You are viewing Aaker on Brands blog posts from June 5, 2013 through August 7, 2013. You can also view the most recent posts.

McDonald’s Struggles to get “Fresh,” Relevant

McDonald’s is addressing a new relevance problem among the key 18 to 32 year old demographic that wants freshness in their fast food fare. Their “solution” is the McWrap, a freshly prepared sandwich wrap. The tortilla-based wraps contain sliced tomatoes, spring greens, shredded lettuce and even cucumbers, a first at McDonald’s, together with chicken, cheese and sauce. The wraps are prepared to order and the vegetables are indeed fresh. The problem is that there is a difference between fresh food and a fresh experience.

McDonald’s has had some success addressing other relevance issues in the past, though it took years to get it right. The unhealthy stigma was somewhat softened when they developed, after a lot of trial and error, a set of salad entrees plus some fruit and yogurt items developed especially for kids. The competition from Starbucks was neutralized with McCafé. Will McWraps

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August 7, 2013  •  Permalink

The Desktop Demise? Not so Fast.

Desktop computer sales are declining while tablet and laptop sales continue to skyrocket. There are predictions that the desktop will be soon be history, based in part on projecting real purchasing trends and in part on an assessment of the technology and uses of the alternatives. Microsoft’s Chief Evangelist Steven Guggenheimer was quoted as saying that over time, the desktop is likely to go away altogether, though he expressed uncertainty about the pace of decline. He has a lot of company in his analysis.

But it’s problematic to make predictions about products that appear to have been overtaken and made obsolete by innovations. There is a tendency to underestimate their functional benefits and the tenacity of the core of committed

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July 31, 2013  •  Permalink

The Retail Revolution Is Here

The retail revolution is here. The online retail force has finally arrived, and the results are dramatic.

Retailing sectors that are most sensitive to online competitors are downsizing. That set includes book sellers (Borders), video stores (Blockbuster), consumer electric stores (Circuit City), office supplies, stationary/gift shops, and big box stores. Chains are going out of business or dramatically downsizing the number and size of stores. The fact is that online competitors often have lower costs and a wider selection. Big box storefronts are being replaced growing retail concepts such as fast-food and fast-casual restaurants, fitness/health clubs, dollar stores, thrift stores, medical services, automobile services and wireless stores. The retail revolution is here, but the number of retailers, on average, is not declining.

The retail sectors that are less sensitive to online competition

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July 24, 2013  •  Permalink

The Real Reasons Chinese Firms Have Weak Branding

In a column for the New York Times, David Brooks posited that the U.S. has one clear advantage over Chinese competition: branding. He notes that U.S. firms are powered by "eccentric failed novelists" (presumably from agencies and consulting firms that are gifted at brand positioning and execution) and "visionary founders" (think Steve Jobs) who have created exceptional brands. This talent is lacking in the Chinese market where "executives tend to see business deals in transactional, not in relationship terms," as Brooks says. This observation is important because there are Chinese firms that seem to have everything to win globally except for branding and marketing.

Speaking as a long-time observer of brands and brand strategy, I believe that Brooks is correct but his analysis

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July 17, 2013  •  Permalink

Can Employee Policy Lead to Customer Loyalty? Costco and HP Prove It Can.

Treating employees “right” as a priority over profits is unlikely to be rewarded by customers. It is difficult for firms to get credit from customers for good works such as sustainability or social programs because they are difficult to attain prolonged effectiveness, and because they fail to get visibility. So how can employee programs that are usually mostly invisible to customers, make an impact on preferences or loyalty?

Employee policies that do stand out can generate “respect” for the organization, and that respect turns into liking and trust.

Consider Costco versus its competitors. Their average employee pay is nearly $21/hr compared to under $13 hr at Walmart. 88% of Costco employees have company-sponsored health insurance and pay less that 10% of the fees while Walmart

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July 10, 2013  •  Permalink

A Different "Kind" of Healthcare Branding: Dignity Health

A full page newspaper ad for a major hospital group, Dignity Health recently caught my eye with the headline “The Earth’s health is our health.” It turns out that Dignity Health, formerly Catholic Healthcare West (about 60% of its current hospitals are Catholic), has 60,000 providers in over 40 hospitals and hundreds of locations in 17 Western states. And it has a very unique brand message.

The ad talks about how our health is connected to the health of the planet, and how the healthcare industry needs to be involved in removing toxic and non-biodegradable substances from the environment and to help conserve resources. And this should be done in the name of “humankindness” – where the power to heal, to inspire and to love is harnessed to do good.

The premise is that there is

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July 3, 2013  •  Permalink

Velcro: How A Category Exemplar Successfully Rebranded

Velcro, from Velcro Industries, is a fascinating brand. It’s a wonderful example of a single product (hook-and-loop-fasteners) brand that created a new category and maintained control and exemplar status over that category for nearly a half century. It illustrates how even a strong brand can get tired and need a rebranding effort.

The Velcro founder story is a powerful part to the brand. It has human interest and also serves to explain the value proposition of their product. A Swiss electrical engineer, George de Mestral came home in 1941 from a hunting trip curious why burrs kept sticking to his clothes and to his dog’s fur. Under a microscope he found that they contained hundreds of “hooks.” That led to an inspiration to recreate the attachment properties of the burrs in cloth. It took nearly 20 years before he had something that was commercial, and several companies turned their back

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June 26, 2013  •  Permalink

Seven Brand-Customer Relationships that Create Loyalty

A key to building segments with high loyalty is to create brand relationships that have traction and meaning. To understand relationships, it’s useful to recall the classic work of Susan Fournier going way back to her dissertation in the mid-90s in which she used human relationship as a metaphor for brand relationships. She examined the work of psychologists who studied the nature of relationships and the characteristics of ideal relationships. Drawing in part on this body of work plus her own consumer research, she identified seven types of relationships that are important to understand and had intriguing insights into how brand-customer relationships should be conceived, measured and managed.

These dimensions provide lessons on

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June 19, 2013  •  Permalink

How to Become an Innovative Organization

Becoming an innovative firm capable of engaging in substantial and transformational innovation that will create new categories or subcategories requires an enabling organization. An innovative organization is difficult to create because it really requires three characteristics that are inconsistent with one another. The organization needs simultaneously to be “selectively opportunistic,” to have “dynamic strategic commitment” and to have an organization-wide resource allocation system.

Selective Opportunism

The organization practicing selective opportunism actively but selectively seeks to identify opportunities through insight or technology development, and then takes advantage of them. The idea is that the environment is so dynamic and uncertain that the prudent and profitable route is to detect and capture opportunities when they present themselves. Strategic

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June 12, 2013  •  Permalink

Creating New Subcategories is the Path to Real Growth: More Data

In my book, Brand Relevance I argue that the only path to real growth, with rare exceptions, is to engage in transformational or substantial innovation that creates “must haves” that define new subcategories (or categories). In virtually any product arena that you examine over a long period of time, from water to banking to computers, any growth spurt, (again, with rare exceptions) can be associated with such an innovation. For example, in the Japanese beer market the market share trajectories changed only four times in over 40 years. In three of those instances new subcategories were formed, and in the fourth two subcategories were repositioned.

In a recent article in the Harvard Business Review, Eddie Yoon

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June 5, 2013  •  Permalink