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Pandemic under Relationship Era

Social media is changing the way how information reaches the mass population, and has been making direct mass communication harder and harder, and today I want to talk about its implication for the Pandemic. I want to argue that, in the Relationship Era, it is harder to generate necessary response from the people side, but applying some of the trust and branding techniques mentioned in the reading is essential to create any difference.

When the pandemic was in its dormant/hidden stage in the United States around Feb/March time, social media generated thousands of different voices, opinions, and scientific viewpoints commenting on the possibility of an outbreak. The result of this is that people were receiving contradictory opinions, and contradictory opinions lead them to not react at all, because they don’t know who to trust.

When the outbreak did happen, discussion regarding how the virus transmits and whether stay-at-home order was necessary again flooded social media, creating doubts in everyone’s mind. Among all these confusing is an important reason: inability to trust. If we consider all the media outlets and opinion leaders as brands, it is safe to say most of these brands are not firmly trusted. People don’t know their incentives: are they trying to tell us the truth to protect us? Are they trying to get more views by releasing the most controversial opinions? Are they release certain opinions because there is economical gain if people follow suit? This can easily apply to people’s opinion for Trump, since at the beginning of all this, he downplayed the harm of the virus consistently in order to maintain the country’s economy stability.

One of the “successful brand” emerged in this pandemic is governor Andrew Cuomo. Several things he did made him trustworthy and promote him as a source of confidence:

- He clearly demonstrated he cared about people’s life, and he based all his opinion and decision on that. This is his mission statement, and he clearly hold on to it.

- He always starts with fact and numbers. He then reaches logical conclusion from numbers. This makes him much more trustworthy than opinion leaders that starts with conclusions and neglect facts.

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Rolex: from everyday to luxury

After reading the Burberry case, the first thing that come into mind for me is Rolex. Similarly to Burberry, Rolex started as a functional brand pioneering many of the practical innovation including waterproof oyster case, self-winding mechanism, date window, etc., that changed the watch industry forever. It started from an everyday high-quality brand (during WWII many soldiers wear Rolex) to the single biggest luxury watch brand in the world, commanding $5B annual revenue and a 25% market share. Rolex did several things with its brand which is amazingly throughout and executed:

- It maintained a clear brand design identity which allows people to spot a Rolex from a far. Though Rolex has many models and designs, they carefully based all their designs on a common language that is compatible with one another. This allows the wearer of Rolex get the most of the exposure, which is also initially the reason why they purchase a Rolex in the first place.

- It doesn’t command a specific customer group based on fashion preference or taste – it commands the entire customer group who can afford a Rolex. A survey result showed that among US families with $100K+ annual income, Rolex is among the top of their shopping list. Rolex created this unique brand identity that people with relatively lower social status (e.g., plumber, butcher, etc.) and high status (e.g., British royal family) can enjoy at the same time and not be intimidated by the fact that people of different social status all love it. It’s brand image, to some extent in China, is a aspiration for pursuit towards wealth through hardworking and diligence. There was a famous saying, “Rolex is the next watch for beginners as well as watch enthusiasts.”

- Functional nature. Rolex started as a functional/sport watch brand, idealize itself as the watch of diver, climber, cave explorer, pilot, racer, etc. The brand identity is still the same, which allows customers to be aspired to their famous sports star.

Looking at Burberry, I think there are several things Burberry can use from Rolex’s experience:

- Building a universal brand identity and move upward. I think Burberry is doing pretty well on this by using its Check design, and I think it is necessary to foster this design into an identity of the brand, for example, “sporty fashion”. It seems that Burberry has not created a strong brand identity as its high-class competitors such as Gucci, LV, etc.

- Expand target audience group. Burberry shouldn’t be limited to a certain class of people, but rather than a certain customer identity and lifestyle. If the young hip-pop generation loves them, let them have it and foster the image through maybe a sub-collection of younger and flashier design, just like the rainbow Daytona I showed in the picture.

[yichewu]

The Diffusion of Electric Car

Before diving into Roger’s five factors regarding electric car, I want to discuss a bit about the market potential and the relative likelihood of conquering each market for the 4 products mentioned in the case:

- Sliced peanut butter: This product seems to limit to the group of family with young kids, because adults rarely eat peanut butter. I don’t think this will satisfy its target market at all because it doesn’t provide any noticeable advantage. Spreading peanut butter takes like 5 seconds – but if you use sliced peanut butter, you need to buy the slices, take them out from the fridge, open the package, open individual slice package, place the slice on the bread, and wait for them to get warm.

- Collapsible Wheels: target customer are people who want to easily fit their bike in their car trunk. Since there are already folding bikes that help fulfill this need, it also seems that the incremental benefit of collapsible wheels is minimal, let alone its price tag.

- Stave Jigsaw Puzzle: smart puzzle enthusiast. I think this may be the best idea so far – it has the potential of achieve great diffusion within the enthusiast group because it provides a unique experience that cannot be replace by normal puzzle. In another word, for enthusiast, the relative advantage is high. The observability is also high – you can display them in your home, and when your enthusiast friends saw it, they sure want to get one for themselves.

- Polytrack: horse course owners and operators. This is a great investment ideally – It allows course operator more racing and bidding income. The adoption can be slow, because it is hard to believe the actual benefit, and the investment can be high.

I want to analyze the product characteristic of electric car under the five factors context:

- Relative advantage: it was hard to say electric car has a great advantage in its early years. Potential environmental benefits and saving on gasoline, yes, but you will encounter many other inconveniences, including difficulties to find charging station, long charge time, battery deterioration, operation temperature limits, short range issues, and most importantly, high price. Without established infrastructure, there is little relative advantage for electric car. However, one thing Chinese government did to foster electric car industry was to give rebate and free license plate (normally cost money) to consumers. This greatly increase the benefit as electric car will be cheaper after rebate than their gasoline counterparts.

- Compatibility: this is a huge problem, even for electric car today. An entirely different system of charging, maintaining, and repairing need to be used, and that is why a lot of people are afraid of adopting.

- Complexity: this is where electric cars actually have advantage. Electric motors and batteries are fairly simple, and electric cars have less parts compared to normal cars.

- Trialability: no significant difference compared to other vehicle type.

- Observability: oh yeah. Remember the early years when every Hollywood celebrity drove in a Tesla Roadster?

In conclusion, electric car as a product naturally didn’t excel in some aspects of the five factors, especially for relative advantage and compatibility. That is why electric cars still haven’t taken over the world yet after a decade. However, a lot of the compatibility and relative advantage issues are being solved, as electric cars drop in average price and increase in average range.

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Using Peer Pressure for Nudging (Online Stream Shopping)

The concept of nudging opens a new window to discuss peer pressure under the context of influencing consumer behavior. We all suffers from peer pressure, and it can be used to drive desired consumer behavior. The voting example mentioned in the reading was very interesting – advocating high voting rate would encourage more voting, meaning that people are peer pressured to vote, and if they don’t vote, they feel that their opinions were left out while the opinions of all other people are considered. Another example I can think of is student clubs at MIT Sloan. When you first come to school, you are overwhelmed by the number of clubs you can join, and they often come with a not cheap membership fee. However, if you find out all of your friends are joining one of the club, your “fear of missing out” will make you more likely to pay the fees.

Let us put the nudging through social pressure under the context of online-stream shopping, a popular new format of marketing for online retail in China. Key opinion leaders (host) will online-stream their demonstration of product in a live format, framed normally as a 2-hour program time. 

During the program, the host will initiate a time window during which viewers can use a special link to purchase a mentioned product at a discounted price. The host will then live report the sales status, for example, announcing thousands of copies of that product have been sold within 1 minute. This will further pressure viewers to purchase due to the time constraints and potential inventory constraints. It is surprising to see the most popular host can sell up to hundreds of millions of dollars’ worth of product during peak hours, and I believe social and peer pressure plays a big part in the consumer’s mind.

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Heineken vs. Corona: you don’t drink beer, you drink marketing

As a former consultant for the Beer industry in China, I resonated strongly with the case when it says: “Beer is all marketing. People don’t drink beer, they drink marketing.” Heineken and Corona took very different brand positioning and approach when they expand globally, and it seems Corona has been winning on multiple grounds. It is useful to understand what brand actually means for the beer industry.

Beer is largely a non-differentiated commodity: you can say that some beer tastes better than others, but tests have shown that majority of people cannot differentiate the taste of Corona and Budweiser when packaging is removed. This means consumers do not know what they are actually drinking, and they care more about what the brands projects and how drinking a certain brand of beer make them feel. Therefore, I believe an easily understandable & highly reliable brand image can be very helpful for any given brewer.

Now let’s look at the brand image Heineken and Corona are trying to project. I will use display commercials used by the two brands in China as an example. Below is a commercial from Heineken:

The words in the commercial translate into:

“Brewed in lying barrel, balanced taste. Always have a “star” discovery!”

It is not hard to realize one thing: what Heineken said doesn’t make any sense. What is “lying barrel”? Why are they better? What is a “star” discovery? How is it related to Heineken? Heineken’s brand strategy is to firmly promote its brand quality, acclaim to be the “No. 1 imported beer globally with the best quality”. However, this brand image is not easily understandable and not quite relatable. How to determine if Heineken has the best quality? What does it supposed to make me feel?

I think one of Heineken’s biggest problems is that they are too arrogant regarding their prior brand legacy – they think just by showing the green bottle and red star, consumer should already be excited to line up for a Heineken. However, this is not the case anymore – now Heineken seems to resemble old-fashioned taste among elder population.

On the contrary, Corona took the very clear approach towards branding, associating it with what it actually is, as demonstrated below:

The words in the commercial translate into:

“The Mexican sunlight in a beer bottle, premium beer from Mexico, one beer, one slice of lime, open a full summer of enjoyment!”

With a few words, the brand image is very clear: from Mexico, represent beaches and sunlight, good for the summer, especially with the company of a slice of lime. Therefore, when consumers saw this commercial, they know that the next time when they are feeling summer vibe or the beaches, they will get a Corona.

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“Intel Inside” or “AMD Inside”?

As a tech lover who pays attention to new computer releases, I noticed one of the biggest news within the PC/Gaming community in the past few days was the release of AMD Ryzen 9 4900HS CPU on slim laptops. This means that AMD takes the lead again after more than 10 years in chip technology ahead of Intel in the mobile PC segment. Immediately I am seeing overwhelming positive views and attraction for AMD, which added to the burden Intel had on its slow-moving R&D processes in recent years. It is interesting to see how a giant who essentially created the industry and its rules is losing edge to a former follower – will the “Intel Inside” badge see the end of its time?

The “Intel Inside” campaign was initially created to encourage OEMs to continuously adopt newer generations of Intel microprocessors when they come out. Before the Campaign, Intel face two fundamentally challenging problems:

-          Lack of end consumer awareness, as the case mentioned, “end users weren’t aware of the product differences.” Consumer lack awareness in two ways: (1) They don’t know which manufacturer’s processor is better; and (2) They don’t know the difference between newer and older generations of microprocessors (e.g., 286 vs. 386)

-          The “B2B” business problem. Intel’s customers are OEMs, but PCs’ end consumers. OEMs cares about end consumers’ preferences, and they will only invest in features that end consumers care about – upgrading microprocessors is a significant investment with no clear impact, so OEMs are reluctant to do it.

The “Intel Inside” campaign magically tackled these two problems and produced tremendous success. For this branding strategy, Intel took advantage of its technological leadership, which is the key why it succeeded. Intel chips were indeed the fastest chips on the market. If Intel only build up awareness among end consumers that CPU is the most important component for a computer, but at the time AMD produced the fastest chip, the “Intel Inside” campaign would never had worked.

The “Intel Inside” campaign also leveraged the power of its OEMs through clever collaboration of marketing format and budget allocation. It was indeed a sweet discount for OEM marketers, but from a long-term perspective, OEMs are much worse-off, because the consistent “Intel Inside” message boost CPU to be the key differentiator and purchasing factor for end consumers. OEMs are losing bargaining powers to Intel and running out of business – as industry reports shows that Intel and Microsoft harvested almost all the profit in the PC industry. As a result, we saw former big PC OEMs such as Compaq and IBM left the market.

However, sustaining such a profitable business with a strong brand positioning is not that easy. Short-term challenges include how to effectively do customer segmentation and sub-brand allocation. The long-term challenge is also pressing – How can Intel keep its leading position in technology development? I think no one has the answer yet.