Hot blood emotions are seldom the route to loyalty

For more evidence why lovemarks don’t matter see “How Brands Grow“.

Recently, I attended an “emotions in marketing” conference in Amsterdam to hear Tex Gunning, Managing Director of AkzoNobel Decorative Paints (global owner of brands such as Dulux). Unexpectedly Tex invited me up on stage to talk briefly about “How Brands Grow” which he praised.

I was followed by Kevin Roberts, CEO of Saatchi and Saatchi, who presented for an hour on LoveMarks. He started by saying what I said was “scientific claptrap” – I was delighted.

What did I say that perturbed Kevin? Well a few things, here is an account I found by someone in the audience.

The Amsterdam conference had the theme: “emotions in marketing”. And I was asked what I thought about this. I replied that emotions were important but that I felt marketing was grabbing the wrong end of the stick – instead of thinking about the subtle emotive reactions that result in the processing of advertising (rather than screening it out) all the talk was of hot-blooded emotional commitment to brands. These strong emotions are thought to underpin loyalty but we’ve known for decades that that isn’t true.

And then, I illustrated with a little experiment. I noted that there were about 200 chairs in the room and everyone had just got up and then returned from a coffee break. So then I asked for anyone to put their hand up if they had returned to exactly the same chair they were sitting in previously – nearly everyone did. “Amazing loyalty” I said, “but not presumably due to your strong emotional commitment to that particular plastic white chair” 🙂

This and other loyalty phenomena have been documented by social scientists, (and more research is underway at the Ehrenberg-Bass Institute).

Kevin Roberts didn’t like any of this. Obviously.

So what was Kevin’s talk like ? Well he has the gift of the gab, an animated speaker, although he flagged towards the end. His content…… half or more was TV ads, over and over. Great creative but it got exhausting, it was too much, for too long. Don’t ask me what brands the ads were for, I can’t remember – says a lot doesn’t it.

Kevin, at heart, is a story teller, a classic ad man, which is an important skill. That said, he is someone who never lets truth get in the way of a good story. And that was his message, that ads that told stories would build lovemarks that would engender loyalty beyond reason and premium profits (no evidence needed). He constantly praised Apple, who interestingly largely don’t tell stories in their advertising, they show product (iPad 2 – thinner, faster, lighter, smart covers, 10 hour battery life). Ah well, as I said, why let the real world get the way of a good story?

www.MarketingScience.info

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Brand Keys (and other brand equity monitors) can’t predict a brand’s future

There are a number of market research products that claim to predict a brand’s future.  Some even make the outrageous claim that they can predict a company’s stock-price, which makes you wonder why these people are still doing the hard work of selling surveys, why aren’t they stockmarket billionaires by now?

Brand Keys is one such market research agency.  I asked them for evidence for their predictive claims and they were nice enough to point to documentation in their book (and many subsequent conference presentations).  But when I looked at the public evidence (it wasn’t hard, I just used Google) I found that the changes in the brand rank in their Customer Loyalty Index occured after real market place changes, not before as they had implied.

Below is the email I sent outlining the evidence to Brand Keys, I received no reply. I don’t mean to single out Brand Keys.  Their rivals in the brand equity business are no better – I have seen no evidence that such surveys can predict a brand’s future.  There is also no good reason to think they should/could.

Dear Robert

Thank you for sending the slide, I also bought your book and have read it, including the Starbucks case study. Unfortunately the evidence does not support the assertion that Brand Keys is able to predict changes in trends ahead of time.

The book and slide give a selective group of different metrics which are supposed to tell a story of Brand Keys predicting, at the start of 2007, Dunkin Donuts awaking from its slumber and Starbucks ending its growth run. It would be impressive if there was evidence of Brand Keys predicting ahead of time a change in trend for either brand but the evidence says differently.

Dunkin Donuts began its resurgence in 2003 (reported by BusinessWeek), long before the 2007 you predicted.  By Aug 2004 it posted an annual 6.9% increase in same store sales, opening 423 new stores, and hence 14% increase in overall sales. Back then Starbucks posted a 10% increase in same store sales, but that was their last year of rises in same store growth, i.e. things started going sour for them in 2004 (when you rated them as fantastic).

Perhaps your 2007 prediction of decline referred to Starbucks’ overall sales revenue – but in 2007 (they year they slipped on your ranking) they posted 22% increase in sales revenue.

Perhaps you meant to predict a change in Starbuck’s share price – but it started declining in 2006, i.e. before you predicted any change in trajectory. Perhaps you meant same store sales – but, as I said, that growth trend ended after 2004.  And actually went negative in 2008 (after practically no change in the Brand Keys score).

Perhaps you meant profits – but these dropped only in 2008, and rose again the next year.

Perhaps you meant market share – but Starbucks has led Dunkin Donuts throughout all this period (and still does). Yes Dunkin Donuts has been growing for a long time now, opening stores where it had none.  Yes Starbucks opened too many stores, especially overseas (it eventually happens to most companies on an expansion drive).  Yes Starbucks got hit by the housing crunch (with big exposure to California and Florida).  But in mid 2009 Starbucks posted a turnaround in same store sales growth achieving record quarterly earnings for the last 3 months of 2009  – note that this before the Brand Keys ranking for Starbuck rose from 3rd to 2nd.

So what predictive claim are you making ?  The facts suggest a rear-view mirror on a host of performance metrics. Please do tell me if I’ve missed some important facts.

Byron

Battle of the Brand Gurus – will BP fail?

Mark Ritson has made two bold claims, that BP has negative brand equity, and that the company will fail.

It’s good to see such predictions.  In this case it’s a bit of a battle of the branding gurus….

  • In 2007 Al and Laura Ries boldly predicted that the iPhone would fail, today Laura sides with Mark Ritson saying BP’s mistake will not be forgotten and BP will never be believed again.
  • Robert Passikoff’s (Brand Keys) brand loyalty index reports that BP has fallen from top to bottom in their rankings but he avoids making a prediction, other than the fact that this will hurt BPs profits – but that’s an easy prediction, of course BPs profits will be down, but not necessarily because of consumers turning away but simply because of the costs of the clean-up.
  • YouGov’s BrandIndex poll says that consumers haven’t turned off BP.  And they predict little impact of attitudes.

Who will be right…time will tell.  But my sympathies are with YouGov’s prediction, because brand equity is much more than brand attitude – which makes Mark wrong on both counts, BP doesn’t have negative brand equity.

Meanwhile BusinessWeeks notes that BP’s share price has jumped 30% this month (July).  That’s before they plugged the well.  Today they report:

“The share-price gains have restored BP to its position as Europe’s second-biggest oil company by market capitalization after Royal Dutch Shell Group Plc, overtaking Paris-based Total SA. BP had overtaken Shell at the start of the year as shares climbed to a year-high of 655 pence on the day of the Gulf accident.”

www.MarketingScience.info

How Brands Grow book now available for pre-order

Oxford University Press will be publishing my book early in 2010.  It’s available for pre-order in a number of countries – here is a list of online outlets where you can order it.

Science has revolutionized every discipline it has touched, now it is marketing’s turn!!  All marketers need to move beyond the psycho-babble and read this book… or be left hopelessly behind.
Joseph Tripodi,
Chief Marketing Officer,
The Coca-Cola Company

How Brands Grow by Dr Byron Sharp

Detroit doesn’t have a loyalty problem

Myths continue to abound that US car brands have suffered a collapse in loyalty.  Marketers believe this because they don’t know about the law-like patterns governing loyalty metrics.  Put simply, they don’t vary massively between brands, and the variation that does occur depends on marketshare.  Detroit has lost share, but it would have had to lose almost all their market share in order for their repeat-rates to plumment.  I published an article on this earlier this year, with empirical evidence.  Detroit’s real problem is a lack of customer acquisition.

www.MarketingScience.info