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This year marks the 12th year that I have been sharing views on branding, marketing, retailing, internet…and whatever else pops into my head as I scan the American marketplace for successful ideas on winning more loyal customers. During these years, I’ve talked about a lot of different types of businesses. Some are real success stories. Some have failed and have disappeared from view—never to be shopped or purchased again. Most of the time, I feature brand concepts that are communicated via outstanding creative executions that win over the hearts and minds of the customer as much as their wallets. To be sure it is the stories behind the brand strategy that make for memorable marketing and loyal customers.
This month, however, I’m featuring a retailer who has been a real success story, selling stuff that’s not very special, to people who just want what they need for a specific task at a really low price. There are no Addy Award winning campaigns here. Nor are the stores going to win any praises for design or emulation of graphics and displays. Just tools. Let’s take a look at one of my favorite stores—Harbor Freight (see http://harborfreight.com).
No, Harbor Freight isn’t special because yours truly is a great handyman or do-it-yourselfer. I found the store quite by accident when they opened near a Sushi restaurant that I used to visit frequently. I was surprised at how many things they sold that I had no idea what they were used for. Nor was I aware how many sizes and shapes of drill bits existed in this world. The stores are clean, neatly organized, well signed. The merchandise—most of which is private label product from China—is well displayed and designed. The prices–even for one who rarely shops for tools—are obviously deep discounted compared to Sears or Home Depot.
Then, there’s the advertising. Oy! Nothing special here. Except consistency. Always price promotions. Always a 20% discount. Always a free with purchase item or two that just happens to be something that you could really use (like a flashlight, or battery checker, or screwdriver set. The discounts are real. The sale periods are limited and enforced. The offers are everywhere. In the newspaper every week. In ValPak mailers. In direct mail catalogues. Online. In Parade magazine or tucked into the freestanding inserts. The graphics are not exciting but are consistent with the store. Well organized. Strong pricing statements. Easily understood discounts.
The products are well made and tested in their own quality test labs called The Workshop (https://youtu.be/_xDFCBPQJXs?t=2)The warranties are real and the 100% Satisfaction promise is enforced. Returns are easy. The people are knowledgeable enough that you can find just what you need.
And it all works. Harbor Freight now has over 600 (with a new one opening every 3 days) stores doing over $2 Billion in annual sales. In the process, they have built a brand that may have surpassed in loyalty the Craftsmen brand that led to Sears’ success over the years. I believe the brand has thrived because of the consistency of the message, the stores, and the product every day. Check out their About Us video on their website (after the typical sale ad on the home page) to hear a great example of a brand strategy and how they live up to it every day.
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MERRY CHRISTMAS. As we run off the days until Christmas, it seems like the holiday comes earlier and faster every year, and 2015 is no exception. Maybe it’s because there isn’t the significant change in weather down here in Florida so the days tend to be the same as they were in September and July and April. In any event, it’s time to get into the full-court press for us to make sure that we are ready for our favorite holiday. We did get a jump on a few things like the outdoor lights and Santas, setting up the tree and decorations and work on this month’s blog in advance. All done before we took off for a visit to the Christmas markets on the Rhine with stops in four countries and several cities to see how the holiday are celebrated in towns dating back to when Santa was just a young elf. Boy, were we surprised. Christmas is alive and well in Basel, Strasbourg, Mainz, Koblenz and Cologne.
As we explored the various Christmas market festivals in each city, we were taken back into memories of how the holidays felt many years ago. We tried to figure out what made it so special and we came to the conclusion that Christmas in Europe is not just a holiday selling season, but it’s a time of celebration for the entire community and all of the businesses (not just the retailers) go all out to show their celebration of the holiday. No political correctness here. This is Christmas with Nativity scenes, Santa Clauses, angels, and all of the other symbols. But most obvious is the happy faces of the people—whether they were visiting the markets or whether they were working the various businesses. It was a festival atmosphere and yet it was calming (“All is calm…”) and heartwarming. Yes, many of the booths in the Christmas markets sell the same items as those in other cities. Yet, there is enough local flavor to give each one its own personality and style. Sure there were special prices, but it didn’t seem like prices and sales were the key focus. The displays—whether in a small, cold hut or in a centuries-old building were as exciting as any that I’ve seen on Fifth Avenue. The crowds were there on Wednesday morning just like they were most evenings and on the weekends where families, seniors, and youth mingled and enjoyed the atmosphere and the offerings. There were women in burkas, men wearing yarmulkes, priests, and even some tourists! Everyone enjoying the special time of year.
Christmas season surely is the biggest sales period in retail all over the world and as such the brand of this season certainly needs to constantly be refined while sticking to the reasons for the season that make it special. It’s not all about black Friday prices and one-day sales. It’s a celebration and a time for special memories. Standing in line in one of the many Kathe Wohlfahrt Christmas stores (you’ve got to experience one of these!) I had the same feeling that I had each Christmas when my mother would load me and my brothers on the Detroit streetcars to go to Hudson’s Downtown department store. This was not just a shopping trip. It was an excursion into the North Pole and Bethlehem and New York all wrapped up in one. An exciting, memorable time and shopping was just a sidelight to a tradition that I’ll always remember. That’s what the brand of Christmas is all about when it comes to retail. The marketing should reflect this attitude of a special time of year. The stores should dress themselves up more with experience and less on sale signs. The people serving you should be as excited as you are about the season and the experience. The community should continue to make living there extra special at this time and give people a reason to come out and share the experience.
So, if you’re dreading the last few days of the Christmas rush, take a few minutes to think back what made this holiday so special when you were young. Think about the brand of Christmas and why this time of year is not only a time for revenues and promotions, but also a time for experiences and memories. If you’re one of the marketers trying to take advantage of the season, make it special for your customers by going the extra mile to make it a memorable experience. If you’re a customer, enjoy the experience and enjoy your families.
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Happy Thanksgiving. Hope you have a peaceful, family-oriented holiday and have chosen (as I have) to ignore Black Friday. Despite the billions of ad messages for everything from SUV’s to CPU’s with special Black Friday sale prices, I believe this retail phenomenon is fading fast in customer appeal. There are many reasons for it. Mostly that customers have figured out that they can get as good if not better discounts prior to the Friday after Thanksgiving (as we used to call it in my department store days) or almost any day prior to Christmas as just about any store of their choosing. But I think there’s another factor that’s contributing to the demise as they say in Germany of“Freitag Schwarz” (I’m going to cruise the Rhine next week so I thought I should practice my Deutsch in advance.). That factor is Amazon!
As an article recently in the New York Times pointed out, Amazon is far outpacing its competitors by building a “retail” operation that nobody can effectively compete with, especially at this time of year. Amazon’s stock performance (double in value)
this year has outpaced the rest of the market. The big reason is that after years of development and investment in technology and logistics, Amazon works! It struck me as I saw the ads for Macy’s “Believe” campaign which I still think captures the spirit that made
department store the Christmas headquarters for shopping several years ago. I also watched the promotions for the Macy’s Thanksgiving Day parade that has been a tradition at our household for viewing for as long as I can remember. What struck me is that I hadn’t been in Macy’s—or any other department store– for at least a year and certainly hadn’t purchased anything at the stores for even longer. However, our family has made at least 50 purchases from Amazon (and Amazon Prime) this year. Everything from swimming pool pumps to water filters to books to videos to shoes to toys…and I could go on. And to top it all off, we had almost all of the items delivered at no cost, to our front door, the next day. And…at prices that beat most Black Friday deals this week.
It’s no surprise why Amazon’s retail sales more than doubled in the last quarter, twice the growth of Wal-Mart who does a far better job of merchandising than all of the department stores put together. Why is this happening? No surprise here either. It’s all about branding. The Amazon brand has gone far beyond the bookstore brand that gave Amazon its beginning several years ago. But the brand goes beyond just expanding what you can buy at Amazon, it’s the way they have developed a relationship with its customers and in the process developed a brand that resonates with so many customers today. That relationship is strengthened by the “personal” communication that out performs even the best of the traditional holiday gift stores. First, with a website that makes it so easy to find what you want, when you want, at a great price. Next with a CRM program called Amazon Prime that for an annual fee of $99 you can get free delivery, usually next day, with one click on your keyboard. You’ll get order status, shipping status, delivery status (even from the USPS), and a liberal return policy just in case you order the wrong size or color. Oh, and the return is just as easy to make. Want to watch a TV series that you missed on primetime? Prime video makes it easy to watch as simply as Netflix or Apple TV…and it’s usually free to download. Want to see if other people have purchased this product and were satisfied? Amazon’s customer rating system is comprehensive and validated so well it’s like calling a good friend who bought the product and is ready to recommend or suggest alternate items. I could go on, but these are just a few reasons why Prime now has over 40 million subscribers and growing every day (Black or not) before the holiday shopping season is over. Click on this linkview a great TV spot for Amazon Prime that really supports the brand. https://youtu.be/RpW3lfKKxPc
Amazon is a brand that lives up to its promise and exceeds customer expectations at every transaction. It’s communications are more personal than…. well, real persons. And it’s growing in brand preference at lightning speed that will keep the competition far behind for many Black Friday’s to come.
Hope you have a great Thanksgiving and a peaceful Christmas season.
Click on PLAY>>>above to view Ken’s welcome video to this month’s blog..
I just read an article detailing the value of the country’s leading brands indicating that not only is a brand important to the marketing of a product or service but it’s also an important component of the company’s total value on the investment markets. SAB Miller just turned down a $104 Billion offer from Anheuser-Busch in Bev, stating that the offer greatly undervalues the company and attributing its value to the strong brands in its portfolio of beers. As important as the brand is, it’s amazing what some major companies do to jeopardize the strength and even the viability of their brands with some deceitful practices.
This is painfully obvious in the current situation at Volkswagen and Audi where the company purposefully altered the software to deceive the regulators of their emissions control testing. So the CEO of VW has resigned, but the lack of trust will linger with the customers long after he is forgotten. One of the key criteria in building a successful brand is the development of trust with the customer. In this case that their vehicles are not polluting the environment is the end result. More important, however, is the fact that we, as drivers of their vehicles, must have trust in the workmanship and safety of the cars, as a basis for considering a purchase of their brands. While the recent infractions would not likely cause injury or damage to the customer or their vehicle, it certainly deteriorates the TRUST that we place that their car is going to run reliably and more important drive safely on today’s high-speed thoroughfares and in all kinds of weather conditions.
The brand strategy that I have championed for several years requires a company and its associates to “live up to the brand everyday”. Otherwise, all the great marketing and promotions are worthless as purchasers become disgruntled and share their negative experiences with their friends, family and the media. To those who were considering changing brands, these covert actions only convince the customer to stick with their existing brand or go elsewhere to a brand they can trust. Just prior to this scandal, VW became the largest auto producer in the world and it has become that by producing cars (since I owned my first beetle back in the 60’s) that were dependable and a great value.
General Motors was also the largest automaker in the world and it chose to deceive their customers with unsafe airbags and other hidden recalls that nearly made the company go broke just a few years ago. GM had worked hard to build a quality image not only for the company but also for the US auto industry. Instead, it jeopardized its existence and helped companies like VW and Toyota surpass them in revenues and market share.
Car selling for years has been based on deceit with loads of fine print, bait and switch tactics, and high-pressure sales policies at the dealer level. I’m currently being bombarded in the Tampa Bay market with commercials from a new Fuccillo KIA dealer in the area. The dealer’s owner fits the stereotype of your Uncle Billy from Jersey City who yells at the view that his deals and promotions are going to be “Huuuuggggee” along with his partner Caroline whose lines are consistently trampled by Billy while they talk about free trips and electronics to prompt a trip to their dealership. In fairness, they have created quite a media presence in a short period. And, the company owns high-volume dealerships all over the country with Billy’s tried and not-so-true tactics. We’ve grown accustomed to dealers’ tactics like this and that’s why customers dislike the whole auto purchasing experience. Unfortunately, no one trusts the dealer to give them the best deal and to live up to their promises after the sale.
What can we expect? If the parent corporations were lying and deceiving, why wouldn’t their authorized dealerships do the same? The key to building a brand that the customer values is building their trust at the same time. With out trust, the brands will likely underachieve and may soon perish.
Click on PLAY>>>above to view Ken’s welcome video to this month’s blog.
I returned recently from a trip to California and on the drive home, I was surprised to see that our local mall had been reduced to a pile of rubble while we were out of town. There still remained some signs and the main entrance portal but most of it and the adjoining theater had met their match with bulldozers and wrecking balls. Of course, this really didn’t happen in the week that we were away. The mall’s closing started several years ago as store after store began closing and the crowds that used to populate the court and restaurants got smaller and smaller. In the meantime, downtown shopping areas in cities big and small are beginning to thrive thanks to a change in customer attitudes toward shopping in a town center atmosphere where you can park in front of the store and so in or wander up and down the streets as was the custom many years ago.
Eaton Town Center, Columbus
I realized recently that in just a five-mile radius of my home three major shopping malls had closed and been torn down in the past 3-4 years. Replaced by power centers where customers can park in front of their destination and get in/out quickly or visit one of the several restaurants (from fine dining to casual) that also drive traffic to the area. The same holds true around the country, where new shopping “centers” like Eaton Town Center in Columbus or Mooresville, NC, attract new stores, restaurants and people every day. The customers have changed the way they shop. Some might say they have just gotten back to way our parents shopped. Major cities are discovering that rebuilding and refurbishing downtown areas has great appeal to younger shoppers and these have become hubs of activity around the country. Developers and retailers realized this and have profited well in the new (old?) environments. Department stores on the other hand still are tied like “anchors” to the traditional mall locations. No wonder they continue to be challenged.
It all starts with continuing to monitor the customer attitudes and behaviors and adjusting the plans accordingly. These new town centers are a brand within themselves and the customers love the results. The same holds true in other industries and product categories. Take photo taking for example. The arrival of digital was not unpredicted. Once this category was one of the most profitable in consumer products and services and retailers took advantage of the higher margins and multiple shopping trips to build traffic to their stores. Kodak recognized this early on and was one of the first to introduce affordable digital cameras and an online service to save and edit your new digital photos. However, with such a history and profit model tied in to film and developing, the company struggled to keep up with the fast changing world of photography. This opened the door for new brands like Shutterfly and Snapfish to provide exciting photo services and products online that not only encouraged more photo taking by customers but also gave them new ideas on how to enjoy the pictures long after the event. Most retailers now offer these services online and it’s not surprising that the online photo sites look amazingly like Shutterfly’s site. (In fact, they provide the service tot the stores in a turnkey fashion, while still providing the traffic building option of in-store pickup.
Just as Facebook and Instagram have made photos a part of our communications, Shutterfly provides new ways to keep your photos alive and visible in everything from photo books to tee shirts to blankets. Meanwhile, Kodak digital cameras are almost non-existent on the shelves of most retailers, their Easy Share program has disappeared, and the company continues to fade.
It all starts with the customer and keeping in touch with them. Then refining and building a brand strategy that takes advantage of the changes in attitudes and behaviors. The regional malls aren’t as easy to move away from and many have added “restaurant rows” to generate more of a town center feeling. But aside from a place for teens to hang out at, or an air-conditioned walking track for many seniors for their morning exercise, their reason for being has faded. When the first malls appeared in my hometown of Detroit, the primary benefit was a warm place to shop in the winter. Here in Florida, it was a cool place to shop to get away from the hot sun and humidity. Customers don’t seem to value these benefits as much any more. They want an interesting, convenient place to shop and a brand that meets their needs of today.
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When Teddy Roosevelt and John Muir stood at the same spot as I did for this month’s video, I’m sure they were not thinking about branding as they had their vision for the National Park System in the US. However, I’m sure their thinking was consistent with the first step in creating an effective brand strategy. As I’ve pointed out in all of my branding presentations, the first step is to have a clear vision for your brand and why it will have value to your potential customers. Looking out from Glacier Point that day a century ago, I’m sure that Roosevelt and Muir understood that the beauty and splendor of what they saw (now Yosemite National Park) would add enjoyment and appreciation to generations of Americans and that if this was going to preserve that value, there needed to be a plan (as in brand strategy) to ensure that we maintain these landmark locations for generations to come.
On August 25, 1916, President Woodrow Wilson signed a bill that mandated the agency “to conserve the scenery and the natural and historic objects and wildlife therein, and to provide for the enjoyment of the same in such manner and by such means as will leave them unimpaired for the enjoyment of future generations.” Development of the National Park System was the brand strategy to insure that this bill was successful. The same is true in developing a brand strategy for your product or service. First, you need to recognize that there is a need for the product that can’t be found elsewhere. Dr. Len Berry at Texas A&M noted that a successful brand has “a reason for being” and as you look at many of those brands that have come and gone, you have to ask what was the reason for being in the first place?
Recent successes of brands like Google, Apple, Prius, CarMax and more, all began with a vision of a product or service that provided a new value that customers would recognize and want not only today but also for years (and generations of customers) to come. Certainly, the key to longevity is to constantly review and revise the marketing plans and strategies, but to maintain a long-term brand a marketer has to consistently reflect on the original vision and criteria for the brand and maintain its integrity. The National Park System has grown and adjusted its operations to meet the changing needs and wants of its visitors, yet it stands steadfastly by its original vision of conservation and preservation of their product—the beautiful national parks that people come to see every year.
I was involved with the original opening and marketing of CarMax in Richmond in 1994. The company was created by Circuit City to capitalize on some of its operational and financial strengths in the electronics business that would translate well to the used car business. It also had a vision to provide a completely new experience in shopping and buying a previously- owned vehicle. Recognizing the many experiences that car buyers had with traditional car dealers, CarMax researched those experiences and then built a totally new concept from the bottom up to provide a value to car buyers. Its vision was to answer the complaints of the car buyer and market it in a creative, intelligent way. The plan has worked as CarMax has thrived (while Circuit City faded away). I believe that CarMax’s new campaign (20 years later) is one of the best in the automotive industry. Click on this link to view one of the new spots (https://youtu.be/1Qkd9AGWU48). Yet it still stands out by addressing the same problems that other dealers still present to their prospective and existing customers. They have a reason for being and a vision to provide a pleasant experience.
Too often, companies develop new communications strategies as nothing more than ad campaigns that lose sight of their original vision and as a result they lose their reason for being in trade for a new slogan or logo. Standing up for the value that the brand provides while remaining fresh and current with your brand messages is critical for long-term success. Just as El Capitan and Half Dome are symbols of the Yosemite National Park, the value and unique selling proposition for your brand must be maintained as the symbols for why your brand was created in the first place.
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We’ve been talking about the Customer Journey and I was pleased to discuss the topic with Terry Brock in an interview for The Business Journals Online recently. Terry is the technology guru for the National Speakers Organization and also writes monthly blogs on customer relationships which are always dead-on when it comes to understanding what motivates the customer in today’s high tech world. I think you’ll enjoy the video below as Terry and I discuss what it takes to build a successful brand by providing a journey that’s a meaningful experience to your customers. And… also click on Terry’s website for more insights that you can really use to build a successful brand.
TIP OF THE MONTH
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I recently was interviewed by Terry Brock for his monthly marketing blog and TheBusiness Journals online to discuss the hot topic of the Customer Journey . If you search it on Google, you’ll find several resources for the Customer Journey and how to map it. In fact you can view at least 10 graphic images of these maps on how the customer goes through the purchase process. Depending on which source, you’ll find up to 10 steps in the map which the customer and the marketer must take to determine the purchase and then what it takes to become a loyal customer.
(CLICK HERE to view a typical “Customer Journey Map. )
There are several articles and links that walk you through the process which most of the trade articles say is the new way of looking at the customer purchase dynamics. However, after reviewing many of them, I believe that these “maps” are nothing more than the same steps and principles that I have learned over the years for developing a successful brand. Simplified, they follow the branding process that Robyn Winters and I outlined in detail in our book: BrainBranding. Activate the Brain. Stimulate your Brand. (available on Amazon and Kindle.) In the book we outline a five step process which guides a marketer in effectively escorting their customers through the Journey to a successful brand and increased market share. Briefly, these five steps are:
1. Create Your Vision: The first step in the customer journey is becoming aware of your product or service. This really starts with you and your company. You need to figure out why the customer would be interested in your product or service in the first place. What makes it different? Why should I be interested in learning more about it? As you develop your brand strategy and options, remember to ask what is going to keep the customer coming back.
2.Conduct research: You really need to know what’s happening in the marketplace with the customer. Who is the competition? What makes the customer chose one brand over the others in your category? What is it that your brand does that differentiates you from the competitors? What is your value proposition and is it enough to get the customer interested to try you out? Understand the data and statistics to find support for your brand position. What’s the history of the brand and what is its sustainability? These are the facts that the customer will look for to determine if their journey is worth the effort.
3. Communicate the emotional value to the customer: Too often marketers go to this step first and (usually at the urging of their new agency) create an advertising campaign before they really know what they should say or what the customer wants to hear. You need to create feelings for who you are and why you should be part of their journey. They want to know “what’s in it for them”. This is the “heart of the brand” where you can create positive feelings toward your product or service. This is where you build immediate interest and long-term loyalty. This is where you establish “who” you are not just “what” you are and build a relationship that can endure. And you must continue to do this consistently and respect their intelligence. There is no place for “dumb” commercials and ads anymore.
4. Construct a plan: Take all three of the first steps and you have the foundation for a plan that will insure brand success. It’s your blueprint for organizing a brand strategy and all the elements necessary to compete. It provides the structure to develop a viable marketing plan and a business plan that can make it profitable. It also will enable you to sustain the brand for the long run, so that you can endure increased competition, changing market conditions, and more diverse customer segmentation. This is where you determine your position in the marke
5. And finally (but really what you must do before you ever go to the customer in the first place) Live up to the brand everyday: Too often marketers rush to brand themselves to the customer before they make sure that their own organization (often the people who represent the brand) really understand what they are all about and how this is different than it was yesterday. In my retail days, I hate to admit that many times our video or promotional newsletter arrived just a day or two before the new branding campaign launched in the media. We know that it takes weeks or months to build a brand position with the customers and yet we give our own staff 24 hours to thoroughly understand why those customers’ expectations may be changing.
These are condensed steps to what we sometimes take several months to put into place, but I believe they cover the “Customer Journey” completely so that their purchase behavior becomes a round trip to your brand on an ongoing basis.
To read the article by Terry Brock in the Business Journal CLICK THE LOGO>
If you ‘d like to view Terry’s interview with me about the Customer Journey,
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Why is McDonald’s suffering a slump in sales? Here’s my take on it. Several years ago, during one of my ad agency experiences, I had the opportunity to work on some of the local McDonald’s coop business. The brand had its national agencies to develop the overall brand strategy and refresh the messages that were being supported by over a million media dollars a day. Then, there were a number of regional agencies that worked directly with the coops to develop localized promotions to drive more traffic on a timely basis. Heck, we even technically had Ronald McDonald on our agency payroll. This works very well to enable the local franchisees to tie in with community events and seasonality as well as test promotions that might go national if successful. I recall one all-day meeting where there was considerable debate over the next price promotion to replace the current price promotion, which would combat the price promotions of the other fast food franchises in the market. Dollar menus, two-for-one offers, free theme park tickets. You name it everything was being considered.
At one point in the meeting, we also broke off to discuss the recent consumer market research and I was surprised that with the exception of their fries, McD’s came in third or fourth on taste and quality of their primary entrées. It occurred to me that when it comes to fast food, it’s a pretty spontaneous decision that’s triggered more by the stomach than the wallet. A review of ongoing campaigns showed very little romancing of the food and a lot of shouting about the price and deals. While Burger King was featuring its luscious Whopper, Wendy’s got my taste buds with its Chicken sandwich, Checkers made a $1 fish filet look really tasty, Red Lobster and Olive Garden always makes their food look so good you want to go there. McDonald’s has a great quarter pounder, a luscious Big Mac, really good Chicken Tenders (not the Nuggets), and a tasty egg mcmuffin. I really think at $1.29, the McDouble is as good a burger as any. Yet, McD’s last few campaigns rarely show the food in a tasty way. The coffee looks as good as Starbucks, but the burgers are barely visible.
The company’s new CEO, Steve Easterbrook, has said that it’s time for McD’s to go a
new direction. If that means getting back to the items that customers think about first when their taste buds start acting up, then fine. But trying to emulate some of the newer fast food and casual dining establishments is not likely the answer. I just heard that now the company is testing an all-day breakfast menu. An egg mcmuffin at 8am sounds pretty appetizing. At 1pm, not so much. Mini bundt cakes may be intriguing but don’t forget it’s the burgers and fries that bring the people in not a little cake that no one can spell correctly. I agree with a columnist who says that “McDonald’s should get back to being, well, McDonald’s. That doesn’t mean to stop innovation, but it does mean that if all these new tricks and promotions don’t bring in the hungry customers, show me “two all beef patties, special sauce. (etc).
Now, the company announces a line of Big Mac clothing. Give me a break…or at least some of the special sauce on a sesame seed bun. It’s all about food and drink (I admit I’ve become addicted to the Mocha Frappe’) and unless McD’s doesn’t put its focus back on the hunger games, it will continue to fight a slippery slope that a McRib can’t stop.
McDonald’s has one of the strongest brands in the world. To keep its customers loyal, the company needs to get back to market those features that got them saying “I’m loving it” in the first place.
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It finally happened this month. After many years of disappointing performance, changes in senior management, even more changes in CMO’s, and as many changes in advertising campaigns, Radio Shack announced that it was closing up shop after 94 years and thousands of store openings. Some of the stores will remain open with Sprint wireless being the primary offering, but it’s doubtful that the Radio Shack that built a strong awareness through aggressive advertising and convenient locations will ever come back as a retail marketer.
Which brings about the question of brand equity. Many believe that if you build top of mind awareness, you have a successful brand. All you have to do is look at Kmart and Sears or Oldsmobile and Plymouth to mention just of few well-known names that just simply weren’t or aren’t relevant any more. As Radio Shack itself admitted in its 2013 Annual Report, the company “struggled to find its place in the market, and more important, with the consumer.” You have to give Radio Shack credit, it was able to spot new technology and become a pioneer in the electronic calculator, then home computers, and later with wireless. Yet, it never became the destination brand for any of them despite aggressive advertising.
The company hung on to its roots as the tech do-it-yourselfer’s place for those little things that helped one build or repair their electronic devices. However, as these devices became obsolete so fast that replacement was smarter than repair, and as the technology itself evolved to inexpensive chips and discs the need for all those little (high gross) “things” just was substantial enough to survive.
Radio Shack was not always lost in the woods, however. About 10 years ago, the company sold its Canadian operations to Circuit City (another high awareness/poor branding casualty). I was involved with CC as a client while at Doner and we were tasked with the challenge to rename the north of the border stores since Radio Shack would not allow its name on one of their competitors’ (CC) stores. It was an interesting challenge, but what was more interesting was to see how different the Canadian stores were from the American ones. With a separate management and merchandising team, the Canadian stores still had strength’s in wireless and personal computing, but it had really developed a niche for “gadgets” that people just like because they are unique and on the cutting edge. These are the items that have made Brookstone, Spencer Gifts, and SkyMall successful. It should be noted that Brookstone filed for and emerged from Chapter 11 last year which verifies the challenges of this category today. They are interesting items, in significant assortments, that make shopping the store and its ads more interesting…and fun. The stores were contemporary and in high traffic locations. Frankly, I thought that CC had hit on an idea that could have moved their entire American operations out of the severe doldrums they were facing. Winning the battle of big screens and laptops was not likely and a look at Brookstone’s success at that time made sense to me. Of course, that never happened as CC’s new management continued on a course of self-destruction and is now just a memory—despite its former high top-of-mind awareness.
Radio Shack (US) was in the same boat trying to do business the same way it did when the first pocket calculator sold for $375, when the first desktop sold for $2500 and the first flat-screen had an $1900 price tag. And only your stores had them. As competition increased, the small, neighborhood stores simply could not live up to a promise of assortment and innovation. Many have said that Radio Shack’s name was its problem and it certainly didn’t do anything to verify a contemporary tech store. However, had the company positioned itself with a brand strategy that built its awareness on the important values that the customers are looking for, the name would have been just fine. A few years ago, Radio Shack’s “You have questions, we have answers” campaign was the closest thing to building a brand promise that had merit given the lack of knowledgeable salespeople in the warehouse stores and other specialty stores. Given the success of Apple (both as a manufacturer and a retailer), Radio Shack could have built a brand based on cutting edge tech with knowledgeable people. Unfortunately, we’ll never know. And the awareness, like the stores will disappear.