving diffusion, we can state that one of the most difficult things to overcome is its compatibility with existing values and experiences. Automakers should think on how to do autonomous driving the most like todays experience inside a car, with a real driver.

Perhaps this is a technology easier to diffuse on specific markets rather than among consumers. Large fleets of trucks could be an attractive market to diffuse this technology at first. On freight transportation companies the relative advantage is higher, and the compatibility issues probably are secondary.

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Casillero del Diablo, the Wine Legend

During the last decades New-World wines have been gaining share at the expense of Old-World wines. One of the main players in the New-World wine industry has been Chile. Chile has been well known for “value for money” wines across all segments. Yet, “Made in Chile” has not been a strong marketing lever for wines compared to that of France, Italy or Spain. This has been a problem to overcome, since wine consumption is highly affected by perception rather than quality, and perception of the country is one that matter the most.

To successfully market its products, Concha y Toro, the main Chilean winery and one of the largest in the world, have been using a bottom-up strategy to open new markets. First Concha y Toro markets its entry level brands, such as Frontera and Sunrise, to build its distribution networks, and then it uses these networks to market premium wines, such as Casillero del Diablo. This strategy makes perfect sense in a wine industry were the distribution power is concentrated, making volume extremely important to seduce large distributors. At the same time, “Made in Chile” seal is not enough to penetrate a new market at the high end, but very useful to succeed at an entry level, being considered “good value for the money”.

Today, Concha y Toro is focused on growing up the brand equity of its premium brands, mostly of Casillero del Diablo. With its worldwide “Wine Legend” marketing campaigns, evoking tradition and mysticism, Casillero del Diablo is appealing to feelings of consumers related with refinement and sophistication (https://www.youtube.com/user/casillerovideos). This is the perfect complement to a “Made in Chile” seal that brings quality to the table. With this strategy, Casillero del Diablo has become one of the most important wine brands in different countries. Casillero del Diablo brand is especially valuable and in consumer’s the top of mind in the UK, where it is the one of the main sponsors of Manchester United (https://www.youtube.com/watch?v=PU5Fo7civ0M). A masterful example of how to become the “Wine Legend”.

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Corona v/s Heineken: How David reached Goliath

With Corona’s introduction into the US market, we can see how great business strategy, with the right brand building actions, can result in a major success.

When Corona entered into the US market, in the early 1980’s, no one thought that it could do so much harm to the king of imported beers, Heineken. Since Prohibition was lifted in 1933, Heineken had been the top selling imported beer in the US. Yet, Heineken presented many vulnerabilities in the US during the 1980’s. They had been working all the time only with one distributor, Van Munching & Company, so they didn’t have references to assess its performance. Being the top selling imported beer for so many years buit on Heineken a huge pride, what made them ignore new threats. Also, Heineken operated though its distributor, making them to be very disconnected from its distributor network and consumers.

Corona faced the US market with a new perspective, doing things different than Heineken. Corona studied the market thoroughly before starting their operations. They decided to start with one distributor, Barton Beers Ltd., but short after they added another one, Gambrinus Inc., generating a healthy competition. Corona also stablished Procermex in the US, as a ground decision maker, generating first hand insight of the market and closeness to its network. Procermex was in charge of marketing decisions for Corona, compared to a Heineken that didn’t have a marketing function. Additionally, Corona’s production was on Mexico, right next door to the US, compared to that of Heineken on Holland.

Clearly Corona was stablished in the US market in a smart way. But one of the smartest decisions that Corona made is regarding to its brand building. With a much more limited advertising budget than Heineken, Corona was capable to build a brand that became the second top selling imported beer very fast.

On the one hand, Heineken based its advertising on the quality of its product, communicating to the consumer that they made a great beer (for example “just being the best is enough”). In the mind of the consumer, Heineken was something sophisticated, probably somewhat arrogant. On the other hand, Corona based its advertising on being fun and relating it to the beach and sun, also appealing to its simple packaging and drinkability. In the mind of the consumer Corona was something simple and relaxed, something unpretentious. Among the imported beer drinkers, which tended to be younger, better educated and wealthier than the rest of the market, the simple and friendly message of Corona had positive impact for the brand and for sales.

Nowadays, we can see that Corona maintains the same brand strategy, showing consistency over the years (https://www.youtube.com/watch?v=60Qcf3sdAjI). Heineken abandoned its former brand strategy and moved its message to metaphors which include spontaneity, fun and diversity (https://www.youtube.com/watch?v=yMfvzlf9Uus). Now its pretty obvious who was right back in the 80’s.

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Intel’s Dual Brand Strategy: The Answer to Protect its Future

Through Intel Inside marketing campaign we can see how a branding initiative can be much more successful than it was intended to be. Intel’s original motivation to launch Intel Inside campaign was to promote the adoption of new generations of products. Being into a B2B business, Intel had to figure out how to connect with the PC end users, in order to make them aware its new products and their benefits.

Developing a strong campaign along with PC manufacturers, Intel placed its brand in touch with the consumer. This way Intel was capable to be inside the consumer’s mind while being only a component inside the final product. This resulted in something beyond the initial intentions: the ownership of the consumer held by PC manufacturers was now shared with Intel, enabling it to extract more value from the business than ever before. Other positive outcomes resulted from Intel’s campaign, such as the presence of more advertising into the industry and the awareness of microprocessor importance.

The key to sustain Intel’s leading brand equity into the PC industry was to act consistent with its main attributes: reliability and leading technology. Maintaining the technological advantage, developing faster and better products than competitors, make Intel to stay at the leading position of the PC industry and becoming one of the most valuable brands in the world.

One of the key decisions that Intel made to protect its brand, was to apply a dual brand strategy. Instead of fighting in the low-end segment with Intel brand, it launched a new brand: Celeron. This Intel protected its brand equity and was able to be successful in a new growing segment. Now the challenge is similar. How should Intel participate into the mobile business to become the leading microprocessor brand? Does the Intel Inside campaign would help it to achieve the desired position? I think the Intel brand is too valuable to risk it into a new business where the consumer drivers seem to be different than the PC industry. I think Intel should think to stick with a dual brand strategy, creating a new brand designed for specifically for mobile users.

To know more about dual brand strategy and its risks please visit https://hbr.org/2009/10/should-you-launch-a-fighter-brand.