It got me thinking about how consumers (and businesses for that matter) really make decisions in the real world.

A few brand pyramids that I had laying around.

Brand Pyramids seem to oversimplify the emotional and totally irrational beings that we call consumers.  I think we sometimes devalue  marketing when we try distill the consumer decision and thought process into a PowerPoint slide.  Do we really believe that if we can move a buyer up the pyramid through clever communication and brand touch points that they will be bonded with our brand  and have some type of lofty “Apple State of  Self-Actualization”?  I don’t buy it anymore.

If you’ve ever sat in a focus group, followed a consumer around on a shopping trip, or had a normal conversation with a friend about their last big screen TV purchase, you’ll know people just don’t work like those brand pyramids say they do.  But brand experts propagate them anyway.  Our job is to bring salience and understanding to the confusion and those brand pyramids are not cutting it anymore.

Ok, now what?  Brand Pyramids are dead.  What should replace them?  I don’t think we need to replace them with something else.  I’ve been re-reading David Aaker recently and I can’t help, but think how simple he makes it.  Make your product relevant, engage with your consumers, be yourself.

Aaker wrote in 2004, “Brand Management in the past focused on achieving preference the basis of differentiation, benefits, customer satisfaction, among a set of brands under consideration for a given application.  But in today’s environment, unless a brand can maintain its relevance as categories emerge, change, and fade, narrow application preference may not be sufficient.” In other words, if all you’re focused on is achieving preference and differentiation with new updates or campaigns, you may miss the major shifts in the marketplace such as AOL did in the early 2000’s.

This of course means an organization has to be more outward focused, nimble, and innovative to stay in the sweet spot of relevance…those are posts for another day.

There’s a lot of talk these days about innovation.  Companies have opportunities for what I call innovation with a lowercase “i” and innovation with an uppercase “I.”

First, let’s define each.

Lowercase “innovation” is opportunistic in nature.  The firm is reacting to some external force in the marketplace, such as new government legislation, changing consumer behaviors, and competitors.  These opportunities rely primarily on distribution channels, sales, and marketing teams to repackage products to create new sales prospects.  Product development is certainly involved, but normally isn’t altering the product roadmap or vision drastically to accommodate the opportunity.  Usually it is short-term revenue opportunity that does not drive long-term loyalty and value for the organization.

Uppercase “Innovation” comes from within and it is proactive and more long-term focused.  It’s  a ‘pull’ strategy vs. a ‘push.’  It’s purposeful, well thought-out and attempts to be transformational.  Uppercase Innovation means the firm is constantly experimenting, defining new opportunities and challenges, and has a deliberate process to sift through and test ideas.

Both approaches are useful and have their own purpose.  Too often though, companies only implement a lowercase innovation approach, and cut themselves off from real market opportunities.  Corporate America is full of these firms that grow each year, but never really redefine their marketplace or create new market categories or sub-categories.  Forbes just recently published a set of articles based on a book called the “Innovator’s DNA”  that ranks companies on innovation based on an assessment of each company’s “innovation premium.”  Innovation Premium measures the premium the stock market gives a company for anticipated or expected innovation.  Salesforce.com came out on top of the rankings for its Chatter application that takes the best of Facebook and Twitter and applies it to enterprise collaboration.

So, the question arises, ‘how do you go from just ”innovation” to “Innovation” with an uppercase “I”?’  Here are few thoughts:

1) Make failure a possible option. You can’t innovate if employees are afraid they are going to get fired if they have a failed attempt at something.  Failure should be a recognized part of the process.  Silicon valley is full of failures.  I’m not saying that it should be celebrated, but rather looked upon as a learning opportunity.  To read more about Failure take a look in the Harvard Business Review’s April 2011 issue.

2) Reward and Compensate. I’m  a firm believe that behavior follows incentives.  If you want your employees to to innovate then there needs to be an incentive program that supports that Innovation effort.

3) Create a context. Set an Innovation vision.  The CEO and top management are responsible for establishing a vision (strategy) which embraces Innovation.  Without a vision of where the company and market is going, often there can be limited success with Innovation.  Management must create the inspiration to push people to stretch, to make the current pie bigger.  At the same time it must be realistic, and it falls upon top management to create direction in which they want those innovation efforts directed.

4) Investment Sandbox. Encouraging Innovation without giving development teams budgets to experiment with is just talk.   To be a serious Innovator, budgets need to be created for Innovation.  Make the process simple and easy to access sandbox funds for experimentation.  Once the idea is developed, put it through a more rigorous business case procedure.

Those would be my top four pillars for creating an “I”nnovation strategy.  What are your additions?

With the system called Scan It—in use at about half of Ahold USA’s Stop & Shop and Giant supermarkets in the Northeast—shoppers scan and bag their own groceries as they navigate the aisles, while a screen keeps a running total of their purchases. About a dozen times per shopping trip, the device lets out a “Ka-ching” as an electronic coupon appears on the screen. “Last week, right after I scanned coffee, I got a coupon for coffee creamer, which I needed,” says Patty Emery, a Caldwell, N.J., dental assistant, who estimates she shaves 20 minutes off her weekly grocery shopping trip at Stop & Shop. “It is really cool.”

Scan-as-you-go mobile devices are a logical next step after the self-checkout lanes that are now common in big food and drug chain stores. When finished selecting items, Scan It shoppers either go to a self-checkout station to upload their bill and pay, or hand the device over to a cashier.

Beyond just eliminating the cashier, this device (or its soon-to-be follower: the smart phone) poses unlimited potential for retailers and marketers.  First though, we need to move beyond coupons.  Limiting this device to an electronic  coupon dispenser would not do it justice.  Here are a couple thoughts on where I think the technology will be heading.

1) Electronic Payments – Why do I need to hand the device to a cashier?  If it had a card reader I could swipe the card myself  and be on my merry way.  The Apple Store has already done this by attaching card readers to their associates’ mobile devices, and I think more retailers will be moving to that model or a customer swipe model.

2) Store Navigation – A typical grocery store is not set up in the most customer friendly way.  Customers shop for solutions and day parts, while the grocery store is set up by category for easy restocking.  The device could act as a virtual recipe checklist. It would remind the user if they want to make certain recipe they need to get a specific item in a specific aisle.  The device could help customers find solutions instead of just products by downloading recipes.

3) Suggestions – How about the famous Amazon suggestion model applied to this device (ie. 60% of people who purchased Corn Flakes also purchased Chiquita bananas).

4) Send to Email – Not ready to buy this moment.  How about a function that scans the code and sends all the product info to your email or smart phone so you can purchase online later or learn more.

5) Send to a Friend/Facebook/Twitter- Found something new a friend would enjoy.  How about a function that allows you to share with friends to make your shopping experience more social?

Those are 5 I came up with off-the-bat.  What ideas do you have to make this device more effective for consumers?

VirginAir Lounge at Gatwick Airport. Maybe the bank lounges will look like this?

Virgin Money may get me to change my ways with their new Virgin Money Lounges they are unveiling on High Streets in London, Edinburgh, Norwich, and Manchester.  According to a Virgin Money spokesman, the lounges will be open to existing customers, who will be invited to use them to relax and enjoy free coffee, wi-fi, and gadget such as iPads. The aim is to make people “want to stay” and engage with the Virgin Money brand.  Virgin Money also intends to open 70 bank branches over the next five-year period, with each following a similar informal model to the lounges.  

At first glance this seems a risky proposition to be opening this many branches when so many banks around the world are closing branches.  Though, the more I got to thinking about it, the more it starts to make sense.  Virgin is offering a higher level of “access.”  Its what I call emotional access.  Vigin gets that its not about the transaction, but an experience that goes beyond customer service that now could steal marketshare from Starbucks and others.  They are taking a declining asset and reimaging it into something that offers more utility and adding in-kind customer value.   Once a financial institution starts to go down this road, the possibilities could be endless.  They could create business centers such as a FedEx/Kinkos location, temporary office/meeting space, and why not charge cost for a latte? 

Banks are on notice, I think its time to start re-thinking the retail experience.

Mobile shopper marketing is more than scanning bar codes and couponing

I’ve been spending a lot of time lately getting up to speed on consumer and commercial banking trends. As you can imagine most of the talk and discussion is about internet banking, the mobile channel, and migration to self-service. The importance of branch locations to a consumer has dwindled significantly. USAA Federal Savings Bank has known this for years, and has been a leader in deliver mobile technology to its customers (they were the first to deliver Remote Deposit Capture). Their customers are military families who move around frequently and need to take their bank with them wherever they are stationed.

Too many marketers and retailers see the mobile channels as just an opportunity to offer coupons and price discounts, and not as away to foster more loyalty. We need to re-think this strategy, and begin to push toward using the mobile channel to offer solutions and engagement instead of just coupons.
USAA learned early on that by offering mobile solutions and tools that help its customers in the car and home shopping process the customers are more likely to use USAA for a car or home loan.

Using its mobile application a customer shopping for a car can enter the details of the desired model. USAA has relationships with many auto dealers, and the app will display a pre-negotiated price, and can determine if the customer qualifies for financing through USAA. USAA customers walk into an auto showroom, show a sales representative their iPhone with the price USAA has already negotiated and ask if the dealer can do any better. The app holds a shopper’s hand through the entire auto-buying process, and gives USAA a better chance of selling a loan. By delivering loan information to a mobile device that people can take right into the salesroom, USAA can better compete for business. USAA also has an app helps homebuyers keep track of different properties they looked at and provides financing information.

The strategy of holding the customer’s hand through the buying process is a non-traditional approach for a financial institution, but it works for them because they are increasing their bond with their customers by walking them through an often times difficult process. USAA see the mobile channel as an opportunity to go to bat for their customers even when the customer decides not to use them for financing. It’s not just another web browsing screen. This alternative focus for a bank has lead to innovations that has engendered more loyalty and puts USAA at the top of the list when the customer needs financing.

I think it is past time to begin imagining ways to use the mobile channel in more inspired manner. How could a CPG food company use the mobile channel help its customers eat healthier, or plan menus for the week (even by pushing foods outside their category)? How about an app that helps do-it-yourselfers plan a project so they know what they need before walking into a home improvement store (or what aisle to find something)? I think the possibilities are endless once we stop thinking about couponing and price discounting, and begin to think about our mobile objective as a way to develop loyalty, not just to sell more stuff. What do you think?

In addition, every brand story should includes the following elements:

Great Stories Have Memorable Scenes – In Rocky, his cousin takes him into a meat locker so he can punch giant slabs of beef, and in Titanic Jack and Rose hang off the bow of the ship with the wind in their hair.

Brands create memorable scenes through meaningful consumer experiences.  A few years ago, Subway shook up its popular “Jared” campaign by putting him on the road.  A double-decker bus crossed the country giving consumers the opportunity to interact with the brand and have some fun taking pictures in Jared’s old size 46 pants.  Brand experiences can allow you to create interactive memorable scenes with your consumers.

Furthermore, look to your past innovations or prototypes that are now sitting in a closet somewhere that can tell a memorable story for you.  Bill Bowerman’s waffle iron may tell the most compelling brand story in the history of brand stories.  Imagine his wife’s horror when he started pouring urethane on to it one morning instead of batter.  His waffle iron launched a revolution.

There’s Beauty in Tragedy – When writing your brand story don’t leave out your mistakes, your blunders, and your failures.  It gives consumers the opportunity to connect with their own story.  Audiences love the honesty that comes with the open admission of failure, as well as the integrity that comes with reflecting on why things went wrong.  Apple’s failure through the non-Jobs era of the 1990’s actually contained advances that helped with their revitalization later on.  Many marketers might not want to tell that chapter of their story, but their story would not resonate without it.

In his book “Building Brand Authenticity: 7 Habits of Iconic Brands” Michael Beverland says “…marketers are urged to tell stories of customer-driven orientation, careful targeting, and innovation success.  In contrast authentic brands celebrate failures and admit when they were lucky.  These activities provide the brand with a rich history and more importantly a story that reflects our own humanity and desires.”

I often find it interesting when talking with challenger brands and start-ups when I ask the question “what’s your story?”  I often get the well-rehearsed 30 second elevator speech.  That works for the quick pitch when networking and talking on the phone with investors, but from the consumer standpoint it most-likely isn’t compelling or emotional enough to trigger a second glance.

As consumers one of the primary ways we make sense of this world and our place in it, is through stories.  They capture our attention, change the way we think about the world, and give us hope.  The same is true of brands.  Brands are the stories that connect consumers to the people within the company and they give meaning and purpose to the consumer’s product consideration and purchase.  Stories unite enterprise and consumer and overtime they should grow and change with customer needs and changing markets.  Furthermore, in today’s social media environment stories should engage consumers and promote a two-way dialogue, loyalty, and repetition to increase long-term profitability and growth.

But, what are the elements of a good story?  What if your brand story used some of the same script structure of a successful blockbuster like Braveheart or Titanic ?

We’ll explore more in part II and III

Toronto’s first disloyalty card launches next week, promising to send patrons on a tour of seven independent coffee shops.  The goal to promote quality coffee and community, is the brainchild of the newly formed Toronto Coffee Conspiracy.

Once the business card-sized wallet cards are printed, you pick one up at your regular coffee shop (there will be about 500 per store) and that will be marked as your starting point.  Then you visit the other six spots, buy any coffee that’s on the menu (brewed or espresso based), and get the card punched. When you’re done, you return to your starting point for a free coffee.

I was recently talking with a Coffee shop owner in Little Rock and he mentioned to me that Starbucks was voted the best coffee in town in their local newspaper survey.  Most coffee connoisseurs in Little Rock could probably point you to 5 other local coffee houses who had better coffee than Starbucks.   It is most likely that Starbucks got the vote because of its high awareness and a lack of strong awareness for independents in Little Rock, or possibly Starbucks is brewing better coffee in Little Rock than anywhere else in the country.  None-the-less his shop and market segment (independent coffee houses) could benefit by developing a stronger coffee culture in their marketplace.

Can your business profit from a little disloyalty?  Challenger brands can heighten the awareness for their market segment by partnering with competitors if done correctly.  It’s tapping the power of group action and appealing to the mavens and your early adopters to drive larger market acceptance and a more robust culture for your niche.  Could you successfully leverage group action and your competitors to overcome a dominant player in the market?

“Hispanic” is more often than not considered a race among many U.S. citizens (It isn’t.) A Puerto Rican man in the Bronx even refused to fill out his Census form because the term “Hispanic” was not considered a race, something he considered plain offensive.

I think the 2010 Census took a positive step forward on question 8 by offering “Hispanics” or those of Spanish origin to list a more specific country of origin.  My wife is Argentinean.  In America she usually gets lumped into the “Hispanic” crowd, but her background, culture, and family history identifies more with Italians.  It just so happens that she speaks Spanish because she grew up in Argentina.  She fills out government forms saying she is White.  After all you wouldn’t expect an Italian American to fill out a form saying they were Hispanic.  Why should a Argentinean-Italian who happens to be an American citizen fill out a form saying they are “Hispanic?”  America’s vast cultural mosaic is too complicated and diverse to even bother labeling anymore with these over-simplified labels.

In question nine of the Census many Americans found an easy way out: Taking advantage of the 19-character free space box under “race,” many chose to spell out the word “mestizo,“ indicating the mixed nature of their heritage.  I look forward to the day when everyone recognizes that we are all “mestizo” or we can just put on a form “American,”  and be done with it.

So how Are consumers emerging from the great recession?

First, let’s look at some key indicators:

• We are getting paid less, not more.  Middle-class families earned less by the end of 2008 than they did in 1999 when adjusted for inflation (NY Times 1/10).
• 1 in 4 mortgage borrowers are under water (WSJ 11/09)
• 10% is the official unemployment, but Real Unemployment is 17.5% (NY Times 11/09)
• American’s are saving more.  Savings increased more than +6% year-over-year (WSJ 8/09)

A new consumer consciousness has awoken and consumers are more aware than ever about the products and services they are purchasing.  What they are doing with this new found awareness is diverse.   The choices we are making are definitely more deliberate. Our newfound clarity has helped to align choices with values.

Here are just a few takeaways:

• People are discovering new ways to explore the world, appreciate their lives, and to reconnect with values.  American’s are reconnecting with what they can see and feel that is local and tangible–themselves, their family, and community.  Respondents said Main Street (49%) was the most important indicator for them to pay attention to for gauging a recovery.

Much has been written about how Groupon.com popularity has soared due to the fact that consumers are looking for great deals in this economy and the new power of crowd-sourcing.  However, connecting with what is local and tangible is a major driving force behind Groupon’s success.  In an out of control economic situation making choice that are local gives consumer a sense of order and control.

• Self-Reliance is the new insurance policy.  Americans have developed a new sense of planning, analyzing, and delaying gratification that has become part of who they are.  They like to see themselves as strong and capable in the midst of all this economic dysfunction.  56% of American’s would rely on themselves to get the country back on track vs. the Government (33%) or Financial Institutions (11%).

Brands need to align with this can-do attitude and be helpful to their quest for something better.  American Express and All State have tapped into this consumer insight with their latest campaigns.  American’s are inherently optimist even if they are not thinking optimistically at the moment.  On a political level the National Tea Party movement has captured this feeling that we need to rely on ourselves vs. government and large corporations.  Brands that offer consumers empowerment and independence will win this battle.

• The reincarnation of the American Dream.  The dialing down of ambitions and the traditional pursuit of happiness–which is bound up with accumulation material wealth–is being relinquished in favor of the pursuit of PEACE OF MIND.  Consumers are achieving this goal by adopting sustainable living habits for the long-term.  Not only when it comes to the environment, but also making choices that do not bankrupt our health, fiscal resources, or values.

While this recession may have given rise to more cynicism, doubt, and confusion, it has also been the springboard for Americans to develop new appreciations for intangibles, and to reconnect with what they think is important.  Brands that will be successful will offer durability, authenticity, transparency rather than corporate, one-size-fits-all, protect the profits at all cost mentality.