The HubMagazine #34

E x c h a n g e o f I d e a s | January/February 2010 | $10.95 HUB �e M A G A Z I N E A publication of Reveries.com and Cool News of the Day

WOULDA COULDA SHOULDA 3 words you won’t have to say next time. At Upshot, we not only help you develop innovative ideas, we help you get them to market ﬁrst. So next time, it’s the other guy saying, “I wish I had done that.” Not you. For more information, visit upshot.net. © Upshot Inc. 2010

HUB �e P I VOT P OINT M A G A Z I N E Razor Sharp JANUARY/FEBRUARY 2010 A lmost 15 years ago, I started asking the best and brightest in marketing questions about the future of 22 this business, first on Reveries.com and now in the Hub. That probably translates into thousands of questions asked. But, in fact, I’ve really only posed variations of one, pivotal probe: Where’s it all headed? COVER STORY Some of the answers have been more memorable than others, obviously. If there’s one I recall best, it was Positively Safeway the response from Geoffrey Safeway chief marketing officer Diane Dietz gets Remembering Frost, a former chief marketing inspiration from innovation. An exclusive Q&A interview by Tim Manners. the late, great officer of Motorola, during late Geoffrey Frost. summer, 2005. It’s memorable partly 8 because, tragically, Geoffrey passed away within weeks of our conversation. But it’s more because he was so damn clear about what he saw coming. He was remarkably prescient when he referred to ROUNDTABLE his product as “the device formerly known as the cell phone.” He also suggested we should think about our Better Things business as “the industry formerly known as advertising.” Innovation just isn’t what it used to be. A discussion But my favorite part of the interview was when featuring Claudia Poccia of Avon mark, Jevin Eagle of Staples, Randy Carlson of Diageo, and Geoffrey talked about the famous William Gibson Jim Porçarelli of Active International. quote: “The future has already arrived; it’s just not evenly distributed.” As Geoffrey explained, “What he’s saying is that 16 there are people of the future, already here, walking among us. If you can figure out who they are and co-create with them, you’re actually doing a rather amazing job of not only anticipating, but also shaping W H I T E PA P E R where the world can go.” It’s a new year, and a new decade. What’s new, for Map the Gap you, in the industry formerly known as advertising? Winning at retail requires innovation across Where’s it all headed? bundles of brand benefits. By Vinit Doshi. Tim Manners tim@hubmagazine.com

Editor-in-Chief Tim Manners Senior Editors Peter F. Eder Jane Harris ALSO Managing Publisher Joseph McMahon 5 Art Director COOL NEWS Julie Manners Consumer Intelligence, Twittovation, Keds Collective, Little Nike, Design Concept Here/Nau/NYC and Full Yield. Alexander Isley Inc. Illustrator John S. Dykes 12 R ESEARCH R EPORT The New Super | What makes a supermarket innovative? An executive summary of a Reveries.com survey. Circulation Director Bertha Rosenberg Brain Trust Active International Arc Worldwide 14 S U RV E Y A NA LY S I S Supermarket Savvy | Innovative supermarkets tap into emotional and functional desires. By Randi Moore. Catapult Marketing EURO RSCG Discovery 20 Henry Rak Consulting Partners E SSAY Hoyt & Company Insight Out of Chaos Popping for Shoppers | The “pop-up” trend is driving retail innovation. Landor Associates By Beth Ann Kaminkow. McGuinn.com Marketing Drive Mars Advertising Triad Digital Media TracyLocke WomanWise 27 W H I T E PA P E R The Shopper Aperture | Let’s put a new lens on the future of shopper marketing. By Anne Howe. Hub Club PMA RPM Connect Upshot 30 W H I T E PA P E R The “We” Decade | Creating community and higher purpose will elevate our brands in the 2010s. By Dori Molitor. The Hub David X. Manners Co. 107 Post Road East Westport, CT 06880 34 W H I T E PA P E R Smooth Selling | Integrated Selling drives bottom-line sales and better brand performance. By Paul Kramer. 203-227-7060 ext. 227 hub@hubmagazine.com n Brought to you by the editors of Reveries. com and Cool News of the Day, The Hub magazine is dedicated to exploring insights, 36 R ESEARCH R EPORT The Socialized Shopper | New research shows how social media is changing shopping behavior. By Mark Renshaw. ideas and innovation as the ultimate drivers of business success. n Published bi-monthly since July 2004, The Hub’s circulation is exclusive to Reveries’ proprietary database of 40 E SSAY Beauty in Virtue | Luxury brands can make us look (and feel) truly good. By Cable Daniel-Dreyfus. approximately 3,500 senior-level, client- side executives in Fortune 1000 marketing 42 departments and major ad agencies. COOL BOOKS n Advertising: For more information on The Hub’s collaborative sponsorship and Makers, Think Twice and Start-Up Nation. advertising opportunities, please contact Joseph McMahon (joseph@hubmagazine. com) or 845-238-3516.

COOL NE W S Consumer Intelligence Keds Collective The defense industry has a long history of feeding innovations to consumer markets — the Keds is engaged in a “wholesale internet, satellite navigation systems and the computer itself originated as military projects, business-model change” in which its for instance. consumers not only design footwear, but can also sell it. “Marketing has Now, the consumer-electronics industry is returning the favor. For example, the U.S. Air evolved into a conversation with Force just ordered some 2,200 Sony PlayStation 3 videogame consoles, which it will use as the consumers,” says Kristin Kohler “building-blocks of a supercomputer.” Burrows, president of Keds. Meanwhile, in Iraq and Afghanistan, soldiers “are using Apple iPods and iPhones to run To keep that conversation going, translation software and calculate bullet trajectories. Xbox videogame controllers have Keds has launched a site, called Keds been modified to control reconnaissance robots and drone aircraft.” Collective, where consumers can This is occurring because the military spends “only a small fraction” of its $1.5 trillion choose from a palette or upload their budget on electronics, leaving it outspent on R&D by the consumer-electronics industry. own design elements. Electronics firms are also able to “move much faster than the slow, If Keds likes a design, it makes a deal multi-year grind of military procurement programs ... And with the consumer, who receives the emergence of open-standards and open-source a 10 percent cut on any sales. The software make it easier to re-purpose off-the-shelf shoes can either be ordered online by technologies or combine them in novel ways.” consumers or stocked by retailers for Leaving such innovations to the private sector sale in stores. meanwhile enables the military to “focus their So far, this hasn’t exactly made spending on the development of new technologies, anyone rich, but that’s not the point. rather than reinventing the wheel.” “I’m totally thrilled,” says Jeriana [S o u r c e : The Economist, 12/12/09] San Juan, who has “sold six pairs of Keds with her designs.” For Keds, its all about turning Twittovation “custom sneakers into an advertising juggernaut when the designers ... proudly holler about them from the “Twitter’s smart enough, or lucky rooftops of the internet.” Jeriana, enough, to say, ‘Gee, let’s not try to for instance, “has posted her Keds compete with our users ... let’s outsource designs on Facebook and is adding a design to them,’” says Eric von Hippel, Keds link to her website.” author of Democratizing Innovation. Similarly, Nike not only publishes Twitter CEO Evan Williams agrees: a “gallery” of consumer designs “Most companies or services on the web on NikeiD, but also provides start with wrong assumptions about what they “convenient icons to click to ‘share’ are and what they’re for,” he says. “Twitter struck an interesting balance of flexibility them on Twitter, Facebook and and malleability that allowed users to invent uses for it that weren’t anticipated.” MySpace.” Among other things, Twitter users invented the idea of putting the @ symbol before their Champion, meanwhile, asked its user names (e.g., @cool_news). They also picked up the idea of using the # symbol to “consumers to design hoodies and categorize topics — another innovation Twitter initially resisted. submit them for votes.” Darren Paul The # idea came from open-source advocate, @chrismessina, who says Twitter thought of Night Agency, the social-media the # concept was too nerdy for mass appeal. Well, now Twitter “hyperlinks the hash consultancy that helped create the tags so readers can click and see all the other posts on a topic.” Keds Collective, comments: “People feel much more connected to the Evan Williams says Twitter’s plan is to keep following its followers. “You get a bunch brand because they’re part of the of users interacting and it’s hard to predict what they’re going to do,” he says. “We say, advertising, in reality.” ‘Why are people using this and how could we make that better?’” [S o u r c e : Christina Binkley, [Source: Claire Cain Miller, The New York Times, 10/26/09] The Wall Street Journal, 12/10/09] Cool News of the Day, a daily e-mail newsletter of marketing insights, ideas and inspiration, is edited by TIM MANNERS. For a free subscription, visit www.reveries.com

COOL NE W S W S COOL NE Little Nike Mark Parker thinks acting smaller will help Nike grow bigger. It’s not as though Nike, now 37 years old, is having any problems growing; its “stock is up 50 percent over the past five years while the S&P 500 is down 7.7 percent.” According to Interbrand, Nike’s brand value “has jumped from 31st to 26th” in the four years since Mark assumed leadership at the company. Despite this, Mark sees the Nike brand as something of a liability, particularly among younger consumers in action-sports categories. Jeanne Jackson, president of Nike’s retail division agrees: “Kids think it’s cool not to have a big, hairy name over the store,” she says. And so Nike’s latest retail venture not only doesn’t carry the Nike name, it has no name at all. Instead, the action-sports store, dedicated to skateboarding and snowboarding, simply displays the logos of “its three key brands at the entrance: Hurley, Converse and 6.0 (an action sports line that does have a Swoosh on it).” “The hardest thing for a company to do is to change when it doesn’t seem like change is necessary,” says Mark. One thing that hasn’t changed is Nike’s connections with celebrity athletes. “We always want to be connected with the world’s top athletes,” says Mark, himself a distance runner. “Our relationships with athletes fuel the innovations,” he says. And, of course, there’s China, where Nike invested some $1.5 billion in 2009, and may invest even more in the year ahead. “No matter how much you’re investing there, it’s not enough,” says Mark. [S o u r c e : Bruce Horovitz, USA Today, 12/7/09] Here/Nau/NYC Full Yield Jean-Pierre Veillet is creating a pop-up boutique “using materials ... “We need to put food back in the heart of health care,” says Zoe almost entirely rooted in New York City’s waste stream.” Finch Totten, chief executive of Full Yield. “It’s the cheapest way to deal with health and the simplest, and definitely the most This includes “fallen tree limbs found on the street, timber and pleasurable,” she adds. metal pipes from derelict Brooklyn factories and piles of discarded cardboard boxes — so that when the store closes, at least the Zoe’s focus is on the way people eat in the workplace. Her solution garbage won’t be new.” is a branded “12-month nutritional program” that’s designed to “take the guesswork out of what constitutes a healthy diet” and The boutique is called Here/Nau/NYC and naturally “will carry help reduce health-care costs. products from several environmentally minded companies, including shoes from Timberland and Toms, organic dresses and The Full Yield menu features “fresh items made with natural, whole sweaters from Stewart + Brown, bags made of recycled truck tarps ingredients” and “will be sold in corporate cafeterias and in the from Freitag and the sleek, athletic designs of Nau.” prepared-foods section of local supermarkets” in the Boston area. John Hancock, the insurance company, is among Zoe’s first customers, And so Jean-Pierre is busy fashioning displays out of cardboard with some 300 of its employees adopting Full Yield next year. and trying to turn bubble-wrap into lampshades. He’s got clothes “hanging from a rolling rack made of old pipes, timber and Meals are priced at $6 to $7 a meal, and employees will receive mismatched wagon wheels.” His main worry, he says, “is that it “$100 worth of coupons that can be used in John Hancock’s could end up looking clunky and cheap.” cafeteria and at 18 local Roche Brothers grocery stores.” Gordon Seabury, who owns Nau, refers to Jean-Pierre’s approach as Full Yield plans to take various biometric measurements of “dumpster-diving” but is “confident that the resulting decor would Hancock participants throughout the year, and then “analyze the ultimately reflect the company’s approach to considered design.” data against insurance claims to gauge improvements in health.” [S o u r c e : Eric Wilson, The New York Times, 11/5/09] [S o u r c e : Melanie Warner, The New York Times, 11/29/09] Cool News of the Day, a daily e-mail newsletter of marketing insights, ideas and inspiration, is edited by TIM MANNERS. For a free subscription, visit www.reveries.com

95 | $10. 20 09 M ay /June de a s | of I ange Exch HUB �e HUB �e Excha nge o f Ide as | Se pt em ber/ Oc tobe r 2009 | $10 N E A Z I M A G M A G A Z I N E HUB Exchange o �e f I d e a s | July /Aug ust 2009 | $10.95 M A G A Z I N E THE HUB 12 TOP Shoppeng r Marketi ce Excellen D ay the s of New Cool and s .com ev erie of R ion bl icat A pu A pub li catio n of R ever ies.c om an d Coo l News of th e Da y A publicati on of Reve ries.com a nd Cool Ne ws of the Day Get the Hub! Keep up with marketing’s boldest and brightest. Subscribe today. It’s easy. Just visit: http://hubmagazine.com/subscribe

ROUNDTABL E Innovation just isn’t what it used to be. Better Things What are you trying up. Every single Staples store in always been that it’s not innovative the United States has easy-tech if it’s a solution in search of a to accomplish with technicians who can provide a free problem. The goal of innovation is innovation? tune-up of your PC. really to ferret out a keen insight, to deliver something that is Claudia Poccia: With new products, A product innovation is our Mailmate needed, wanted or lacking. we constantly challenge ourselves Shredder. Our customers were to look outside of the cosmetic opening their mail in their kitchens The word “innovation” clearly is industry into the broader landscape but their shredders were in their overused. So many people use it of change. We try to leverage offices. So, we made a shredder as “give me something different inspiration across the convergence that’s just perfect for the kitchen. to save me for six months” or of media, technology and other There are many more examples of “something different for the sake of A product forms. solving problems for customers being different,” so that I can say R oundtAble We also engage with our customer embedded in our culture. that I have fostered innovation. F eAtuRing or representative because, for the Claudia Poccia most part, she is one and the same. We try to leverage inspiration across That’s why bringing our product Avon mark to her, where she lives, and where the convergence of media, technology Jevin Eagle she’s most receptive to receiving and other product forms. Staples our message, is so important. C L Au DI A P o C C I A Randy Carlson We bring direct selling into the Diageo digital age through social media and other nascent technologies. We’re Randy Carlson: The goal of But innovation really is about Jim Porçarelli going to her in a place where she’s innovation should be to bring new paying attention and looking for Active International open to receiving our message and ways to delight consumers that are sometimes the simplest things that engaging with our brand. relevant for them. For Diageo, and solve the issue in a way that no one a lot of mature businesses, maybe else has done before. Jevin Eagle: At Staples, the goal that’s more “renovation” than of innovation is to provide customers with value, product or an experience “innovation,” but it’s really about How do you create a breathing new life into our brands. that solves a problem or helps make culture of innovation? their lives easier. That’s the link Some people look at innovation between the customer, the innova- as inventing the un-invented. But Poccia: Talent is the key ingredient tion, Staples and its shareholders. our obligation, as companies, is to to creating a culture of innovation. deliver business results. Inventing If you have a team of forward- For example, we offer free delivery the un-invented is a nice, long- thinking individuals who can that, in almost all cases, arrives term aspiration, but innovation had look at things with a fresh, new the next day. That would be an better create revenues and profits. lens, it creates an environment experience innovation. A service that fosters innovation throughout innovation is our free PC tune- Jim Porçarelli: My mantra has 8 THE HUB JANUARY/FEBRUARY 2010

the company. High emotional Proven results are what get the organization intelligence is also paramount. gelled around innovation. You need people with great, cutting-edge ideas, but equally R A N Dy C A R L S oN important is a team that has the ability to initiate and execute You also need an element of In fact, she demands it. She inspires those ideas in a strategic manner. pragmatism. Rather than just us. She co-creates with us because It’s important to build a team of thinking about an idea, you need we’re both a brand and a channel. creative thinkers who reach for to go and do it and focus on results. So, whenever we ideate a product, the stars, but also keep one foot Otherwise, your innovation is not our favorite expression here is, firmly planted on the ground so going to have a long life. Proven “let’s take it to the Girl Lab.” That that everything aligns with the results are what get the organization means going to our consumer and business objective. gelled around innovation. our representative and engaging Eagle: We not only have a market her in the ideation and decision- Porçarelli: You have to give people research department at Staples, but making process up front. honest-to-goodness permission also groups of people who are not to fail. If people aren’t afraid of This co-creation partnership exactly in “market research,” but making mistakes, they are going enables us to bring forth products are constantly doing, testing and to come up with more and more that allow for our consumers’ and trying new things. For example, we creative and interesting ideas. representatives’ self-expression. So, have what we call our “usability she’s got a more immersive brand group.” Their job is to observe how You need people who say things that experience at a higher level of customers use things, either online you hadn’t thought of yourself. If emotional engagement with us. or in person. people are just repeating everything I already know, they are not right Eagle: I have a strong point-of-view At any given time, we have for my team. Leaders need to allow on this. We used to run a contest dozens of tests going on of either themselves to be challenged by at Staples called Invention Quest, new products, new ways to display their teams. where we asked customers and products or to develop offers. The employees to create new product culture when we go out into the Managers have a responsibility ideas. I’m so glad we did this — I field is the culture of listening, whenever someone comes to them was one of the judges — but I don’t whereas in traditional retail it’s with an idea — no matter how big think it was the most effective way a culture of telling. We have or how small — to sit with them to get insights because customers tremendous respect and awe for and help tweak the idea until it are not product developers. our store managers, and when works. It’s imperative to continue they give us ideas we take the conversation because it can A better way to get customers voracious notes. foster other ideas in other arenas engaged is for us to listen to them. that will solve bigger problems. How do you live your life? How do Carlson: Innovation really starts you work? How do you play? How at the top. There may be a heretic who’s trying to push innovations How should consumers do you use products today? That’s where the much bigger ideas come uphill, but heretics have a very be involved in the from. We listen, observe, and take low probability of getting anything innovation process? it from there. done without leadership support. Poccia: Bonding over beauty and Carlson: For us, the involvement Second, you need people who fashion fosters community and is three-tier, including consumers, believe in possibilities and are brings young women together. customers and distributors. If you willing to beat their heads against Because direct selling is inherently have a brokered sales organization, the wall. With innovation, you are participatory, it’s really natural for you should include them, as well. going to hear “no” a lot. You have us to engage with our customers It’s critical. to have people who are willing to work in that kind of environment and representatives to create a co- I personally find that the trade — and aren’t brought down by it. branding experience. including distributors and sales JANUARY/FEBRUARY 2010 THE HUB 9

organizations — has a kind of What is the most taking any money you make and “fingertip feel” for what’s right or applying it to lower prices, and wrong with your product offerings. innovative idea then focusing everything in your It’s a great thing to get that kind of you’ve seen? culture on leveraging scale to get feedback sooner than later. lower prices. I think Starbucks was Poccia: True innovators create the first to not require a signature On the other hand, your customers, products or services that customers at the register when you use your your consumers or the trade are not can personalize to meet their credit card. That was brilliant. going to come to you with the next, needs. I find TiVo fascinating. For big breakthrough idea. That’s just decades, all of us were happy to I do think that Staples’ ink not going to happen. So, hopefully view pre-determined and recycling program is breathtaking. that’s where the innovator’s thinking scheduled programming and then We give three dollars back for comes in. It’s really up to the out of the blue comes TiVo. every cartridge you bring back to innovator to identify the problem recycle. This meets the customer’s being solved, and how to solve it. Now we have the power to need for doing something good for decide when we want to watch the environment, while also giving Porçarelli: First of all, their this programming. This TV-by- them money for it. We’re going to involvement is about the due appointment culture has created a recycle more than 50 million ink diligence of the marketer. seismic shift in consumers. jet cartridges this year. There’s so much information and data available to us today, Something that we’ve done at mark Carlson: My favorite innovator but you need to understand the is a franchise called Hook Ups. Hook right now is Tesla Motors. attitudes, concerns and buying Ups are dual ended, customizable What Tesla has done is make a behaviors that are intrinsic to your makeup products for eyes, lips completely electric car using cell- consumers. So, don’t be afraid to and cheeks. We provide a wide phone battery technology. It’s the preview ideas with your audience. assortment of textures, tones and same kind of battery you have in product forms. The consumer can your Blackberry, just stacked up. Procter & Gamble had a wonderful put together over 2,000 combinations formula where every single brand and make it their own. That has They make a sports car that’s super light, looks a lot like the Lotus, and can go from zero to 60 mph in 3.9 seconds, with a 250- The culture when we go out into the field is mile range. It costs $100,000, but the culture of listening, whereas in traditional it is twice as efficient as a Prius. They are also making a 4-door retail it’s a culture of telling. sedan for 2011 delivery. J E v I N E AgL E What Tesla has done is turn the efficiency issue on its ear. They’re taking this notion of a car you had to set aside a little bit of its really gotten the industry’s attention want to be in and the right thing budget every year for testing — even because it puts creativity in the to be doing for the world, and though they knew that 80 percent of hands of the consumer. put them together. And they’ve the results may not give them an actually executed it. It’s brilliant! Eagle: With Amazon, one innovation insight worth acting on. But the was giving away shipping and Porçarelli: There’s a product other 20 percent was invaluable. As tying that to extremely low prices. called New Energy Solutions — it’s a result, they had the greatest insight Most business people would have this pad that you can put on your into the package-goods consumer. said “no” to that. Another innovation dresser, and it charges all of your While consumers generally don’t was buying back used books and electronic devices without having really know what they do want, then reselling them, which to plug them in. That really adds they pretty much know what they GameStop does with games. to your quality-of-life because don’t want. By knowing what to they’ve solved an everyday At Walmart, the innovation eliminate, it’s often a lot easier to problem. was Sam Walton’s concept of figure out what to offer. 10 THE HUB JANUARY/FEBRUARY 2010

T HOUGHT L E ADER S In a very different realm, there’s for us — if not at the moment, a technology in radiology called then over the life of customer. micro-bubbles that are injected There are plenty of things we do into the bloodstream to take better where we’re not maximizing profits “pictures” of a specific organ. - on a transaction basis, but we are The idea is that if you inject the on a customer basis. That’s the key. CLAUDIA POCCIA is global bubbles with chemotherapy, you president of mark, Avon’s trend might be able to treat cancer more For example, during back-to- beauty and fashion boutique brand, effectively. It’s still being tested, school season, we offered free where she is reinventing the direct but could have a huge impact. backpacks — 100 percent back in selling business model for the Staples rewards on any backpack. next generation by tapping into How do you Why did we do that? Not because the world of social media. measure the return we thought we were going to JEVIN EAGLE is executive vice make money that day. The on innovation? president of merchandising and innovation is in how we create marketing for Staples. Jevin was Poccia: R.O.I., at mark, means value for customers. It all comes a principal architect in developing “Return On Innovation.” It’s a back to our customer economics. the Staples brand promise to make buying office products easy. metric for success that has never Carlson: At Diageo, we have been more critical to the bottom business performance metrics line. We measure it through our that are attributed to innovation. RANDY CARLSON is global most important asset, and that’s the In fact, in our annual report, innovation director for Diageo. mark representative. That’s because half of our growth last year Previously with Ralston Purina, not only is she our consumer, but came from innovation. It’s a real Tropicana and PepsiCo, Randy has she’s also our retailer. a diverse perspective on common number. There’s real bookkeeping success factors for innovations So, for us, the innovation imperative and accounting associated with across marketplaces. is to deliver an entrepreneurial innovation that’s done both in platform to this representative aggregate and individually. JIM PORÇARELLI is chief strategy officer at Active International, a global marketing and business If people aren’t afraid of making mistakes, solutions firm. He can be reached at jporcare@activeinternational.com. they are going to come up with more and more creative and interesting ideas. J I M P oRç A R E L L I that reinvents direct selling for In a broader context, your return on innovation and reinventing them, and allows them to play on innovation requires short-term themselves. Is there a return on in a digital space through their metrics in addition to the long- innovation? You bet your life social networking platform. As term investments, and you have to there is, because innovation is the her engagement and connection roll them up together. If you start lifeblood of every business. through these platforms rises, so doing activity-based costing on each There’s a huge return because does her sales productivity. So, it individual innovation, there will innovation fosters innovation. generates organic growth. be more things you kill than you When someone comes up with an launch. When that happens, then Eagle: Innovation is all about the innovative idea it becomes almost somebody else invents the future. notion that if we do things for our addictive because as you begin to customers that meet their needs, Porçarelli: Without innovation, have success with innovation you they will reward us. Our underlying a company will begin to die. want to have more success, and more assumption is that doing good Great companies falter because innovations follow. Innovation is its things for customers is also good they didn’t put enough emphasis own impetus for greater innovation. n JANUARY/FEBRUARY 2010 THE HUB 11

RE SE ARCH REP ORT What makes a supermarket innovative? Where would shoppers most like to see innovation? Which supermarkets are most innovative? The New How innovative is the supermarket you shop most often? Conventional wisdom has it that many — if not most — supermarkets haven’t changed much Somewhat 55.0% for about 50 years. True, there’s more in the way of prepared meals. And the number of products Very 21.7% offered has grown. Store brands may have improved in quality, too. Not at all 17.1% But has the basic construct of aisles of ingredients really budged all that much? We put Extremely 6.3% this question to Reveries.com readers and the answer came back somewhere down the middle: A majority of 55 percent said the supermarket In which ways is your supermarket innovative? they shop most frequently is only “somewhat” (pick as many as apply) innovative. As one respondent put it: “It seems grocery Product Selection 54.3% retailers perceive innovation as being creative with inventory and don’t give enough consideration to Prepared Foods 46.6% environment and space.” The only area a majority deemed innovative Private Labels 38.9% was “product selection” (54 percent), followed by “prepared foods” (47 percent) and “private Store Layout 31.7% labels” (39 percent). However, in nine out of ten areas, survey Checkout 31.7% more in the way of innovation: product selection; respondents suggested they would like to see Customer Service 29.8% format/store layout; checkout; customer service; promotions; new services; online tools; and Promotions 17.3% displays. The only area shoppers indicated they Displays 17.3% are satisfied is “private labels.” Online shopping tools appear to be especially Online Tools 13.5% ripe for innovation, as an overwhelming majority of respondents (74 percent) said they do not use New Services 12.0% retailer websites. An even larger majority of 80 percent said they do not use “any other online planning tools for grocery shopping.” Some remarked that they weren’t aware that How important is a supermarket’s prices versus its such tools exist, while others confirmed that this innovations to you? may well be the case: “I wish I could get ads via my phone and use mobile coupons. I would also Somewhat 39.6% love to be able to upload coupons to my loyalty Very 37.1% card and not have to deal with paper coupons.” Frustrations were many, with crowded Extremely 18.3% stores and slow checkouts being the most frequently cited complaints. Others aimed their Not at all 5.0% ire at stores that rearrange aisles for no apparent reason: “Shuffling where categories are found, 12 THE HUB JANUARY/FEBRUARY 2010 THE HUB JANUARY/FEBRUARY 2010

Super Where would you most like to see innovation at your supermarket? (pick as many as apply) sometimes just from the right to the left are annoyances, not innovations.” Self-checkouts also received mixed reviews. others said they only benefit retailers. One Some said they liked the convenience while respondent had a similar complaint about store formats: “I’m tired of grocery stores being laid out to help the grocer and the vendors.” Product Selection 51.5% Overall, there was no shortage of suggestions on where supermarkets could improve in ways Store Layout 50.6% both big and small: Checkout 41.6% “ Why can’t grocery bakeries make good, healthful, preservative-free breads?” Prepared Foods 35.5% “ This business of forcing me up and down aisles and across the store to find the things I need is Customer Service 33.3% tiresome and makes me tired and angry.” Promotions 31.6% “ I wish I didn’t have to go to three different stores in order to supply our home.” New Services 31.6% “ So many carts with wheels that don’t work right!” Online Tools 29.9% Despite such grievances, a perhaps surprisingly large majority of 70 percent said they generally Displays 25.5% enjoy grocery shopping, especially discovering new items. And even though most do not consider Private Labels 15.2% their supermarkets to be innovative, a plurality of 43 percent felt their grocers were up-to-date. But as one respondent observed, the In general, do you enjoy grocery shopping? innovations of the future may well be rooted in the past: “I shop at a small, family-owned Yes 70.3% supermarket that prides itself on personal service. Another hinted that maybe it isn’t up to Its innovation is old-fashioned customer service.” No 29.7% supermarkets to be innovative at all: “Since I purchase groceries from three stores and one farmer’s market each month, maybe I’m the innovator.” Overall, which era does the supermarket at which you And this comment may provide the greatest usually shop most resemble? insight of all: “Here’s the deal, when money is 2000s 42.7% in short supply and entertainment dollars are small or non-existent, grocery shopping becomes 1990s 21.4% entertainment … When money is flowing and we can eat out more often and I’m cooking less, then 1980s 11.5% grocery shopping goes back to being a chore.” The supermarket picked at the number-one 2010s & beyond 10.7% most innovative? Whole Foods, followed by Trader Joe’s and Wegmans. Curiously, nowhere near as the supermarkets they shop most frequently. n 1970s 7.7% many respondents selected these same stores as 1950s 3.8% Complete survey results can be found at: 1960s 2.1% www.hubmagazine.com/survey/supermarkets JANUARY/FEBRUARY 2010 THE HUB 13 JANUARY/FEBRUARY 2010 THE HUB

SURVE Y ANALY S I S Supermarket Savvy T he latest Reveries.com survey asked a I m pl I c at I o n s : Improve navigation — beginning savvy shopping crowd whether today’s in the parking lot and continuing through the store supermarkets are innovative. What we and checkout. Create a shopper-centric store layout heard back was how shoppers want us to with intuitive assortments and adjacencies in an innovate today’s shopping experience. uncluttered environment. What do they want? Well, as one respondent Fix the broken carts. Smooth the checkout succinctly said, “I want it all.” And today, to get it all, experience — if not with technology with good, old shoppers go everywhere. fashioned, helpful, happy, engaged employees. When asked, our shoppers reported that they Relevant Rewards. This means delivering more patronize an average of three different supermarkets, than price incentives in a format that is relevant to making one or two trips per week. But that’s not today’s shoppers. It is about innovating both in terms the whole story. When we dig into where they are of content and delivery. It is about informing and shopping, we unearth an eclectic, channel-blurring motivating shoppers along their paths-to-purchase. I m pl I c at I o n s : Provide relevant, convenient rewards and tools that are customized to shoppers’ Innovative supermarkets tap into needs and localized to their markets. It is about consistently reinforcing that membership in retail emotional and functional desires. reward programs has privileges. To do this, retailers need to build in additional value and convenience. To help communicate, augment list that includes traditional supermarkets, specialty outbound retail email campaigns with innovative stores, club, mass and drug. product information, planning tools, recipes and a link to What drives them? From a functional perspective, coupons. Consider extending to mobile applications. shoppers want: From an emotional perspective, shoppers connect Product selection. Provide affordable, one-stop with retailers and brands that: shopping without sacrifices. This starts with providing Understand them by having the right assortment, quality produce — including both local and organic right offers and then something extra. Strive to choices. It extends to value-added product options, understand the cooking-shopping-nurturing connection with shoppers looking for specialty, gourmet and that drives both the function and emotion around prepared-foods offerings. many shopping trips. Don’t underestimate shopper I m pl I c at I o n s : Provide an array of quality products commitment to more sustainable and green solutions, that meet their needs and their wants to build baskets. even in a down economy. Be consistent in your product offerings and eliminate I m pl I c at I o n s : Understand your shoppers and the critical out-of-stocks that drive shoppers out of their preferences. Become a resource for more than your store. merchandise, and become a partner that helps provide Convenience. It’s not all about location, location, innovative solutions that entertain and nurture their location. It is about time: Get shoppers in, get them families. out — fast, with everything on their list. Provide them Engage them personally with communications with helpful and happy personal service. that inform and educate — before and during the 14 THE HUB JANUARY/FEBRUARY 2010

shopping trip. Shoppers are looking for information that provides ideas and inspiration. Ask them their opinions! Truly Super Markets I m pl I c at I o n s : Understand your shoppers’ paths- to-purchase and engage them along the way. Don’t In survey respondents’ own words, here’s what undervalue the role of personal service. Create simple, makes supermarkets super: relevant planning tools that integrate with how Whole Foods: Product Selection; Convenience they plan today. Engage them visually in-store with (Store Layout and Service); Engagement attractive displays and signage — remembering that (Communications and Causes). value is much more than price. Entertain them. Take the mundane out of the Trader Joes: Product Selection; Convenience shopping experience — make shopping an event. You (Checkout and Service); Entertainment have a live audience. Make it fun for them and for (Sampling and Surprises). family members in tow. Wegmans: Shopping Experience; Product I m pl I c at I o n s : Add music, demonstrations, Selection; Convenience (Layout and Signage); sampling, wine tastings, product specialists and good, Engagement (Communications, Causes, Recipes old-fashioned customer service to add a personal and Service); Entertainment (Sampling). element. Introduce them to new products and invite Tesco Fresh & Easy: Product Selection; them to explore. Convenience (Checkout Options and Layout); Success requires solutions that drive the mutual Engagement (Social Media). goals of both the retailer and the manufacturer. This means listening to the shopper and delivering against multiple shopper needs. Manufacturers need to find connecting points between their brands and the retailer. If your Build programs to deliver against shoppers’ product benefit is about convenience or speed, partner multiple needs. For example, when we create with retailers to deliver convenient solutions and programs that inform and educate (e.g., recipes, meal services. For example: This checkout or checker plans, activities, in home entertaining tips, healthy brought to you by Brand X. living guides, etc.) We show that we understand that If your product makes folks smile, sponsor an our shoppers are looking for ideas and solutions. employee recognition program that delivers improved When these ideas include complimentary (and customer service that engages shoppers and improves potentially private-label) products, we are building convenience. If your brand entertains, find a way to baskets in a way that leverages the retailer’s product bring that into store in a way that builds on both the selection. When we overlay incentives in a tips booklet, brand and retail platform. or through shopper targeting, we are providing relevant Listen to the voice of the shopper and understand rewards. the impact of changing shopper behavior. Irrespective By collaborating with retailers to develop in of any shortcomings, 70 percent of our survey store “solution centers” with attractive fixtures and respondents say they like shopping and discovering informative signage, we maximize convenience while new things. engaging shoppers. Add an educated, animated So, create events that encourage shoppers to go demonstrator, and we entertain the shopper, as well. on a “treasure hunt.” Purposefully drive consumers When we bring these elements together, we are on the throughout the store to fulfill their missions to discover road to true super marketing. n something new — it both engages and entertains. Shoppers are pre-planning as never before, but according to this survey 60 percent of them are RANDI MOORE is vice-president not using retail circulars and 74 percent are not and account director with leveraging retail websites. Marketing Drive. She leads the Engage consumers where they plan by integrating agency’s shopper-marketing into relevant online activities like popular cooking practice. Randi can be reached at randi.moore@marketingdrive.com. (Epicurious, Food Network) and couponing sites to build on planning behavior. JANUARY/FEBRUARY 2010 THE HUB 15

WHI T E PAPER Map the Gap By Vinit DoShi h e n r y r a k c o n S u l t i n g Pa r t n e r S T he real story behind the growth of store brands is less often about price gaps than the shrinking value gap between national and store brands. This narrowing value gap is real, and marketers anticipating an economic recovery to lift their sales in a “rising tide” effect are bound to be disappointed. Consumers are fundamentally changing their consumer behavior that holds as true today as ever: attitudes towards more conscientious consumption National brand manufacturers need to innovate across on matters of environment, health and value. The the entire value bundle that comprises the brand — heightened importance of value-for-money is leading positioning, product, packaging, pricing, etc. — in them to rethink their attitudes and behaviors order to deliver relevant benefits to the right targets in concerning the value of branded products and the a superior way and align with consumers’ needs and price premiums they are willing to pay for frequently desired benefits. consumed necessities. Mature markets demonstrate these principles of consumer preferences all the time. In the last five years, for example, marketers have successfully Winning at retail tapped into consumers’ health and wellness needs with a variety of innovatively-positioned and requires innovation precisely-targeted beverage products that promise to deliver specific functional benefits such as quick across bundles and lasting energy, meal replacement, or vegetable nutrition — often to selected targets during specific of brand benefits. parts of the day. These consumer preferences lead to consistent behaviors that collectively create markets organized The trend is further reinforced by better consumer around bundles of relevant benefits. This results in perception of store brands, backed by improvements product groupings that deliver primarily against one in the quality and range of these products (according of those benefit areas and compete closely with other to a recent study, 70 percent of millennial women products in the same group. perceive the quality of store brands to be “excellent”). Regardless of the market, price-value invariably This portends the potential continuation of store manifests itself somewhere in the structure, although brand sales and share growth, and a steep challenge the role of price-value relative to the role of brand to the growth of branded products. varies considerably across different markets. The To look for answers, we turn to a key principle of price-value dynamic depends on the importance and 16 THE HUB JANUARY/FEBRUARY 2010

types of consumer needs, nature of product usage, A market map provides a precise understanding role of trust and imagery in the category, the presence of how consumers are behaving, for what reasons, and strength of dominant brands and levels of and with what trade-offs. It is a proven platform for marketing and innovation. evaluating and predicting the impact of different Ultimately, however, the price-value relationship marketing strategies. As such, it is an essential depends on how well marketers have managed to define foundation for managing a brand to a better outcome. and deliver relevant benefits. In some cases, marketers Unfortunately, many organizations do not fully have created benefit-structured markets based on years appreciate or understand the power of a correct, of advertising, innovation, and effective positioning precise, and behaviorally-based understanding of against relevant functional and emotional benefits. their market. Too often, a brand’s competitive frame is In these situations, brands or brand groups play a based on category definitions, consumers’ opinions, or significant higher-order role in which they effectively a less-than-rigorous evaluation of consumer behavior. stand for and own key benefits to the exclusion of As a result, the hierarchy of benefits may be other brands. Store brands may play a smaller role — out of order, or the spheres of influence through existing but interacting in an undifferentiated way — which consumers make choices and trade-offs may or in a limited way that does not preclude the growth of be misrepresented. Managing a brand with a flawed branded players. The example of soy milk demonstrates understanding of the market is bound to inhibit or how branded products used precise positioning, even derail growth. marketing, and innovation to establish and own a value- So, the first challenge is to understand how the added position as a tasty, healthy, nutritious, dairy- market is organized, what your brands really compete free alternative to conventional milk, leaving behind with, and on what basis. After developing a precise, the commodity dynamics of the dairy milk category. behavior-based understanding of the market, you At the other extreme, markets that lack meaningful are ready to understand how to guide your brands differentiation of relevant benefits to consumers, to more advantageous positions of sustainable and significant marketing, and effective innovation, profitable growth. You can also identify and prioritize predictably degrade into attribute-driven markets in the most viable innovation opportunities among many which form, flavor, price-tiers, or easily replicable seemingly reasonable options. factors become the primary organizing principle of the market (for example, conventional dairy milk). Finding growth opportunities In such cases, national brands often play a The logical first place to look for growth is among weakened role in the structure, and store brands do your established brands in their current, competitive well as consumers reward the brands that deliver the frames-of-reference. In some cases, a brand may have only differentiating benefit of relevance — price-value. significant upside potential in terms of consumer Most markets fall into a continuum between these behavior that can be accessed. Well-differentiated extremes in which many national brands are fighting a brands often find that their strong loyalty puts them losing battle, struggling to stem losses or eke out small in the enviable position of being able to bring in new gains. Some are dealing with the added burden of budget buyers or increase usage simply by increasing media cuts and cost reductions that affect product quality. spending. All the while, store brands are racking up growth. More often than not, however, brands have not Fortunately, the picture is not all gloom-and-doom fully optimized their potential from a positioning for marketers of national brands. If they are committed standpoint. Many brands may be competing in an to understanding and leveraging the principles of undifferentiated way with other brands, representing consumer preferences and benefit-structured markets, the same benefits to the same consumers in more or they have good reason for optimism. In a previous less similar ways. issue of The Hub, my colleague Eric Greifenberger Insights based on the market map can provide introduced the concept of a market map (see: Map the a breakthrough understanding of how to deliver the Market, July/August, 2009). functional and emotional benefits of a market in a JANUARY/FEBRUARY 2010 THE HUB 17

Concentric spheres of competitive interaction illustrate the range of competition from close-in to furthest-out Fruit-flavor All flavors of Desserts/ Desserts in other Ice Cream Ice Cream Sweet treats situations S o u r c e : Henry Rak Consulting Partners more compelling, effective or different way. Or, it differentiated itself as a high-quality, more effective can show how to expand the benefit appeal to more laundry care product. Chanel owns a certain mystique consumers, or across more occasions. in perfumes and luxury accessories. Victoria’s Secret In recent years, some brands have leveraged and Starbucks have come to stand for distinct benefits consumer trends by emphasizing the simplicity and to selected consumers that allow each to transcend the freshness of their ingredients to consumers who are products themselves to own an experience. most motivated by health and wellness. One particular An integrated view of the market with consumer brand of lunch and dinner products has done well by needs and usage behaviors can also help identify elevating its appeal from basic product attributes to a emerging opportunities to meet unaddressed or sharper connection with old-world Italian sentiments. unknown needs. The bigger and further out the idea, In other cases, positioning a brand to bridge multiple the more likely it is to require significant product benefits has proven effective in improving relative innovation. The process begins by examining the value perceptions versus store brands. different needs that people experience across occasions A market map represents “concentric spheres and their satisfaction with the current solutions, all of of consumer interaction,” in which each sphere which helps identify problem areas and gaps. represents gradually broader sets of needs being met For example, the basic “hydration” benefit of by a wider array of competitors (see chart). In this beverages has been redefined and segmented to meet sense, a brand can look for growth by extending its different nuances of the basic need, including portable positioning to stand for something bigger and broader. hydration for everyone/everywhere/anytime (bottled Taken to its logical conclusion, such brands can water), hydration with replenishment (isotonics), begin to own a “benefit platform” to a sufficiently hydration with nutritional benefits (vitamin and distinct degree that they command greater loyalty and enhanced waters), and so forth. source volume from brands in other segments of a Exploiting the sufficiently large and viable white- market. This is known as “partitioning the market.” spaces can sometimes provide more significant and A brand that has partitioned the market is sustainable growth opportunities than battling for characterized not only by strong market-share, but share within crowded areas of the market. Effective also by strong loyalty and a price premium. Tide has innovation requires brands to extend their positioning 18 THE HUB JANUARY/FEBRUARY 2010

platforms and equities to reach further out (or develop competitive frame includes Subway and Quiznos, new brands), secure larger marketing budgets, and then product testing on that brand should include manage to a longer-term investment horizon. the sandwich chains’ products. Following that, An effective portfolio plan that balances risks simulating the trade-offs between different levels of and rewards by optimizing the shorter-term and product positioning, quality, pricing, and margins can longer-term opportunities of established brands and provide management a quantitative range of options to innovation simultaneously, can enjoy significant factually determine what size business is most viable competitive advantages and drive sustainable growth. from a total perspective of volume, revenue and margin. Drive ROI at the Expense of Growth. Optimizing Av o i d Q u i c k F i x e s the marketing mix is a powerful way to understand the Having examined some examples of how to drivers of the business, to quantify what works and use the market map to one’s advantage, it is equally what doesn’t, and to evaluate the mix of tactics and important to note some principles of what not to do, campaigns. However, when used in an isolated fashion or what to avoid as singular quick-fixes. to reduce costs or improve ROI without effective growth Fight Fire with Fire. The temptation to fight strategies to guide the decisions, such “optimization” store brand growth by “right-pricing” the brand, or does nothing more than facilitate a more efficient increasing price promotion, may yield short-term deterioration of the brand (using proven tactics to do it!). relief. However, unless the brand aspires to become Of course, continuous improvement in execution just like a store brand, this is unlikely to drive is important, but effective marketers seldom use the profitable, long-term growth. It may even focus the efficiencies only to cut costs, reduce risk, or make brand on fighting an unwinnable battle in the wrong minor corrections to the mix. Effective marketers part of the competitive frame. use it primarily to fund their most promising top-line That said, pricing and promotion clearly play growth strategies — and to do it smarter along the way. critical roles in the overall marketing mix. Our ••• recommendation is to simulate and test pricing and promotion strategies. This should be done as part of a Marketers need a precise, fact-based understanding comprehensive growth strategy in which these levers of the market to determine the linkage between consumer play a precise supporting role to the main storyline of needs, benefits and behaviors. Knowing the basis of a consumer benefit-centered strategy. competition is critical, not only against store brands, Undermine Product Effectiveness. Every but against the entire relevant frame of reference. promising strategy is ultimately predicated on the A market map is a dynamic reflection of the ever- assumption that the product must deliver on consumer changing ways that consumers prioritize needs and expectations. Reducing costs to improve margin can organize behavior. With this knowledge, the marketer be risky. For some brands, years of small, seemingly will understand the benefits a brand should reasonably innocuous cost reductions affecting ingredients, strive to own through positioning and innovation. packaging, amount, and quality have compounded Markets can be changed by the actions or inactions themselves into noticeable changes in overall product of marketers — to the benefit of some brands and the appeal. It is clear that the growth of store brands detriment of others. Only the fittest will survive. n in several categories is due to years of gradual cost reductions by the branded products. Without meaningful product differentiation VINIT DOSHI is a principal with Henry versus store brands, justifying a price advantage Rak Consulting Partners, a growth- becomes difficult for a branded product. For this strategy consulting firm. Vinit can be reason, we recommend testing for relative product reached at vdoshi@hrcpinsights.com preference in the context of a brand’s full competitive or (203) 540-5524. To learn more about HRCP, visit www.hrcpinsights.com. frame-of-reference. For example, if a frozen sandwich brand’s true JANUARY/FEBRUARY 2010 THE HUB 19

E S S AY Poppingfor Shoppers I t’s the virtual opposite of Amazon and eBay, They did it by adding experiential areas and but “pop-up retail” has become a pop-culture services: Make-up counters began to offer more shopping phenomenon as immediate, makeovers and demonstrations, and brow-bars innovative and provocative as anything online. sprang up, as well as celebrity-branded product areas Pop-up retail fits perfectly with the complete with videos to aid the imagination. The Entertainment Economy, the Experience Economy, lifespan of such stores-within-the-store varied from the Surprise Economy, and other trendsetting labels temporary, to brief, to permanent fixture. defining 21st century shopping. VH1’s Pop-up Video is an important — and Nothing quite captures the fun of bargain hunting successful — metaphor here. The show cleverly drew at Filene’s Basement or treasure hunting at Costco new attention to the already familiar MTV music the way the recent pop-up stores do. Surprising video. The visuals took the form of “bubbles” that consumers — creatively and pleasantly — with popped up during a music video containing trivia and temporary brand “performances” and exclusivity has wry witticisms. made “pop-ups” a terrific platform for gutsy brands The format later inspired viewer input, with and adventuresome merchants. comments from the television audience, and truly made watching music videos an interactive, engaging experience. You couldn’t look at music videos again The “pop-up” trend is without thinking of their “pop-up-ability.” The combined driving retail innovation. sense of surprise, of inviting you to become a participant and seeing the familiar in a new way is at the heart of this powerful pop-up trend. The essential ingredients of pop-up stores have We have seen pop-up promotions show-up in city been around since the soukh. International bazaars centers, train stations and parking lots of traditional and urban markets filled to the brim with stalls stores. Essentially, they appear in any potentially selling or bartering assortments make even the high-traffic area with the hopes of disrupting normal poorest areas feel rich with goods. Farmer’s markets routines with captivating offers, demonstrations or or pop-up farm stands make roadside stops a must for limited-time-only distribution. the freshest tomatoes, corn and jams. Pop-ups may be one of the best ways to target As if megamalls didn’t offer enough choice, a niche audience — college campuses or bringing specialty carts lining the corridors with items urban brands to a rural area. These promotions are truly differentiated from the big, retail chains particularly useful to educate consumers and drive surrounding them became a new norm. A generation trial (e.g., the Alli pop-up); to hear from consumers ago, supermarkets “popped” into fuller service before an idea solidifies into a brand (1969 Gap Jeans); environments with flower shops, coffee shops and and to cause a spectacle to drive buzz or publicity wine sellers. Desperate department stores refreshed (Charmin’s “Enjoy the Go”). their floors to draw a new generation of shoppers. When applied as part of the marketing mix, the 20 THE HUB JANUARY/FEBRUARY 2010

pop-up concept forces you to think through what The quintessentially British store — Liberty — creates an innovative, worthwhile investment. While refreshingly incorporated a pop-up Hermes shop, there is potential to generate sales, the real value in selling a collaborative range of traditional and updated this type of retail that occupies a location for a short designs. The space went beyond the merchandise to duration (1-30 days) is promotional and creates hype, offer education: hosting workshops to show people how coolness factor and a sense of urgency or intrigue. to loop, tie and knot the signature scarf in novel ways. This delights consumers who are increasingly The vibrant environment emphasized an apparent used to “massclusivity” and “planned spontaneity” strategy for making Liberty once more the chosen behind so many viral and buzz campaigns. Brands resort of the artistic shopper. This pop-up experience from Gucci to Kidrobot — and even retailers like Target gave two old, established brands a chance to reinvent. and Uniqlo — have used pop-up stores to launch new It kept the customer’s curiosity alive and enticed new lines as well as generate buzz. ones in a cost-effective collaboration for brand and They’ve used pop-ups to integrate and align brand retailer alike. positioning and shopper-marketing efforts. Even Personally, I’ve always been one to search for Walmart — the global retailer that defines economy of special items in small runs or one-of-a-kind pieces. branding scale — adopted this concept when it offered a For me, pop-ups feed that same desire for discovering two-day-only exposure of its new fashion line, Metro 7, things not everybody knows about. The idea of little in a Fashion Cabana in Miami’s South Beach district. surprises inserted into the shopping monoculture is Like iPhones and Blackberries, pop-up retail can exciting and important. Successful little surprises also have the power of mobility. In May and June 2009, can translate into surprisingly large margins. Brands, Gap kicked off a ’60s style tour, using a school bus retailers and their consumers can all win. as a traveling pop-up store. Instead of seats, the bus Make no mistake: Pulling together a successful sported shelves filled with T-shirts, flip-flops, and beach pop-up is hard work. The payoffs are worth it, hats that people bought and paid for at a cash register however. From individual designers teaming up, near the driver’s seat. The Gap’s pop-up tour helped to real-estate agents making better use of vacant rejuvenate a tired brand with energetic outreach. properties, to big brands looking to add a bit of agile Seasonal pop-up stores have become a cliché in ‘cool’ to their otherwise fixed locations and massive many malls. But how about brands “owning” a season flagship stores: Pop-up retail can be platforms, not in an unseasonable way? Altoids’s “Curious and Original just one-off techniques. Chocolate Shop” opened for six days in February, 2007. Don’t ignore the dozens of online pure-plays The pop-up was promoted as an “anti-Valentine’s dying to get a bit of offline visibility. Why not an day shop” for those exhausted by the unrestrained Amazon.com or Zappos pop-up store? Even iTunes sentimentality of Valentine’s Day. The tremendous online could pull off an interesting pop-up experience. traffic compensated for the limited physical foot-traffic. Should that be in an Apple Store? A Best Buy? A Seasonal pop-ups also keep traditional retailers Walmart? A 7-11? Or a college campus, airport, competitively alert to how they will continuously subway station…? innovate their holiday merchandise and merchandising. “Here today gone tomorrow” doesn’t have to be Pop-ups are as important to retailers as competitive a term of derision. It can — and should — announce threats as they are opportunities for merchandising “innovation” and “profit” whether you are a retailer, a innovation. manufacturer or an agency. And, by the way, pop-ups My favorite pop-up innovation practice is rooted also build brands. n in the bursting of the real-estate bubble. Many store fronts on popular streets and off-the-beaten trail neighborhoods are empty. Mayors across the country BETH ANN KAMINKOW is president and have jumped on the “when you’ve got a lemon, make chief operating officer of TracyLocke. A strong advocate of insights-inspired lemonade” bandwagon by inviting artists, designers marketing programs, she is a pioneer in and entrepreneurs to inhabit these spaces. The strategic-planning research methodolo- overarching problem isn’t solved, of course, but giving gies. Contact: bethann.kaminkow@ life and economic dynamism to empty spaces during tracylocke.com or (203) 857-7616. difficult times is significant. JANUARY/FEBRUARY 2010 THE HUB 21

COVER S TORY Positively F Safeway or nineteen years, Diane Dietz was all smiles, but now she’s all aisles. A little over a year ago, having refreshed the Crest brand and revived Procter & Gamble’s oral-care business, Diane joined Safeway with an eye toward reinvention of the grocery business. It was an auspicious move, given Safeway’s long history of innovation. Back in the 1930s, Safeway pioneered selling produce by the pound, the use of expiration dates and nutritional labels. It actually was one of the first supermarkets to have its own parking lots. More recently, in 2003, Safeway embarked on a multi-billion dollar overhaul of its shopping experience with the launch of its now-famous Lifestyle stores. The lights became softer, the colors warmer, the feeling friendlier and the message crystal-clear: Shopping at Safeway is about living a healthier and happier life. As far as Diane is concerned, it’s all very simple: “It really goes back to understanding what your shoppers are looking for,” she says. “We can be as efficient as possible, but that’s not what that shopper wants.” What the shopper wants, says Diane, are “simple meal ingredients, a great shopping environment, great service, excellent quality products and innovative solutions.” All of that, and an emotional connection, too: “We’re in the food business and that involves family, friends, holidays and special times,” she explains. “So, we’re focused on how to make grocery shopping an inspirational part of daily life.” For Diane, who majored in economics and marketing, retail seems the perfect place to discover what’s next. As she points out, “Marketing and retail are a combination of analytics and creative, using both the left and right brain. You have the creative aspect, but then you also have so much data to support your decision-making.” 22 THE HUB JANUARY/FEBRUARY 2010

Safeway chief marketing officer Diane Dietz gets inspiration from innovation. What is the most innovative thing the creative aspects of being in the store and putting happening right now at Safeway? things together and experimenting to be fun. There are all so many great departments in There are so many different innovative things, our store — from the bakery to the deli to our meal but I’ll take one innovation that came out in the last solutions. So, every time I shop, there are new things year or so: Bright Green. That’s a line of products that that I’m excited to bring home. goes across multiple categories and is much better for the environment. But we have such a wide array of Is there anything you hate consumer targets we try to please that there are many about grocery shopping? innovative things happening. It’s not a problem at Safeway, but the only thing Is there a typical Safeway shopper? I don’t like is if I can’t find what I want. Any shopper will tell you that if they make a special trip and you There is not one typical shopper; it varies quite don’t have what they want — that’s not good. a bit by store. We definitely have profiles based on You can be a really innovative company, but it’s the store and we do a lot of research in this area, but the simple things that make the biggest difference. there’s really not one Safeway shopper. If the shelves aren’t stocked, or you don’t have the What’s the best way to right product — or someone in the chain-of-command get at shopper insights? decided to eliminate something that’s very important to our shoppers — that’s a problem. What I prefer to do is be in the store asking shoppers questions, shopping along with them and How would you like shoppers to feel gaining insight straight from them. They’ll tell you while they’re shopping at Safeway? how they feel and whether it’s good or bad. There are two words that come to mind when I How directly should shoppers be think about what we want consumers to feel when involved in the innovation process? they’re in our stores: one is “understood” and the other is “smart.” Very, very, very involved. From an experience If you understand your consumers, you understand standpoint, I can only walk in the shoes of Diane. what’s happening in their lives and what they need. So, it’s very hard for me to know what it’s like to be The “smart” aspect is that we really focus on high- walking down the aisle and having two kids pulling quality products, world-class innovation and a great at me to go down different aisles. But I’ll find this out shopping experience. soon since I’m expecting my first child! What roles do Safeway’s Congratulations! store brands play in that? Thank you! But I have to try to walk in the shoes Private label has changed dramatically. Safeway’s of that consumer to understand how to make the private labels are not just about low-cost versions of experience better for her. The only way to do that is to national brands. They go to things that we think are stay close every step of the way with the shopper and most important. the consumer. For example, our O Organics brand is about What do you love most health, wellness and high quality. And that’s not a about grocery shopping? low-cost version of a national brand. It was created before I was here, but O Organics is a truly inspiring I just like to see all the different new items that private-label business. we have in our stores. I like to cook, so I always find JANUARY/FEBRUARY 2010 THE HUB 23

In light of that, are national brands we each have a different target consumer and need as relevant as they used to be? different things. Yes, because there’s a role for both. National Is “shopper marketing” here to stay? brands are very relevant. But the days of launching I think it is very real and it is here to stay. I’ve new products that don’t work and that retailers take read statistics that say that shopper-marketing spending the time to put on our shelves and market — are gone. has increased faster than internet advertising spending. Packaged-goods companies have to be very cognizant It makes sense to me that this should be a huge focus of their mix of brands, their pricing and staying for retailers and packaged-goods companies because relevant to the consumer. the old model of “big TV” is changing. What is your best advice for a We know that many purchase decisions are made packaged-goods marketer today? right at the store shelf. The best packaged-goods companies and retailers will figure out how to market It’s in a few areas. One — and this comes from 19 messaging and educate consumers on products. That’s years at Procter & Gamble and a Safeway culture that a huge area of focus for us. reinforces it — the consumer and the shopper usually have the answer. So, the packaged-goods companies How do things look different I’m most impressed with have a very deep knowledge from the retailer’s side? and understanding of their shoppers. When I was at Procter & Gamble, I worked a mile So, when those packaged-goods companies deep in a few categories; my focus was on the mouth present innovations, we’re excited because we know and the smile. I was definitely a mile deep on our they have that depth of knowledge and we know that innovation, manufacturing and product design. It was it’s a consumer-based idea. Many innovations fail all around our promise of healthy, beautiful smiles because you’re not close enough to what the consumer for life. So, I was always looking at how to get to that really wants. It might be science-based innovation, perfect smile for our consumers. but it is not consumer-based innovation. At Safeway, I’m working across many, many The second thing is, we look to our packaged- different categories. I might be in a meeting today on goods vendors as partners. And the companies where wine and there might be a discussion in two hours we have the best relationship are those that are truly about pharmacy. So, I’ve had to learn a lot more about trying to do what’s best for us. When they are truly a lot of different categories — many categories that I approaching it from the standpoint that we’re in this didn’t work in before. together, with common objectives and measures, I now also have the ability to get with our that’s a great scenario. consumers or shoppers at any time. My ability to be What gets in the way of that? very close to our shoppers is a great part of the retail experience because when you ask shoppers in the When it comes to product innovation, one store what they like and don’t like, you’re going to problem is that retail might be the last thing that hear about it. I find that to be very refreshing. packaged-goods companies consider. There is still We also have the ability to test and learn very much more focus on the 30-second TV commercial, on quickly. When you’re working on the packaged-goods the naming of the product and product design. side, you often have very long-term horizons to make But often there’s not a ton of time or energy spent new products and test things. But at Safeway, you can on the in-store marketing, and the ability of that package have an idea in the morning and test it in the store at the retail shelf to sell itself without a 30-second ad. that afternoon. The ability to get real-time data is also Retail must not be the last element of the marketing very refreshing. plan; it’s got to be a critical element of the marketing plan. So, marketing, sales and R&D folks at the How is technology changing packaged-goods companies need to understand retail. the shopping experience? They need to understand the difference between In two areas: information and speed. Technology the channels and each different retail banner, because changes the ability for shoppers to have a lot more 24 THE HUB JANUARY/FEBRUARY 2010 THE HUB JANUARY/FEBRUARY 2010

Healthy Measures A t Safeway, we are building a culture of for healthier living: Employees are tested for health and fitness, writes Safeway’s chief “tobacco use, healthy weight, blood pressure and executive, Steve Burd, in the Wall Street cholesterol levels.” Journal (6/12/09). In 2005, he explains, Safeway Those who pass all four tests earn a “$780 discount introduced its own version of health-care reform that on their insurance premiums for individuals and capitalized on “two key insights.” $1,560 for families.” The program is voluntary, but One insight “is that 70 percent of all health-care over the past four years, it has held Safeway’s health- costs are the direct result of behavior.” The other care costs flat, “while most American companies’ “is that 74 percent of all costs are confined to four costs have increased 38 percent.” chronic conditions (cardiovascular disease, cancer, Even more important, Safeway’s “obesity and smoking diabetes and obesity).” rates are roughly 70 percent of the national average.” The thing is that “80 percent of cardiovascular Steve concludes: “By our calculation, if the nation disease and diabetes is preventable, 60 percent of had adopted our approach in 2005, the nation’s direct cancers are preventable and more than 90 percent of health-care bill would be $550 billion less than it obesity is preventable.” is today … The implication is that we can achieve So, Safeway’s “Healthy Measures” insurance program health-care reform with universal coverage and for its employees simply offers financial incentives declining per capita heath-care costs.” information on products and pricing. The speed at of the shopper, talks to them about their shopping which people can make decisions has changed quite a experience, or asks if they need help getting their bit as well because you can get so much information groceries out to the car. at your fingertips. It’s those simple things that wrap up a shopping There are a lot of different technologies today at experience on a very positive note. We also track a the shelf level, and on the carts. What you have to lot of metrics just to make sure that we are delivering figure out is which ultimately enhances the consumer against things like line lengths and wait times to keep experience without being invasive. it a positive experience. Technology has also changed the shopping experience for us because we have a lot more How do you ensure great customer service? information on our shoppers. We measure almost Our employees pride themselves on going above every aspect of the shopping experience and get and beyond when it comes to customer service. metrics that help us to understand what consumers We coined the term “legendary service” to create a like and what they don’t like. legendary experience. The ultimate goal is to improve that shopping That includes providing information and help in experience. You have to do that in a non-invasive way the store, as well as help out of the store. We look at that helps give the retailer data and information, but every aspect of the shopping experience and try to also does not bother the shopper. make it ideal for our shoppers. Can anything be done to improve Where do Twitter and Facebook fit in? the checkout experience? They have the potential to be very, very powerful as The checkout is a critical part of the process shoppers are more informed. For us, the positive thing because that’s your last interaction with your shopper. is that the more Safeway fans and loyalists we create, We love it when our checkout person knows the name the greater the opportunity to build our brand message. JANUARY/FEBRUARY 2010 THE HUB 25 JANUARY/FEBRUARY 2010 THE HUB

With social media, the things you do well will lives, the more time-constrained we are. The big get out there and the things you don’t do well get out opportunity is to take technology and make time more there too. So, it’s a call-to-action for our employees to efficient for the shopper and the consumer. raise our game continually, and constantly be looking for ways to improve our experience. Which other retailers are leading the way? I really admire the way Disney has inspired its What are the greatest opportunities for employees to focus on the guest to create excitement innovation in the store format? from the minute you enter the park to the experience Safeway’s Lifestyle store definitely took a huge you have in their hotels. It truly is magical. step in that direction. It’s thinking about the whole Nordstrom has always created a great experience store experience, not just parts of the store, but that due to their service. They provide service without holistic store experience. making shoppers feel pressured, and that’s very positive. Shop-a-longs with consumers have told me that I also find the Apple stores to be highly innovative and it’s confusing to shop categories. It’s hard to find what very focused on making the experience very simple. they want, and hard to find new items. That hasn’t changed in years. Have you applied any of those You look at a picture of a retail shelf in the 1950s innovations at Safeway? and you look today and it’s still more about stocking We look at a lot of different retailers to benchmark shelves versus selling benefits. Innovation today is whether we can improve our experience. Disney about making shoppers aware of healthy choices and truly creates a legendary experience. Every person on fresh alternatives. the Disney team feels they are there to create a fun Safeway is all about health, wellness and food environment for every child and family that walks quality. My boss, Steve Burd, with his focus on through its doors. healthcare and the linkage of behavior to healthcare, So, we can take that simple philosophy and apply is one of the most innovative thinkers in healthcare it to create a legendary experience for every shopper today. Safeway is one of the only companies that has who walks in our door. We definitely look at aspects actually flat-lined or reduced healthcare costs. We of service, experience and innovation from companies did it by looking at the linkage between behavior and like Disney, Nordstrom and Apple. outcomes (see sidebar). What keeps you up at night ... Does that philosophy translate other than expecting a baby? to your shoppers as well? Well, we’d need another hour to talk about that! We’re looking at a lot of different ways that we Ultimately, the most important thing for me is to stay can do this through education and inspiration with our in touch with our consumer and our shopper and stay product assortment and information in the store. Some close to what they’re going through in these times. of it is not yet out, but we do romance our perishables That also means staying close to our employees. and focus on healthy options and offerings. If you walk It is a tough economic time. People are working a Safeway store, you’ll notice that our cantaloupes, harder than ever and it’s tough for our shoppers. So, grapes and apples are lit like a jewelry case. staying close, staying in touch — that’s the biggest challenge to me — and that’s true in both bad times How do you see the and good. n shopping experience evolving? Well, obviously, social media and technology will DIANE DIETZ is evp and chief marketing play a huge role in terms of the information that’s officer of Safeway Inc., the nation’s available to the shopper. Technology can make things third-largest supermarket chain. a lot easier and more convenient for shoppers, too. Previously, she spent 19 years at Procter & Gamble, where she led the turnaround None of us has enough time today. of the oral-care business and earned a We’re all working harder, we’re all time-constrained reputation as a motivator and innovator. and the more complexities that are added to our 26 THE HUB JANUARY/FEBRUARY 2010 THE HUB JANUARY/FEBRUARY 2010

WHI T E PAPER Let’s put a new lens on the future of shopper marketing. The Shopper Aperture By anne howe Picture the problem. Back in the early days of shopper marketing — which for me means 1992 — our MarS aDVertiSing objective was to deliver binders full of account- I specific promotion options to sales teams to support n marketing, we tend to rely on symbols and communication of offers and trade deals. diagrams to help us define our business. In By the mid-1990s, we were working with brand theory, our diagrams help explain what “it is” teams to develop national programs and platforms and “how we think about it,” but diagrams should really help us define actions we should take, as well. Given the complexity of — and rapid innovation in Char t O ne — shopper marketing, we need more actionable diagrams. The new shopper-marketing landscape Here’s a way to simplify a few of the newer practices in shopper marketing via pictures with a bias for action. Picture an actionable definition. Close your eyes. Picture the ubiquitous three intersecting circles. You’ve seen this visual in countless shopper marketing Yesterday Today decks: Brand, Retailer, Consumer. New versions might Consumer Shopper have “Shopper” in place of “Consumer.” While an Top Down Bottom Up iconic symbol of shopper marketing, it’s outdated. Yesrerday Brand Management Today Today Shopper Solutions We propose a new diagram as a better way to Category Share Shopper Share depict the current landscape of shopper marketing relative to reality only a few short years ago (see chart Transactional Data Shopper Insights one). We can use the right column as a checklist of How They Shop Why They Buy things that require action in today’s version of shopper Talk To Talk With marketing; full engagement in the discipline means Media Silos Everywhere Messages actually delivering something against each item. The practice of shopper marketing is evolving Creative Isolation Integrated Campaign rapidly, with sophisticated retailers expecting Isolated Innovation Collaborative Innovation manufacturers to bring solutions that drive trips, leverage the potential of the total store and grow basket size. Use this diagram to help make the transition from yesterday’s way of thinking to tomorrow’s action plan simpler and more effective. S o u r c e : Mars Advertising JANUARY/FEBRUARY 2010 THE HUB 27

Char t Two Today’s reality of retailer execution of a national marketing platform push National Marketing & Promotion Campaigns push Retailer A Retailer B Retailer C Retailer D Shopper Shopper Shopper Shopper Shopper Shopper Shopper Shopper push Segment Segment Segment Segment Segment Segment Segment Segment Consumer Consumer Consumer Consumer Consumer Consumer Consumer Consumer pull Segment Segment Segment Segment Segment Segment Segment Segment S o u r c e : Mars Advertising to take to retailers. Shopper marketing success was may well be the defining principle of a retailer-specific measured by how many retailers executed a brand’s view on shopper marketing processes for the future. national consumer promotion in their stores. Frankly, When the initiative works as a solution for the that model worked pretty well for a number of years. shopper and builds traffic/basket size for the retailer, Given the evolution of retailer sophistication, we and grows a brand without undermining the category, need a new diagram to depict today’s reality of retailer it makes the cut. When an approach or concept execution of a national marketing platform (see chart supports a strategy that both the manufacturer and two). A top-down focus, driven by classic “push multiple retailers have in common, it should ladder up marketing,” now results in only spotty effectiveness to be considered by the manufacturer as an integrated with retail partners. national program that marketing dollars can support Snapshot of a solution. Collaboration is the root across a range of timeframes that make sense for of innovation in shopper marketing. But to get there, multiple retailers. the focal point must switch from the consumer to Geoff Jackson, the director of shopper and event the shopper. To win where the shopper’s decision is marketing for Campbell Soup Company, understands really made, marketers should move beyond home- the value of this thinking, and now leads the based demand/consumption thinking to full path-to- organization’s team that recently combined national purchase understanding and messaging. consumer events and shopper-marketing staff into one Assess your organization honestly: Does marketing cohesive unit. understand the consumer in the shopping mode? Does “Our planning focus is changing to consider the shopper play a role in the development of the both shopper perspective and retailer strategies at the overall brand-marketing plans? When these lenses are front-end of the planning cycles,” says Geoff. “We on, planning can be more collaborative internally, as are also working on solution-focused partnerships well as externally. and expanded activation windows on key Campbell We’ve coined the progressive path to planning all initiatives such as Labels for Education and healthy marketing activity as “shopper-designed” planning. This meal solutions,” he adds. planning rigor has been in place for years within many Planning with a “pull” focus assures that progressive agencies and manufacturing companies, and the marketing spend is focused on those who are 28 THE HUB JANUARY/FEBRUARY 2010

Char t Thre e Planning with a “pull” focus assures that the marketing spend is focused on core retailers National Consumer Promotion A Allow consistencies National Consumer Promotion B to surface Differentiated Shopper Marketing Programs Engage in Retailer A Retailer B Retailer C Retailer D shopper solutions Shopper Shopper Shopper Shopper Shopper Shopper Shopper Shopper Segment Segment Segment Segment Segment Segment Segment Segment S o u r c e : Mars Advertising shopping at each of the core retailers in which early benefits that nascent shopper-marketing teams every brand must rely on to make its growth target have realized by launching their shopper-marketing for the year (see chart three). This can help deliver efforts against this process. differentiated approaches that retailers require and Frame the shopper. For true collaboration and allow marketers to ladder those initiatives back up to innovation to be effective, the shopper must start and effective and fully integrated national strategies. remain the “hero,” and be a core cog in the ways of When marketing dollars are mapped to support working process for each and every effort. A cycle of the programs along every stage of the shopper’s journey, continuous improvement is a clear benefit to be sure, it’s easy to correlate more of the marketing spend to but moreover, the shopper can take both subjectivity specific results. This keeps shoppers happier, and and guess-work off the table. results in growth for both brand and retailer, fueling a Presenting a boomer-centric concept for approval shopper-centric focus on more effective collaboration to a GenY buyer can be tricky, as can presenting and future innovation in shopper marketing. a new-mom platform to a solid, yet old-school Transforming an annual planning process takes marketing veteran! All kidding aside, shopper-vetted time and commitment to fundamental change within insights, concepts and even results takes bias off the the organization. Once changes begin, it can take up table. It puts objectivity front and center, increasing to two years to fully realize the benefits, based on the program’s propensity to succeed, as well as the long lead times between when a program is sold providing rationale for improved ROI estimates. n in and actually activated with shoppers. But there is no time like the present to begin, given the continued evolution of shopper marketing, especially within ANNE HOWE is senior vice president, retail organizations. market intelligence for Mars Advertising, where she focuses on Even relative newcomers into shopper marketing strategic development projects for can realize benefits from shopper-designed planning. the agency and its shopper-marketing Tangible increases in both the sell-in rate and the clients. Anne can be reached at level of retailer collaboration to ensure programs and howea@marsusa.com. initiatives are shopper-centric are just a few of the JANUARY/FEBRUARY 2010 THE HUB 29

WHI T E PAPER The We Decade By Dori Molitor woManwi Se l lc T he first decade of the new millennium is over, but no one seems to have found the words to capture the essence of these past ten years. The Eighties, for all its self-indulgent excess, was known as the “me” decade, and the Nineties, with its exuberant growth, was often called the “roaring ‘90s.” But after all the turmoil of the 2000 election, the trauma of September 11th and the avarice that led to economic catastrophe, the decade just past apparently shall remain nameless. That’s kind of sad, but not entirely, because I believe the last ten years created the perfect climate for what is coming in the 2010s: The “we” decade. It’s going to be an amazing ten years, a time Many will certainly point to the rise of online social- when we put our personal interests in perspective, networks and the advent of open-source innovation as band together with our friends, family and neighbors a driving force of the power of “we,” as well. and take aim at achieving a higher purpose. I’d like to suggest that when the story of this When we look back on it, ten years from now, decade is written, many of us will point to the tiny historians might trace the start of the “we” decade town of Albert Lea, Minnesota. As of now, most people to the 2008 presidential election, and the winning have never heard of Albert Lea, even though it was campaign slogan, “Yes We Can.” featured on the Oprah Winfrey show. Regardless of how anyone feels about President th e A l be rt l e A st ory Obama’s policies, or how his presidency turns out, there is no denying that his election was made Exactly one year ago, the AARP, in partnership possible by an unprecedented groundswell of “one- with a health-and-wellness group called Blue Zones, ness,” of community and shared purpose. selected Albert Lea as a test case for the idea that a Those with a lighter touch might suggest it has its community commitment to health and longevity could roots in the phenomenal launch of the Nintendo Wii, a add a collective 10,000 years of life expectancy to its technology that broke down the barriers of gender and citizenry. age, bringing people together to play videogames that What makes this so interesting is that the project sometimes doubled as both mental and physical exercise. does not center on a diet-and-exercise program, which 30 THE HUB JANUARY/FEBRUARY 2010

Creating community and higher purpose will elevate our brands in the 2010s. is the way individuals typically try to improve their our town, a mutual support system that we didn’t health and well-being. have before.” Instead, the AARP/Blue Zones City Health What I found so astounding was that this project Makeover, as it is called, encourages changes in moved a whole town into action over an extended behavior that emulate the lifestyles of some remote period of time. That it became a movement within the communities around the world where people live to town is simply amazing. It happened for one reason be 100-years-old ten times more often than in the above all others: It created camaraderie that changed United States. behavior around something people had tried and The elements of such lifestyles are based on a failed to do on their own. global research project by Dan Buettner, and It unleashed the power of “we” and changed documented in his 2008 book, The Blue Zones. Did people’s lives for the better. you know, for instance, that people who eat a handful Dan Buettner now plans to replicate Albert Lea’s of nuts four times a week live two to three years longer success in communities across America, and I wish than those who don’t? According to Dan, it’s a fact. him all the best in that endeavor. At the same time, Most of Dan’s suggestions are simple behavioral he’s building a brand — Blue Zone — that not only shifts, such as storing snack foods in out-of-the-way includes his book but also CDs and a product line sold places, keeping a bowl of fresh fruit handy, and via a website, bluezones.com. serving food on smaller plates — studies show people As marketers, we can learn a lot from Dan’s eat 25 percent fewer calories when plates are reduced example. His approach certainly aligns with the from 14 to 10 inches in diameter. guiding principles I’ve been writing about in the Hub They extend to plating food at the counter instead for more than the past three years. of serving it family-style, and even include dropping friends who smoke, don’t exercise and spend too Me, we, higher purpose much time snacking while watching television. For me, it’s all about how to create a deep soul In Albert Lea, the goal was to build personal connection with women and fundamentally change changes in behavior by engaging the community as how they feel about our brands. It comes down to a whole. A total of 18 initiatives were implemented — three things: “me, we, and higher purpose.” involving local restaurants that added longevity- Taken together, these three ideas point to the promoting foods to their menus, and educational cooking future of marketing and endless opportunities for classes at the town’s Hy-Vee grocery store, for example. innovation and business success. Albert Lea’s mayor, Mike Murtaugh, pushed Me. First, we need to re-think the intensity of the through a walking and biking trail, added new relationship our brands have with women. Brands sidewalks and hundreds of kids got together to walk sometimes aren’t thinking big enough about the role to school instead of taking the bus. that they can have within women’s lives. They focus Volunteerism is an especially important part of on insight and what women want, but there are the Albert Lea project. Participants are encouraged to different levels of depth of what that connection can be. make a list of their interests and then figure out how So, the “me” is about getting to a deep, aspirational to activate those interests to help other people. This desire or need. It means transcending a rational, notion of giving back not only enhances the “we” but functional or even an emotional benefit, and requires studies also show that people who volunteer have digging for those subconscious drivers of behavior. lower rates of cardiovascular disease. The goal is to find the one thing that’s the trigger While the program was originally planned as a to an aspiration. That trigger needs to be relevant in 10-month project, town officials are so pleased with her world in the context of her life, but also relevant the results that they say they plan to continue it. The to our brands. We must be able to own that, and it has project’s greatest achievement, says city manager to relate to our brands’ core values and existing promises. Victoria Simonsen, is “a new sense of connection in The magic of “me” can be found in a deep dig JANUARY/FEBRUARY 2010 THE HUB 31

with the consumer, while also understanding where our brands fit in that world. I call this the emotional truth — that one, single, subconscious, emotional Me, We, Higher Purpose! trigger that’s most relevant to our brands in her life. The more relevant the emotional trigger is, the ME: Fulfills a deep, aspirational desire more intense the response is. When you find that trigger, you’re going to enrich her life in ways she ◆ Rethink the intensity of the relationship probably hasn’t even articulated, but that will impact you have with your “citizens” her in a very big, positive way. ◆ Enrich her life Most important, we convey to her that she matters. So much branding activity is one-way, which ◆ Show her how she matters is a huge mistake. We know from our research (“Stand ◆ Create a relationship with her that By Me,” The Hub, Nov/Dec 2009) how desperate she transcends rational and functional benefits is for recognition in today’s world of disappointment, uncertainty, and mistrust. She’s really in a place where she needs to know WE: Fulfills her sense of belonging she matters. That is a huge opportunity for any brand. ◆ Provide the emotional intensity to create She’s our consumer: What are we doing to make her a movement feel like she matters? When we connect with women at “me,” we’re letting her know she’s appreciated. ◆ Create a sense of oneness with other We. The “we” is about fulfilling her sense of stakeholders belonging. She wants to have a feeling of one-ness, ◆ Join together in shared ideals and values a feeling that she’s part of something larger than herself — both with other people as well as with a ◆ Move the relationship beyond “us” and “them” to become “we” brand. We can accomplish this by joining together in shared values and shared ideals. • For brands to do this we’ll need to get This is a big shift for marketers because it moves ourselves into a “we” mentality the relationship beyond “us” (the brand) and “them” ◆ Include advocates in everything we do (the consumer) to become “we.” Most marketers think • Let the consumer drive the movement in terms of doing something to the consumer. It’s more about doing something with her. • Be the enabler, not the center of the But if we want her to join us, we have to begin conversation to see ourselves as equals. We need to evaporate the gap between “us” and “them.” We need to get to a HIGHER PURPOSE: Fulfills her desire to place where we are at one with her, working toward leave a legacy by making the world a the same goals, and sharing a sense of being part of better place something we — and others like us — care about. This means making sure that we’re including ◆ Move beyond a sterile transaction to achieve our advocates in everything we do. If we first find higher purpose and meaning in her life this place where we are connecting with her at an aspirational level, and we also stand for bringing that ◆ Look for people, ideas, brands that she can sense of fulfillment to her, then we can let her drive intimately trust the movement and be active within it. ◆ Transform her community, society and the As the brand we become the enabler of the world at-large conversation, not the center of the conversation. That is a real leap for marketers because we have always believed we control the conversation. But now we need to blend into the background because that’s a key part of this sense of belonging. 32 THE HUB JANUARY/FEBRUARY 2010

In fact, the consumer is not in the middle of in some fashion, but usually this manifests itself as the conversation, either. It is the idea — the sense of a short-term promotion based on one kind of cause fulfillment — that’s in the middle of the conversation or another. Often, it’s not aligned with the brand or and we are all equal in moving that forward. company or mission. Doing so requires patience. We have to give up Even when the cause is directly linked to the control, stop thinking about ordinary business issues brand, the effect is weak because it is not linked and think about the benefits we’re bringing. to “me,” much less “we.” As a result, it is not In the end, this creates the strongest kind of sustainable, which is what made the Albert Lea loyalty because we are standing for something she example so compelling. wants to belong to and be a part of. It was the sense of “we” that ignited the human Higher Purpose. Having a higher purpose fulfills connections within the town as a whole. It created her desire to leave a legacy by making the world engagement, interaction and support. a better place. This is a fundamental desire and The Albert Lea experiment worked because it’s only grown in recent years. Women today are so many people became invested not only in the desperately seeking ways to find greater meaning in quality of their own lives, but in the lives of everyone their lives. else around them. The higher purpose was about Part of this comes from the many disappointments increasing the quality of life in the town, all centered of the last decade and uncertainty in her financial on a common interest in longevity, health, vitality, future. She is looking for people, ideas and brands happiness and connectivity. that she can trust, intimately. She is open to joining The lesson is that, as marketers, we can’t stop at with brands that are transforming communities, “me” and we can’t just skip to “higher purpose.” We society and the world. Brands that care. need to do the hard work of “we.” Only then will we When I explore these emotions with women, truly align with the hearts and minds of our partners, I ask them what they dream about, what they our consumers. care about, what they worry about, and what they It all comes down to what I like to call cultural stand for. When I ask these questions, the age or value. This works on an individual level — enriching demographic profile doesn’t matter — the importance her life by bringing intangible benefits that are of the world we live in and making it a better place derived from relationships with people, ideas and comes up over and over and over again. things that bring higher purpose and meaning to her She wants to feel that she’s left a legacy that says as an individual. It feeds her sense of identity, which she made a difference in the world. And she’s looking is the “me.” for places she can do that. This, in turn, feeds her relationships, which is the If we can help her fulfill that desire, she will “we.” And it feeds her values, which is the “higher want to be part of it. She will reach a higher purpose purpose.” When our brands bring cultural value, they and fulfill a deep need for meaning in her life. have the potential to transform communities, society The deeper the “me” is and the stronger the and the world at-large. “we” is, the more powerful is our ability to achieve That’s exactly what happened in Albert Lea, and higher purpose. They’re linked and it’s all based on we can make it happen with our brands, too — not an emotional truth. In Albert Lea, the emotional truth only during the “we decade” but for many decades is “vitality.” So, ask yourself, what is the emotional to come. n truth for your brand? c r e A t i n g c u l t u r A l vA l u e DORI MOLITOR is founder and CEO of Few brands are asking the most important WomanWise LLC (womanwise.com) question, and even fewer have begun to answer it. a WatersMolitor Company, a hybrid consultancy-agency specializing in Many are solely focused on “me” — in fact, most marketing brands to women. Dori can be invest heavily in gaining insights into how their reached at dmolitor@womanwise.com consumers think or behave. or (952) 797-5000. A good number try to capture “higher purpose” JANUARY/FEBRUARY 2010 THE HUB 33

WHI T E PAPER Integrated Selling drives bottom-line sales and better brand performance. Smooth Selling G iven the fragile state of our economy, We evaluated the importance of mass communication and retail communication for brand the marketing industry and our (emotional/imagery) messaging versus sell (product brands, this is an ideal time for attribute and benefit) messaging. We discussed marketers to take stock. Rather than the best communication vehicles, shelf placement, channels-of-distribution and pricing. We conducted a define ourselves as Integrated Marketers, I think complete 3600 dialogue of how best to sell more. a more suitable characterization is to say that This is what an Integrated Selling Organization (ISO) is discussing today. This particular we’re in the business of Integrated Selling. manufacturer is investing in shopper studies, What’s the difference? Integrated Marketing engaging shopper insights agencies, and considering is the antiquated practice of targeting consumers both supply- and demand-side initiatives in its annual exclusively and aligning messaging behind television communication planning process. commercials and print ads. It fixates on traditional Studies show that shoppers invest more time consumer measures such as advertising recall scores, interacting with impulse items at retail than aided and unaided brand awareness. It is focused on they do planned-purchase items. This then drove top two-box acceptance scores and the latest tally of consideration of where to place brand (imagery) advertising awards. messaging versus sell (benefit) messaging for impulse However, very little is said about how shoppers versus planned-purchase items. are addressed, sales are being driven or bottom-line To get on the shopping list, planned-purchase business results are being enhanced. By comparison, items would communicate brand attributes and Integrated Selling recognizes that people have both a consumer benefits early in the path-to-purchase, for consumer and shopper mindset, and that it is never both in-home and on-the-go touchpoints. Meanwhile, too early to engage a consumer as a shopper. impulse items would communicate brand attributes Integrated Selling expands on Integrated and consumer benefits strongly at retail through Marketing by incorporating a strong sales message packaging and in-store communication. into the planning process. This includes in-store This is the so-called “store back” model that Procter product visibility and availability, packaging design, & Gamble is promoting: First understand where and retail communication, merchandising performance, what triggers the shopper to buy the brand, and then inventory management, pricing and channel ladder back to consumer involvement. An ISO recognizes migration. The result is a 3600 planning process. that people have both a consumer and shopper mindset, depending on where they are in the path-to-purchase. A new discussion When in a consumer mindset, people tend to be I was recently talking with a manufacturer’s more emotional and have higher aspirations. They research and marketing team when the conversation are looking to bond with the brand, feel good about turned to the amount of time shoppers spend it and what it stands for. In a shopper mindset, people interacting with their products at retail. We discussed are generally more pragmatic, looking for solutions, the difference in time spent for planned-purchase conscious of the price/value relationship and the items versus impulse items. tangible, functional reasons to buy. 34 THE HUB JANUARY/FEBRUARY 2010

To bridge these two mindsets and complete the determine advertising recall scores for in-store formats. path-to-purchase, an ISO invites the marketing and Taking traditional measures, such as recall sales teams to the integrated planning table on an scores, and force-fitting them into a new selling equal footing: The marketing team manages the environment is a bad idea. Walmart has already brand and consumer messaging while the sales team come to this conclusion by engaging DS-IQ, a digital manages the shopper and shopping experience. The shopper-media analytics firm, to provide real-time ISO follows a simple three-step process to assure a sales evaluation, measure shopper marketing ROI, balanced consumer and shopper planning orientation. gain insights and optimize messaging from a selling perspective based on in-store communications. th e s u b wAy s u c c e s s Here are several recommendations to help The first step is to understand the brand, consumer/ capitalize on the emerging value of in-store media and shopper and the retailer motivators. realize integrated-selling solutions: For example, Tony Pace, chief marketing officer • Determine the sales value of your targeted messages of Subway Restaurants, says that Subway has both to leverage fully the value of in-store media. emotional and tangible brand benefits to communicate. Subway’s emotional value as a “healthy and active life- • Ensure that all marketing and sales efforts are style” brand is balanced by the price/value relationship driving shelf velocity and corresponding return-on- of “made fresh” and “made for you” for five dollars. investment. The emotional benefit of visiting Subway reinforces • Configure retail messaging around shopper that its customers are health-conscious and that they propensity to buy brands, retailer merchandising lead an active lifestyle, which allows Subway to and inventory initiatives, not traditional reach/ enhance the consumer’s self-image. From a functional frequency measures. standpoint, Subway delivers a healthy, made-for-you sandwich that is delicious at a great price point. • Closely align integrated media buying with sales Subway, as the retailer, is motivated to drive greater values and inventory measures. foot traffic, higher loyalty and higher cash register ring. • Be wary of traditional agencies that may not offer Next, determine the appropriate balance of time the best route to generate in-store communication or and location of communication priorities between foster an integrated selling environment. emotional/brand and rational/sell messaging. As Tony explains, “Subway communicates our ‘healthy’ This last point is especially important. After all, and ‘active’ brand values by spotlighting Jared and retail by its very definition is a selling environment, famous fans of Subway (Ryan Howard, Michael not a place to win a Clio. In-store messaging demands Strahan, etc.). We also use these fans to communicate appropriate sales communication — whether that is “$5 Footlong” selling messages that reinforce a price-off and temporary price reductions, promotional positive price/value relationship.” offers and selling solutions, or image messaging and Through ongoing tracking studies designed to emotional connections. It is a venue that is designed gauge consumer perceptions, attitudes and values to drive a shopper to pick up our brands. for Subway versus competition, Subway balances the The time is indeed ripe to evolve into an dual messaging through traditional vehicles such as Integrated Selling Organization. We can then work television, print, radio, and so forth. to identify optimal brand and sales communication However, in-restaurant is where the price/value opportunities and target communications more relationship is strongly reinforced. It is in the retail effectively to consumers and shoppers to drive purchase, environment where Subway recognizes the mindset build sales and enhance business performance. n change from a consumer to a shopper. Finally, an ISO recognizes and audits all the available communication platforms and vehicles. This PAUL KRAMER is CEO of Catapult places equal emphasis on in-store communication and Action-Biased Marketing, a full- service agency that combines expertise traditional media. While many manufacturers grasp the in brand strategy, shopper marketing, shift from traditional media to in-store communications national consumer promotions, and and are allocating more marketing dollars to retail integrated communications. Email: media, measures still frequently smack of traditional pkramer@catapultmarketing.com. marketing. For instance, marketers are scrambling to JANUARY/FEBRUARY 2010 THE HUB 35

RE SE ARCH REP ORT The Socialized Shopper By Mark renShaw shopping experiences across 10 product categories. Then, 500 respondents who had experienced social arc worlDw iDe media brand contact during a shopping experience I (called “Social-Media Shoppers”) and 500 respondents t’s no secret that social media is one of the who had not (“Non-Social Media Shoppers”) hottest topics on marketers’ radars. What isn’t completed a follow-up interview that delved more widely known is how to use social-media deeply into shopping behaviors and attitudes. This contacts to drive sales directly. provided the opportunity to identify the differences People of all ages are using social-networking and similarities between these two groups of people. sites and other user-generated content platforms at It’s big and growing: There are 95 million astonishing rates, and brands are scrambling to create social-media shoppers in the United States. More social-media strategies both as part of their overall than 40 percent of U.S. adults are using social media marketing and in isolation. in their shopping experiences, and this trend appears In fact, Forrester Research estimates that social- likely to continue. When asked how often social media marketing budgets will grow 34 percent per media is used in shopping versus a year ago, almost year from 2009 to 2014 — faster than any other form 30 percent said they are using it more, while three of online advertising. Moreover, within five years, percent said they are using it less. Currently, social-media contacts are made in a variety of forums. For 35 percent of shoppers, the New research shows how process includes — or starts with — online search. social media is changing What’s surprising is that 30 percent read user reviews on retailer websites as a part of the shopping process. shopping behavior. So, who are these social-media shoppers? They come from all walks of life, but the study uncovered a heightened relationship between age, education level and the use of social media in shopping. As expected, social media budgets will be larger than those for because they’ve grown up using technology, people both mobile and email marketing activities. under 35 and those holding college degrees are most Despite all of this increased attention and likely to be social-media shoppers. spending, we actually know very little about what is Interestingly, the study also revealed that social- perhaps the most critical factor in achieving positive media shoppers are not necessarily very “actively ROI through social-media marketing: How people’s social.” Only about one in four social-media shoppers behavior in shopping for and buying products is contributes anything to a conversation about a brand impacted by social media. or product; the rest view content posted by others. So, Leo Burnett and Arc Worldwide recently fielded a a very small group influences a very large group. research study that uncovers this connection. More than Social-media shoppers are more engaged with 3,500 online U.S. respondents completed interviews media and spend more time shopping. Importantly, about media contacts that they may have in their shoppers who access social media in their shopping 36 THE HUB JANUARY/FEBRUARY 2010

Char t O ne Social-media shoppers incorporate more media channels into their shopping process n Social-media Non-social channels media 4.3 n TV, Radio, Print, Direct, In-store, shoppers Website Social media 7.5 3.0 shoppers 0 2 4 6 8 10 12 S ource : Arc Worldwide Social-Media Study process still use historically prevalent contact channels information from retailer and manufacturer websites such as television, radio, magazine, newspaper ads are likely to buy more expensive featured products, and direct mail, as well. In fact, they tend to engage we find that social-media shoppers are only a bit more even more with these channels (see chart one). likely to spend more (see chart two). Social-media shoppers see more value in the Social media impacts behavior throughout the opinions of other everyday people as useful input in shopping process. Television, print, magazine, direct their shopping decisions. For example, 39 percent of mail and online research brand contacts are most likely social-media shoppers strongly agree that they can learn to take place at the beginning, and in-store contacts a lot more about a brand by tend to spike at the end of the seeing what everyday people shopping process, but social are saying about it online media holds steady throughout Char t Two versus only 22 percent of non- (see chart three). This suggests Social-media shoppers spend social media shoppers. social media needs to play more time shopping, and to a Social-media shoppers multiple roles in shopping as have broadened the set of lesser degree, more money they are tapped at many stages sources they use for validation during the path-to-purchase. n Social-media and are seeking additional 150 shoppers Social brand-contacts information beyond what n Non-social are a communal activity. To media shoppers marketers, manufacturers, reveal why different types 132 and retailers provide. of media are accessed by Incorporating all of these 116 shoppers, respondents were additional social-media sources 100 asked to rate a series of into shopping takes time. In motivations for using media fact, social-media shoppers are in their shopping. Creating a 84 spending a significantly greater perceptual map of findings amount of time shopping. Their 72 validated two obvious, but greater time investment does unproven, benefits of using 50 not, however, automatically social media in shopping. Time spent Purchase lead to a similarly significant shopping amount Specifically, social media difference in what they spend. I ndex : Social-Media Shopper Group / Total Online Adults enables shoppers to gather the While other research impressions and analysis of shows that shoppers gaining S ource : Arc Worldwide Social-Media Study others while channels such as JANUARY/FEBRUARY 2010 THE HUB 37

Char t Thre e Social-media contacts run throughout, while other contacts occur early in the shopping process Share of media contacts throughout process 40 In Store/ Word of 30 Mouth Social Media 20 Online Research 10 TV, Radio, Print Very beginning Relatively Middle Relatively Very end of shopping early late of shopping process process S ource : Arc Worldwide Social-Media Study television, print and radio allow them to form their wh At th i s M e A n s own impressions and analysis (see chart four). This It’s clear that it’s not enough for brands simply introduces a significant point regarding the “wisdom to have a social-media presence — a Facebook fan of the crowd.” page, Twitter account or corporate blog, for example. With so few people actually contributing to the If brands truly want to connect with shoppers and conversation, the early adopters and posters have a impact their ultimate purchase decisions using social heavily weighted influence on the message. Their contacts, they must develop strategies that continually impact is the greatest and can become self-perpetuating. engage with shoppers throughout the process. Social media’s impact on shopping varies widely Although the “right” approach will undoubtedly by category. Nearly 50 percent of people shopping for vary from brand to brand, here are a few guiding computer hardware/software and books are likely to principles that marketers can refer to when devising incorporate social media into the shopping process. their social-media plans: With greater purchase risk and reward, greater value • Monitor constantly, listen early and respond is given to the opinions and advice of others. regularly. People are constantly talking about brands In contrast, only nine percent of people shopping (on social-networking sites, blogs or ratings/reviews for laundry detergent and soft drinks are likely to use sites, etc.), to the tune of hundreds of thousands of social media. Conventional wisdom might suggest this conversations per day. is because people don’t seek peer reinforcement when As a result, much like Best Buy with its @Twelpforce buying lower-involvement, commodity-type products. Twitter account, brands should: Monitor social media However, an argument could be made that chatter with regularity; listen in real time to consumer engagement with social media contacts in such comments (both positive and negative); incorporate categories is low simply because those contacts aren’t that feedback into their marketing activities; provide as readily accessible or heavily promoted. If true, this answers and advice; and, when appropriate, engage presents a ripe opportunity for both brands and retailers. people in further conversation. 38 THE HUB JANUARY/FEBRUARY 2010

Char t Four Social media and other brand contacts play a variety of roles in the shopping process n Product in a movie / TV show n Facebook, Internet Forums, Blogs, Twitter n Radio ads n Talked with family / friends Obtaining the n Sent email / IM / text Forming your n TV ads impressions Digg, Delicious, post own general on review websites n of others impressions n Infomercials Read blogs n Read product review websites n n Received email / IM/ text Read net forums or boards n n Magazine or newspaper ads n Direct mail piece Accessing n Retail store n Product display in store Conducting the analysis n Product info in store your own conducted by n Manufacturer websites analysis others Professional reviews in n Retailer websites n magazines or websites User reviews on n retailer websites n Search engine to find information n Social media n TV, radio, print, direct, in-store/word-of-mouth, website S ource : Arc Worldwide Social-Media Study • Facilitate conversation, don’t force it. Contrary integrated communication strategies. to the practices of many marketers, blasting brand Brands must ensure that their social-media announcements and promotions to people via messages are consistent with what people are exposed Facebook and Twitter does not constitute a viable to on television, in print, in stores and elsewhere social-media plan. As the research suggests, shoppers online, and that they’re encouraging cross-channel rely on social-media contacts to seek out the opinions behavior. of others. Walgreens, for example, created a Facebook To that end, brands need to provide tools — both application that allows users to print and pick up their on and off their sites — that facilitate conversations Facebook photos at local stores, and promotes that amongst shoppers and allow them to share information application through various print and online media. with each other in as turnkey a way as possible. Don’t think of social media as a campaign. Social Jansport’s integration of Facebook Connect into its media lives and breathes. onsite shopping experience is just one best-in-class Engaging advocates to drive word-of-mouth example. to increase brand loyalty requires constant fuel, • Assess your competition. Brands can monitor participation and management. n social channels to determine how their competitors are using social media and the size/impact of their presence. Consider how their brand is being perceived MARK RENSHAW is EVP, Digital versus yours, and why. Practice Lead at Arc Worldwide and Leo Burnett. Arc Worldwide, the • Integrate social media into the broader marketing services arm of Leo Burnett communication strategy. The fact that social- Group, specializes in shopper, digital, media shoppers are supplementing, not replacing, promotion and direct marketing. Email: other media contacts during the shopping process mark.renshaw@arcww.com. reinforces the importance of developing fully- JANUARY/FEBRUARY 2010 THE HUB 39

E S S AY Beautyinvirtue T he hideous debt hangover of the gimme- The luxury brands that can best tie their products gimme credit recession was a sobering and heritage to a philanthropic cause that allows wake-up call to many. Goodbye luxury, customers to express their “goodness” publicly are the hello H&M. But the truly wealthy ones that will be rewarded with loyalty. responded differently. Afflicted by As Milton Pedraza, chief executive officer of survivor’s guilt, they paused momentarily, looked to The Luxury Institute, a U.S. think-tank, told Qantas their favorite luxury brands for guidance, and kept Magazine, “If wealthy consumers know a luxury purchasing. brand is socially responsible, they will give that brand While the world was in a state of shock, smart greater purchase consideration over a brand with CEOs of luxury brands busily augmented the similar quality and service.” purchasing experience by adding a dimension of Celebrities and wealthy consumers are spreading social good, simultaneously removing buyers’ guilt the belief that it is their personal duty to give time and building brand equity. and money to causes. It is an updating of old social Luxury brands and their celebrity muses started orders, as traditional buyers of luxury were the embracing their inner goodness by investing time upper classes. Upper-class women did not work; they and money in philanthropic causes and charity work. donated time to causes. Whether it is the Grey Goose Character & Cocktails The old money believed that it was noblesse bar for Elton John’s AIDS Foundation, the Rolex oblige to donate both time and money. Giving was Institute or Cartier’s LOVE Charity (see sidebar), these not a choice; it was a duty. Today’s “upper classes” A-list brands would have us believe that giving is the are considered by many to be luxury brands and new receiving. celebrities, and are treated as such. In this way there is a return to duty. Jane Shepherdson, the former principal designer for Luxury brands can make us Topshop, responsible for turning it into the multi- million dollar business it is today, departed to become look (and feel) truly good. the head creative for Oxfam. Both Bill Gates and Warren Buffett are giving their billions away via charitable foundations. Bono Wealthy non-celebrities have taken note, as have has been busy innovating the giving model by helping the aspirational masses. Western luxury shoppers are to creating Product (Red) to raise money for AIDS now demanding more than a beautiful design and a medications in Africa. non-disposable, fast-fashion item. These brands and celebrities are setting the Their desire is for feeling virtuous as well as for standards and they’re demonstrating this behaviour looking good. Luxury consumers expect their brands in a public forum. to fulfil more than the temporary happiness of retail This group wants their luxury brands to donate therapy, or the self-expressive benefit of keeping up. as well, and so they should. Luxury status is not given or demanded; it is earned through expertise, conscientious consuMption craftsmanship, design-led leadership and heritage that This trend has wider implications than just money cannot buy. making people feel good about spending money. Louis Vuitton was once a trunk maker to royalty, We’ve moved from conspicuous consumption to and would have no doubt seen and understood the conscientious consumption and we want to be concept of noblesse oblige. Today, the company links associated with beauty — of both object and behavior. its heritage of making bags and trunks for travel with 40 THE HUB JANUARY/FEBRUARY 2010

purchasing beautiful, yet superfluous, objects of desire when you are used to getting high from the C ar t ie r ’s experience. LOV E Charit y Luxury brands need to be mindful of balancing the individual’s need for recognition with the needs of Customers can purchase a Cartier bracelet the world collective. The screamingly obvious line of and choose a corresponding silk cord “you deserve it now!” is on its way out. Subtly, grace aligned with a specific charity. and taste are making a comeback. Combine that with a refreshed and modern H Ashanti with Boys & Girls Clubs of America, definition of “duty,” and luxury brands can help customers publicly express virtue by simply letting blue bracelet them purchase their wares, knowing that the H Common with Common Ground Foundation, foundation, money or time that the brand is aligned khaki bracelet with will reflect on the buyer. H Hilary Duff with Blessings in a Backpack, Many luxury brands and the media vehicles that promote them already care deeply. purple bracelet Brendan Monaghan, executive director of H Eve with Women in Transition, peach International Fashion for Condé Nast’s GQ states, bracelet “Green is a global concern and GQ takes brands very seriously that are taking steps in helping the H Fergie with The Peapod Foundation, orange environment…It’s the most modern approach to bracelet looking at their future as a worldwide business, and H Good Charlotte with The Richie-Madden world issues. This is how fashion translates trends Children’s Foundation, green bracelet into global causes. Being responsible is chic.” Ironically, despite the economic slowdown, H Janet Jackson with Ovarian Cancer National this could be the best time for luxury brands. An Alliance, grey bracelet educational campaign targeting those who are not H Emmy Rossum with Susan G. Komen for the millionaires should explain why buying one luxury item is better than buying five cheapish things. Cure, pink bracelet The benefits are cutting down on unsustainable, disposable fashion and re-educating consumers as to the joyful anticipation of waiting and saving for the truly exquisite. advertising stories featuring astronauts Buzz Aldrin To create this kind of desire, artisan and and Sally Ride. luxury brands need to create beautiful, design-led Louis Vuitton is now a multi-million dollar creations and philanthropic collaborations that allow company and it is only appropriate that it donate time consumers to badge their goodness credentials. and money to worthy causes that are in line with its They must be captivating and extraordinary, not modern customers’ expectations and tastes. just a retrofit of a previously released model. They The old notion that companies are in business must be something bold and audacious that invites for their stakeholders is still accurate, but to continue and seduces consumers to make the leap. n to be competitive they must be in business for their human interests as well as their financial interests. CABLE DANIEL-DREYFUS is a brand A New Duty consultant in the London office of Landor Associates, working with However, a paradox remains: Due to the very corporate clients and specializing in nature of charity and sustainability, the opposite analysis, positioning, naming, and of consumption is required. The tricky part is that internal brand engagement. Email: abstinence tends to be harder than consumption. cable.danieldreyfus@landor.com. Similarly, it is hard to give up the habit of JANUARY/FEBRUARY 2010 THE HUB 41

COOL BOOK S Makers more reliable results,” he also thinks “it’s better ... simply to recognize the limits of intuition.” Cory Doctorow’s latest novel is about a future where “technological change has created an economy so He writes: “To make good decisions, you frequently efficient ... that traditional companies can hardly stay must think twice — and that’s something our minds in business,” writes L. Gordon Crovitz in the Wall would rather not do.” He also believes we tend to Street Journal (11/23/09). underestimate the role of the workplace itself in our decision-making, arguing that we often to give too The premise of Makers is a world in which inventors much credit to talent and not enough to circumstances. “figure out a way to use three-dimensional printers to produce copies of machines and most As Michael puts it: “We tend to observe financially anything else at close to no cost” and approach successful companies and attach attributes ... to that a “pure and perfect state ... with competition and success, and recommend that others embrace” the invention ... producing a kind of superabundance.” same attributes. But we’re only deluding ourselves. The only competitive hope is to “have a really innovative idea, which can’t stay innovative for long, Start-Up Nation so you need continuous invention and reinvention, too.” Venture capitalists, recognizing that product Through “war, strife and rising animosity from other innovation is passé, decide that “the next big thing nations,” Israel has become “the world’s techno- in technology is financing litigation over copyright nation,” reports James K. Glassman in a Wall Street and other intellectual property.” Journal review of Start-Up Nation by Dan Senor and Saul Singer (11/24/09). Cory, meanwhile, makes the book itself a medium for its message, selling it in hardcover but also “Civilian research-and-development expenditures making chapters “available for free downloads — a run 4.5 percent of the gross domestic product — half reminder that the convenience of the printed book is again the level of the U.S., Germany or South Korea worth the $24.99 purchase price.” And he comments — and venture-capital investment per capita is two- that “science-fiction writers don’t predict the future and-a-half times that of the U.S. and six times that of (except accidentally) but if they’re very good, they the United Kingdom.” manage to predict the present.” Incredibly, over the half-dozen years after the tech bubble burst in 2000, “Israel suffered one of its worst periods of terrorist attacks and fought a second Think Twice Lebanese war; and yet, as the authors note, its ‘share In Think Twice, Michael J. Mauboussin offers a of the global venture capital market ... doubled, from gentle rebuke to Malcolm Gladwell’s Blink, reports 15 percent to 31 percent.’” Susan Berfield in BusinessWeek (12/21/09). Where Some suggest this is because Israel “concentrates the Malcolm endorsed “decisions made in the blink of genius of the Jews.” But the book’s authors see a an eye,” Michael says this is advisable only if you combination of factors that essentially center on practice “blinking” in a disciplined way. Israel’s “unique entrepreneurial culture that combines He also cautions that making decisions based individualism, egalitarianism ... and nurturing.” on intuition works only in “stable environments, It’s a culture, they say, that comes from the Israeli where conditions remain largely unchanged, where military, writing: “You have minimal guidance from feedback is clear, and where cause-and-effect the top ... and are expected to improvise, even if this relationships are linear.” means breaking some rules.” Citing psychologist Daniel Kahneman, Michael The authors further note that Israel imposes mandatory identifies two kinds of decision-making: One is “fast, military service, and think other countries should automatic and difficult to control,” while the other is consider a similar policy to achieve “something like “slower, serial and takes effort.” So, while Michael the leadership, teamwork, and mission-oriented believes it’s possible to “train our gut to produce skills and experience Israelis receive.” 42 THE HUB JANUARY/FEBRUARY 2010

JANUARY/FEBRUARY 2010 THE HUB 43

The retailer’s VP is calling on her trusted vendors. Are you one of them? Do you know how to stay one of them? What makes a manufacturer trusted by a retailer? Insight, collaboration, and the ability to nurture the relationship. Success isn’t being the biggest partner—it’s being the most valuable one. At RPM Connect, we have the right tools to help you be her first call: Storehouse ConnectSM: images and analysis you can’t find anywhere else. Know their competition, who’s best-in-class and what actually happens in their stores. Concept ConnectSM: our ideation process for creating solutions that enhance the shopper’s experience and benefit your brands as well as your customer’s brand. Retail ConnectSM: experts that understand what matters most to your customer and how your brands are vital to their business and their shoppers. It’s that approach that helped us be #2 on the HUB Top 12 for 2009. Get the right help… Call Joe Robinson—612.397.5623 minneapolis, MN | pleasanton, CA | cincinnati, OH | lakeland, FL | bentonville, AR | dallas, TX 10 South Fifth Street, Suite 330, Minneapolis, MN 55402 | 612.204.9790 | rpmconnect.com check out our blog: connect.rpmconnect.com RPM Connect, Inc. is a wholly owned subsidiary of D.L. Ryan Companies Ltd.

The HubMagazine #34

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The HubMagazine #34 — Document Transcript

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