How commoditized products redefined their categories
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How commoditized products redefined their categories

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More and more brands are seeing value in being more than just the function of their products. For instance, Lululemon employs only the most evangelical of brand stewards to run their retail outlets, ...

More and more brands are seeing value in being more than just the function of their products. For instance, Lululemon employs only the most evangelical of brand stewards to run their retail outlets, creating a tribe-like mentality among consumers.

Running Room, with its 114 locations, has become far more than a store that sells sporting apparel and equipment; it is a running club with a highly engaged and fiercely loyal consumer base. More recently, brands such as the Art of Shaving and Clif Bar have both demonstrated the need to provide brand experiences, lest they become commodities in their respective product categories. The following white paper explores these brands, and the strategic tactics that have enabled them to carry and benefit from the moniker “experience brand.”

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    How commoditized products redefined their categories How commoditized products redefined their categories Document Transcript

    • Experience brands How commoditized products redefined their categories
    • White Paper | September 2013 | Experience Brands | 1 Shikatani Lacroix is a leading branding and design firm located in Toronto, Canada. The company wins commissions from all around the world, across CPG, retail and service industries, helping clients achieve success within their operating markets. It does this by enabling its clients’ brands to better connect with consumers through a variety of core services including corporate identity, naming and communication, brand experience, packaging, retail, wayfinding and product design. About the author Adam Mintz, Strategic Planner at Shikatani Lacroix Adam is an experienced brand strategist specializing in market positioning and consumer engagement. His career spans multiple industries and numerous segments within the product cycle, from manufacturing to retailing. He began his work in the world of fashion as a brand manager for Diesel Clothing Canada, after which he spent time working in mass merchandising for some of the world’s largest CPG companies and big box retailers across Canada. Adam recently spent a year as a brand strategist with FutureBrand Australia before returning to Canada where he has since held a senior planning position at Shikatani Lacroix. Adam holds a BA in Communications from Concordia University and a Masters in Global Marketing Communications from Emerson College.
    • White Paper | September 2013 | Experience Brands | 2 Growth through experience In 1986, Nestle created the Nespresso Group and alongside it its first single-serve coffee capsule. For 11 years the brand grew at a moderate pace, and by 1997 had amassed approximately 220,000 club members. Then over the subsequent 14 years, Nespresso grew its club to a whopping 10 million members. Notably, between 2000 and 2003, Nespresso grew its annual revenue by 28%, 34%, and 42% respectively. As of August 2013, Nespresso is now the Nestle Group’s fastest growing division with annual revenue topping $4.3 billion. While casual observers have attributed these numbers to the George Clooney ad (which did not air until 2006), it was in fact a number of strategic, non-advertising related marketing activities that lead to the brand’s swift ascent. In 2001, Nespresso refined its corporate identity, created the first Nespresso boutique in Paris, and designed luxury style packaging for its machines, capsules and shopping bags. Ultimately, what lead to such astonishing growth was the ways in which consumers experienced the brand. Nespresso became more than the product it was selling – it became an experience. It created unforeseen value beyond its product’s function that consumers could connect with.
    • White Paper | September 2013 | Experience Brands | 3 A new norm Taking cues from the likes of Nespresso, more and more brands are seeing value in being more than just the function of their products. For instance, Lululemon employs only the most evangelical of brand stewards to run their retail outlets, creating a tribe-like mentality among consumers. Running Room, with its 114 locations, has become far more than a store that sells sporting apparel and equipment; it is a running club with a highly engaged and fiercely loyal consumer base. More recently, brands such as the Art of Shaving and Clif Bar have both demonstrated the need to provide brand experiences, lest they become commodities in their respective product categories. The following white paper explores these brands, and the strategic tactics that have enabled them to carry and benefit from the moniker “experience brand.” Five strategies to an experience brand Becoming an experience brand requires the implementation of one or more of the following strategies: 1. 2. 3. 4. 5. Strategic distribution Unique product and package design Telling a “different” story Living the brand Creating communities in the physical world
    • White Paper | September 2013 | Experience Brands | 4 For a commodity, becoming an experience brand means making strategic distribution an important part of the marketing mix Experience brand tactic #1 - Strategic distribution For commodity products such as snack foods and beverages where low cost, high volume and mass distribution are the name of the game, the path to becoming an experience brand is a road that goes through event sponsorship. They immerse their brands within a particular lifestyle or culture, thus creating an association between their products and a particular way of living. As an example, Red Bull uses sponsorship as a means of associating itself with extreme sports culture through its sponsorship of everything from Motocross bikers to space jumpers. A less costly means by which to immerse a brand within a lifestyle or culture, however, is through strategic retail distribution. Position through distribution Unlike most bars found in the snack aisle of a grocery store, Clif Bar carries the moniker of experience brand through its association with the outdoor enthusiast culture. You won’t find people consuming Clif Bars as a means to satiate their hunger while watching TV. To Clif Bar brand evangelists, the product is seen as an important energy source to be used during a hike, a bike ride, or on a camping trip. This association was made possible at its inception, when Clif Bar was sold primarily through bike shops and outdoor enthusiast stores, thus creating an association with those activities. While Clif can now be found in major grocery retailers and convenience stores, they continue to create their association with outdoor lifestyle through freestanding displays at outdoor enthusiast stores such as Mountain Equipment Co-op in Canada and EMS in the United States. For commodity food and beverage products such as Clif Bar, becoming an experience brand means making strategic distribution an important part of the marketing mix.
    • White Paper | September 2013 | Experience Brands | 5 Experience brand tactic #2 - Unique product and package design Unless your product comes in multiple colours, special editions, or your packaging is too beautiful to throw away, your brand’s experience is limited only to the times your customer uses your product. Despite what your mother told you, what’s on the outside matters almost as much as what’s on the inside. In recent years, the advent of single serve coffee has brought with it a multitude of competitors to market, yet few, if any, have made design as high a priority as Nespresso. Dubbed “The Apple of Coffee” due to its attention to detail, not only to the simplistic functionality of its products, but also the design of every aspect of its brand – from the retail stores to the espresso capsule. For starters, Nespresso coffee machines come in a dizzying array of sizes and colours to suit design preferences and spatial needs of various kitchen sizes. Look and feel, however, goes well beyond the machine; it is in the packaging details where the full branded experience comes to life. Nespresso capsules are treated as a luxury item, and similar to a protective case you would expect to accompany the purchase of an expensive pair of sunglasses, capsules are housed in thin, long, black-matte-finished sleeves. At retail, these purchased sleeves are then placed into an equally beautiful shopping bag similar to what you might expect to receive after purchasing an item from Holt Renfrew. In a commoditized coffee market, brands need to look beyond product function to find a unique point of difference. Nespresso has done so by elevating the category beyond taste; through a unique and luxurious look and feel.
    • White Paper | September 2013 | Experience Brands | 6 When every brand is going one way, it never hurts to go the other. Consumers pay attention to the other Experience brand tactic #3 - Telling a different kind of story “My razor has two blades.” “Mine has three.” “Mine has four.” “Mine has a vibrating handle.” “Interesting, mine has one blade, requires pre-shave oil, a brush made from rabbit hair, and shaving cream that must be lathered and spread evenly across my face, followed by a soothing post shave moisturizer.” When every brand in a given product category is going one way, it never hurts to go the other. Consumers pay attention to the other. A change in perspective In 1901, Gillette introduced the first safety razor, eliminating the cumbersome task of having to sharpen and shave with a straight edge blade. In 1949, Carte Wallace produced the first aerosol shaving cream, rendering the need for shaving brushes and lather cups obsolete. Speed and ease of use became top priority above quality and precision, and the commoditization of male shaving was born. That was until 1996, when Eric Malka‘s sensitive skin compelled him to formulate a “protective pre-shave oil” to alleviate the discomfort he felt from shaving, and reintroduce a lost art: “The Art of Shaving.” Beyond the tale of the comfortable close shave, The Art of Shaving defines the morning ritual as a process not to be sped up, but slowed down through a four-stage process: a pre shave oil, a rich lather of shaving cream with a brush, a close shave, and finally the application of a soothing moisturizing balm. The essence of the story is that shaving should be a daily experience to be enjoyed, rather than simply exist as part of a man’s morning to-do list.
    • White Paper | September 2013 | Experience Brands | 7 Living the brand breeds authenticity... authenticity breeds loyalty Telling a story your competitors are not invariably leads consumers to think differently about your product category and, in turn, your brand. This inherently provides them with a new experience – your brands experience. Experience brand tactic #4 - Living the brand Brands do not live exclusively through the product that bare their name; each has its own distinct personality, and at retail, and in particularly for clothing manufacturers, those promoting and selling the brand must first and foremost exemplify the brands persona. Visit any of Lululemon’s 200-plus stores and you’ll not only find employees dressed head to toe in company apparel, but also a company lifestyle, attitude and personality imbedded in each and every employee. An investment, not a cost Lululemon creates brand ambassadors who sell the lifestyle with conviction, due in large part to the fact that they live and breathe the brand. The process of cultivating these ambassadors begins at the interview stage. Prospective employees sit in a group on floor pillows and share different aspects about their life and personality. Once hired, they are given motivational books to read by authors such as Malcolm Gladwell and Starbucks’ CEO Howard Schultz. Fitness and dance classes can be expensed, and employees spend time getting to know each other outside of work at company sanctioned hikes, conferences, and fitness classes. Unlike many retailers, Lululemon does not see its store staff as a cost of doing business, but rather as a marketing investment that produces sales results. As one former employee puts it, “You were supposed to take ownership of the store. When you left (work,) it was clear you were representing the company. If we went to fitness classes, we were supposed to tell others where we worked and maybe invite them to events. It was a lifestyle.”
    • White Paper | September 2013 | Experience Brands | 8 “While others may mimic parts of the business, it’s impossible to copy a personality.” The absence of mass advertising within Lululemon’s marketing mix means it relies on a hyper-local marketing strategy: hosting yoga events, half marathons, and inviting local fitness instructors to become brand ambassadors who sport the brand’s apparel while teaching their classes. The most essential aspect of Lululemon’s success, however, continues to be its store staff who participate and promote events and the brand at every turn. Laura Klauberg, Lululemon SVP of Global Brand, says, “While others may mimic parts of the business, it’s impossible to copy a personality.” It’s this personality that creates a loyal customer base and encourages them to continue to live the brand. When employees live the brand, the brand becomes authentic. If employees don’t believe in what they’re selling, authenticity ceases to exist. Living the brand breeds authenticity, and authenticity breeds loyalty. Experience brand tactic #5 - Creating communities in the real world There’s no doubt brands with extensive online communities can garner fierce brand loyalty among its customers, in particular for product categories that exist online, such as gaming, electronics, and telecommunications. But when it comes to brands whose products exist offline (sporting equipment and apparel for instance), communities should exist not only online, but in the real world where products are consumed. Along Yonge Street in midtown Toronto, within a five-block radius of one another, exists three major sporting retailers, all of which sell running apparel, shoes and accessories. Only one, however, offers a free, biweekly running club, running clinics, and online training tools that enable you to track your training progress. It’s called Running Room.
    • White Paper | September 2013 | Experience Brands | 9 Now with 114 locations across North America, Running Room has built its business on catering to every aspect of the customer experience, both online and offline. Online, consumers can take advantage of the runner’s forum, map out local routes, read the company’s online magazine, and create training programs with ongoing training logs. Offline, Running Room holds, sponsors, and participates in hundreds of running events each year, in addition to its biweekly running club. In doing so, the brand has become more akin to a health club with a retail store than the other way around. As founder John Stanton puts it, “It’s an environment that’s like a clubhouse where people meet other runners.” Running Room views the community aspect of its stores as more than a tertiary “nice-tohave service,” it sees it as one of its core business tools that helps foster brand loyalty among its customers. When a brand’s products are sold and consumed in the real world, it’s important that its communities live there as well. Online communities have a virtual life, offline communities have a real one.
    • White Paper | September 2013 | Experience Brands | 10 A deeper meaning for consumers When a brand becomes an experience brand, the products become important to the consumer beyond the functions they serve, which is why people don’t just like experience brands, they love them. During a man’s morning routine, The Art of Shaving isn’t just a brand used to shave their face, it’s a luxurious, ritualistic way for him to start his day and rejuvenate his skin. A post-dinner coffee enjoyed in the comfort of your home isn’t just a nice way to end a meal. More than a kitchen appliance, the Nespresso system is a nightly café experience. These are not merely things people do, rather they are rituals by which consumers live their lives, enabled through the brands they consume and experience on a daily basis. In a market filled with seemingly endless choices in consumer products, it is no longer sufficient to have a unique product. A brand must also deliver a unique experience if it hopes to become a category leader with droves of brand loyalists.
    • White Paper | September 2013 | Experience Brands | 11 Reference materials Business Insider - You Really Do Have To ‘Drink the KoolAid’ To Succeed At Lululemon http://www.businessinsider.com/what-its-like-to-work-atlululemon-2013-2?op=1 Strategy - Brands of the Year: Lululemon takes local to the next level http://strategyonline.ca/2012/09/28/brands-of-the-yearlululemon-takes-local-to-the-next-level/ Clifbar.com - The Clif Bar and Company Story http://www.clifbar.com/uploads/press_downloads/CBCOCompany-Story.pdf Nestle-nespresso.com - Our History http://www.nestle-nespresso.com/about-us/our-history Interpack - Nespresso: successful design capsules http://www.interpack.com/cipp/md_interpack/custom/ pub/content,oid,13560/lang,2/ticket,g_u_e_s_t/mcat_id, 3776/~/Nespresso_Successful_design_capsules.html Bloomberg - Nestle’s Nepresso Growth Hit by Swiss Contender Migros: Retail http://www.bloomberg.com/news/2013-04-21/nestle-snespresso-growth-hit-by-swiss-contender-migrosretail.html Fast Company - Triggering Demand: How Coffee Maker Nespresso Turned Drips Into Gushers http://www.fastcompany.com/1781304/triggering-demandhow-coffee-maker-nespresso-turned-drips-gushers
    • White Paper | September 2013 | Experience Brands | 12 The Art Of Shaving - Brand Story http://www.theartofshaving.com/article-brandstory/articlebrandstory,default,pg.html http://www.runningroom.com/hm/ For more information contact: Adam Mintz Strategic Planner Shikatani Lacroix 387 Richmond Street East Toronto, Ontario M5A 1P6 Telephone: 416-367-1999 Email: amintz@sld.com