vinke - Tumblr blog

[vinke]

Believe in something. Even if it means sacrificing everything.

The advertising by Nike featuring Collin Kaepernick describes perfectly the theme for the week. This motto applies to both positive or negative influences. It is often that we see brands choosing a side as they hone in on a target market, from Victoria Secret depicting what the "woman" should look like and earning critics in its pursuit, to others speaking openly about their believes and perceptions, as was the case of Houston Rocket's general manager Daryl Morey, who tweeted support for Hong Kong protesters which erupted into an international diplomatic firestorm.

Regardless of the stance, to really get into the heads of customers, even when the matter is a thorny one, something that has proven effective is to "Believe in something. Even if it means sacrificing everything".

However, the real question is how much of a brand's identify is actually fabricated and strategic to match with the highest volume of people behind a social sentiment? Makes you wonder how many company's identities are genuine and which ones are just trying to say the right things that will generate revenue.

One of my favorite companies, Patagonia, is a great example of a company who has always stood for a single mission and has acted accordingly. Patagonia donates 1% of sales to the preservation and restoration of the natural environment. As an environmentally-friendly consumer, I immediately identify myself with Patagonia as a brand. This exemplifies the power of consumer-brand relationships.

Have you ever stopped buying at a certain store because of a mismatch between your values and those of that company? Or stopped using a product in an attempt to protest (eg. #DeleteUber in 2017)? If so, leave in the comments below how your identity has affected a relationship with any brand.

[vinke]

Recipe to success: owning the media and distribution channels

Burberry, in its quest for brand repositioning, identified a niche between labels such as Polo Ralph Lauren and Giorgio Armani in apparel, and between Coach and Gucci in accessories. Burberry focused on a particular price point and a particular bracket; neither cutting-edge nor classic. However, this niche meant a few brand challenges for Burberry. By positioning itself as "accessible luxury", Burberry was wedged between lifestyle, represented by Ralph Lauren, and fashion, represented by Gucci. Not only it was competing between these two categories, which could disrupt its brand positioning, but it also mean competing in more categories with more brands.

Burberry is a success story, focusing on its track record, between 2006 and 2014, after the brand's turnaround, delivered value to shareholders exemplified by the stock’s 250% appreciation during Ahrendts’s tenure. This success is attributed to three strategic pillars: brand, digital presence, and tangible assets.

Burberry likely realized that its competitive position was not sustainable long term, particularly knowing that it could eventually face a brand crisis by trying to appease two ends of a market between lifestyle and fashion. Similarly, their position was threatened by rivals copying the style and entering the category, and inability to control its brand positioning through fragmented distribution channels. In order to defend its status as a leader, it had to continue to capture and engage its audience in ways not done before... it had to disrupt itself.

How to control your branding while engaging your audience? RELY ON NO ONE BUT YOURSELF. Solution: vertically integrate, expand your retail stores through experiential shopping, decrease reliance on distribution channels and licenses, and increase engagement through direct interactions with consumers. Burberry introduced artofthetrench.com, virtual fashion shows, direct consumer engagement through social media, omni-channel retail with the use of RFID chips, strategic retail locations in upper-middle class neighborhoods. Be the talk of the town. Did it work? YES. Result: revenue CAGR of 17% vs competitors average of 11%, and becoming the leading fashion brand among a young and fashion-minded demographic.

What will the challenge for Burberry be moving forward? Not siloing themselves by vertically integrating and ensuring that "accessible luxury" remains accessible, without losing sense of its image.

[vinke]

Predicting Diffusion or Creating Adoption?

In my New Enterprises class with Bill Aulet, I've been learning about the 24 steps of creating a startup. Among these steps, a pivotal moment to capture as an emerging startup are the Windows of Opportunity. These windows are described as times when someone within your customer's circle (influencer, economic buyer, target market, champion, etc.) will be particularly open to considering your product. These windows are moments like life events such as change of jobs, or holiday seasons. A very clear example of such a window of opportunity was the most recent COVID-19 pandemic, that saw rise to an accelerated growth of digital adoption. Companies like Microsoft, or Zoom, saw such an uptick demand for their videoconferencing products that they had to spend millions of dollars into their operations because they couldn't scale fast enough. We saw a similar behavior with toilet paper at the beginning of the pandemic; toilet paper is a stable and low volatile product that I'm confident the manufacturers have a strong grasp on demand. They were too victims of an unexpected surge in demand.

This raises the question, can product diffusion really be predicted? Or, can we instead predict those windows of opportunity and trigger the behaviors as needed to accelerate adoption (or even slow it if required)? For this latter point, think of consumer goods companies activating promotions to trigger purchasing behaviors.

In the article we are presented with four products and we must rank each based on our expected adoption rate and our reasoning.

With this in mind, I ranked the products from fastest adoption to least in the following way.

1. Polytrack (synthetic surface for thoroughbreds)

* As explained in the case, the Window of Opportunity is happening now. Previously, the American market wouldn't consider the product, but after seeing the success and adoption in England, the leading players in Kentucky, USA converted to Polytrack. This led to other executives in the industry to consider Polytrack.

2. Peanut Butter slices

* If it weren't for the fact that Polytrack's window of opportunity is happening now, and the solution has already been proven, this innovative product would have been ranked first. Although it has enormous potential due to the amount of peanut butter already consumed by Americans, the company will have to educate the consumers and show that it is a safe product to consume, similar to the regular peanut butter that everyone is already accustomed to.

3. Stave Jigsaw Puzzle

* This product has the potential to become a rare and unique but must have products among households. The company has an opportunity to advertise itself as the conversation starter or ice breaker for house gatherings. Beautifully designed, intricate, and fun to solve, is a great way to spark interest. However, the proper retail channels and target market must be targeted due to the expensive price of the product. The chicken salad, at $500, competes with the likes of TVs, laptops, smartphones, and other products that could offer much more versatility and use for the same price.

4. Collapsible Wheel

* The main factor stopping rapid acceleration of this product is likely the cost, at a range of $2,000 to $6,000 makes it cost prohibitive. The convenience factor of a collapsible wheel probably does not outweigh the cost factor, considering you can buy a replacement wheel for $100. This probably explains why the designer is getting positive reactions from almost every industry except bikes.

[vinke]

Nudging or Deceptive Influence?

I spent some time over the summer investigating consumer behavior for a Fintech startup I was working with, and we found out a few interesting ways to influence the customer's decision.

For context, this was a challenger bank whose revenue was generated from interchange fees (customers using their credit card), and from the customer's savings fund (which were invested in high-yield securities.

1. Follow the Green: in the app, a common theme was used. Any "smart" choice was always shown with a green button. For example, the withdrawal button was a faint gray, while the deposit money button was big bold green. Similarly, the company would suggest a savings goal, and as expected, the highest amount was highlighted in green. These examples were subtle but identifiable ways of influencing the user's experience and decision-making. During an interview with a customer, I recall her saying specifically "I like how you make it easy to follow the green".

2. Incentive to Spend? ironically, another strategy was to influence the user to spend money. Since the company generated the most revenue on interchange fees, they would offer the customer a "savings boost interest rate", "more points", or some other benefit for spending a minimum amount of money during that month with the cards. To this extent, coupons or cashback offers would also be advertised to the user for typical products that person would consume (eg. coffee at Starbucks).

In this way, the company was influencing the user's behavior into a saving and spending cycle. What is interesting is that people would come to use the service because of an original need, but the gamified strategy behind the product would make the original value proposition of the product loose its intended effect (in my opinion). Granted, the user was always "in control": he/she could choose when to take their money out, and what to spend it in.

This raises the question, how many behaviors are actually self-initiated versus nudged? And to that extent, could we even consider it a nudge, or is it a deceptive influence?

Think of all the data collected by companies like Facebook. By monitoring your cookies, they could show you on Instagram featured posts of influencers wearing the shoes that you've been considering getting. Without realizing it, your next purchase are the shoes after constantly seeing them across your social media platforms. A very powerful tactic.

As the case suggests there are 12 types of nudges. Upon reviewing them, I wonder whether some of these should be limited by industry. For example, mindless nudges that encourage and activate a desired behavior perhaps should be limited to activities or products that incentivize a positive behavior as opposed to an impulsive decision. In this manner, it would be interesting to further investigate the line between nudges and ethics.

[vinke]

Intel inside

Intel is among the leading semiconductor companies in the world, constantly ranked as one of the top 5 largest semiconductor companies. For such a complex product, a microprocessor, that the customer does not even see, Intel was able to position itself as an ad-hoc B2C customer. Through its great marketing, it was able to gain mindshare from the end-user and influence the decision making process. The “Intel inside” campaign was genius marketing that propelled Intel to solidify its position as the market leader.

The original motive behind the campaign was a lack of traction with the latest generation of chips, which soon was to be outdated and cannibalized by an even newer generation. The question that Intel managers asked themselves was, if the customers didn’t buy the 386 generation, which was faster and better than the 286 generation, then why would the buy the upcoming 486 generation. Through research they realized the reason was simply because customers thought they already had everything they need in the 286 version. So, the head of marketing ran a marketing experiment in Denver which proved to be successful.

The success of the campaign is largely attributed to making the end-users care about what is inside their computer and powers it. By creating that awareness, they were able to successfully convince users to demand the Intel products. Not only this awareness, but instead of just comparing product specifications, they related with customers by selling an emotion. Like Coca-Cola, Intel was selling the activities only Intel processors could power, like browsing the internet, or watching TV.

A strategic challenge presented in Inter’s strategy is ensuring that the brand is positioned to win across a variety of products and not just one. Similarly, ensuring that the brand’s image is consistent throughout regions and product lines.