Why Chipotle brand will Rebound Quickly

Chipotle has been through no picnic recently, with two multi-state E-coli outbreaks, a separate norovirus issue, and widespread negative food safety publicity.   However, barring any other major food safety issue, Chipotle will recover quickly and thrive, for five major reasons.

1. Consumers LOVE, not like, the brand – Chipotle has extremely high levels of brand awareness and brand esteem, well beyond their peers, which yields very high levels of brand equity, from which a setback can borrow.  Brand equity is like a bank account: continued positive experiences build brand equity; issues will erode.  Consumers have a very strong personal affinity, love and respect for the brand; it’s well beyond a fast-food choice they visit.  In fact, Chipotle scores 83 (out of 100) on the American Consumer Satisfaction Index (ACSI), nearly at the top of all fast food brands, which average 77, well beyond Wendy’s (73) and McDonald’s (67).
2. Chipotle has been transparent in its communication and rigorously improved product safety – Once the second E coli incident occurred, Chipotle’s leadership has aggressively communicated taking responsibility for the problem, sought best-in-class system-wide food safety counsel and implementation, and has invested in redundant measures to ensure food safety.   In their most recent quarterly report, Steve Ells, founder, chairman and co-CEO of Chipotle said “We are pleased to have this behind us and can place our full energies to implementing our enhanced food safety plan that will establish Chipotle as an industry leader in food safety. We are extremely focused on executing this program, which designs layers of redundancy and enhanced safety measures to reduce the food safety risk to a level as near to zero as is possible. By adding these programs to an already strong and proven food culture, we strongly believe that we can establish Chipotle as a leader in food safety just as we have become a leader in our quest for the very best ingredients we can find.”  This contrasts with several food companies who either hid or understated their food safety or recall issues and were quick to try to claim it was solved with a reactionary nominal manufacturing change.
3. Favorable food safety and public relations are reassuring and reminding consumers to return – Yesterday, both the CDC (Center for Disease Control) and FDA (Food & Drug Administration) called Chipotle’s E. coli outbreaks over.  Chipotle will close its stores for several hours on February 8th to have a company-wide meeting reviewing new food safety measures.  Internal communication and execution of these improved processes are already in effect in their stores.  We also expect Chipotle to resume and increase its compelling advertising, in-store promotion, and couponing programs to welcome concerned consumers back to their stores and resume their unusually high frequency and loyalty of coming back to the stores.
4. Chipotle will refine, but stay true to its compelling promise of Food With Integrity –
   Chipotle loyalists are drawn to their unique positioning as a higher quality fast food option, strong price/value, and great taste.  While their will be refinements in product sourcing and distribution, the product promise of Food With Integrity will remain intact, and strengthened. Consumers will continue to see the Chipotle brand as a superior fast food choice meriting their continued loyalty.
   
5. Same-store-sales will rebound faster than industry averages – Since Chipotle has a stronger and more loyal customer base, traffic will improve more quickly than the industry’s typical 12-18 months to recover same-store-sales performance, as per Credit Suisse estimates. In addition, their marketing and promotional effectivenessand sophistication will also accelerate the pace of same-store-sales rebound.  We expect a recovery in 3-4 quarters, propelled by an even stronger in-store experience, product quality, favorable public relations, and consumer word-of-mouth.

Lessons learned:
1.  Give consumers a superior, differentiated product and a reason to love, not like, your brand.
2.  Beloved brands can, and do, recover from quality and public relations issues, if they are quick, contrite, and responsible.
3.  Be proactive and vigilant in your product quality processes, pre-prepare how you would mobilize to address a product quality issue.
4.  Incent post-crisis consumers to resume confidence in your brand and incent/reward them for their loyalty.

by Tammy Katz

5 Branding Lessons from the 2016 Presidential Campaign

The 2016 Presidential Campaign is loaded with great branding lessons that every company and person can apply to their favorite brand.   I’ll try to be unbiased.

1.   Awareness Trumps –  The ascension of the Trump brand has been astronomical, largely due to awareness.   You had heard of him before, and you’ve certainly heard of him now. Millions of Americans were exposed to the Trump brand through his television series, real estate and entertainment holdings, media-inducing polarizing comments, and the unique, visual persona.  He’s said more soundbite friendly and contentious comments since, further gaining publicity.   The political pundits were quick to downplay his legitimacy, yet he dominated media mentions.   If you’ve heard of something and it registers in your mind, it has successfully penetrated the critical consideration set – the short list of things you might choose.

Latest NBC/WSJ Poll

2.   Differentiate –  Ben Carson, Carly Fiorina, and Bernie Sanders are succeeding, largely on their ability to  differentiate themselves.   Ben Carson expertly plays the ‘I’m from outside of politics, plain-speaking neurosurgeon’ game, Carly is the ‘seasoned ex-HP CEO, non-Hilary female leader,’ who deftly leveraged the “look at that face” Trump gaffe into a gift, and Bernie Sanders is the self-described democratic socialist focused on improving middle class inequality.   He also is the sole non-Hilary Democratic option.   Conversely, Scott Walker, an early front-runner dropped to oblivion and out as one of the many ‘successful governor with relevant experience’ options. You must be different, and relevantly different, to be selected from your competition.

3.   Be Authentic – Consumers demand authenticity in their brands and selections.   Consumers have a strong “bs meter”  and have 24/7 access to social media that can uncover and amplify lies, inconsistencies, and skeletons.   On the (at least perceived) authenticity meter (net score on honest and trustworthy, latest Quinnipiac poll) Carson (+51),  Biden (+45), Sanders (+23), and Bush (+19) lead, while Clinton (-31) and Trump (-22) take a beating.   A brand is a promise to consumers – what you are, what you stand for, and what you consistently do – and consumers value and crave credibility and authenticity.

4.   Resonate – Your offer must resonate with your target audience; know what their key issues are, articulate how you solve their most important issues, and speak their language.    Despite his polarizing personality and image (top 4 Quinnipiac poll descriptors: arrogant, blowhard, idiot, businessman), his surge is largely explained because his messages of ‘make America great again’ and ‘sick of insider incompetence’ resonate deeply with a vast population.   He may ultimately have a product and personal credibility gap (29% of GOP voters would definitely not support Trump), but his message unquestionably resonates.

5.    Cut Through the Clutter – You must sharply define and articulate your unique brand positioning.  At the moment, Trump, Carson, Fiorina, and Sanders’ brands are memorable and clear.   Although still early in the campaign where Trump’s style over substance noise is captivating consumers and the media, several extremely solid, admirable and, arguably, superior talent – like  Kasich and Pataki are going relatively unnoticed so far, as 57% and 58% “haven’t heard enough” about them, respectively.

As the campaigning and jockeying for position continues, we continue to enjoy the show and its rich brand and marketing lessons.   The marketing communication is riveting, but great brands perform on measurable criteria over time.

by Tammy Katz

 

Avoid Botching Exposure: No, we still don’t know BDO

BDO, a global accounting, business and financial consultancy, is wasting millions of dollars on its current advertising campaign, “People who know, know BDO.” In their advertising, they could tell you who they are, but they don’t. They could tell you what problems they solve for you, but they don’t.    They could tell their target audience when to contact them and why, but, alas, they don’t.  It’s painful to see such a great introductory opportunity go to waste.

Rather, they do tell you that the people who already are aware of them and know what they do (presumably anyone but the audience) are knowledgeable.     So they are talking only to people who already understand and use their services.     This is a great example of everything you don’t want to do in your advertising.

Sadly, they repeat the strategic vagueness on their website as well (At least the campaign is consistent).

To avoid this, take these simple steps:

1.   Clarify your brand proposition – Who are you, what problem(s) do you solve, who is your target audience, and why are you superior and unique.
2.   Determine your advertising goal – Are you trying to attract new users?  (like BDO is attempting, but failing to do)  Convince current customers to buy/select/consume your brand more frequently?   Are you trying to improve your brand image?    If you are not clear about the purpose of your advertising (or any marketing investment), you can count on meandering advertising, unless your marketing partners are clairvoyant.
3.   Assess your advertising from the consumer’s perspective – What do they know about you now?  What do you want them to know about you after they have been exposed to your message?    Make sure you are giving them a persuasive message, in their language, based on what you know from your consumer research.     Again, BDO makes a common error of crafting advertising based on their internally focused, prideful self-assessment.     It’s a missed opportunity to tell potential customers of who they are, why they’re a superior service, and how they will solve the customer’s problems.
4.  Pre-test your advertising – There are several great advertising effectiveness evaluation methods, including MSW ARS and IPSOS ASI, that will give you unbiased, quantitative and credible feedback on if your advertising campaign is persuasive and has achieved your marketing goals.    These are small investments that can be done while the campaign is in the idea phase, prior to wasting money on producing or airing ads that do little to grow your business, or even may do harm.

by Tammy Katz

5 Hottest Food Trends at Expo West |

We were delighted to appear in The Ohio State University’s Food Innovation Center Blog:

“Natural Products Expo West 2014 was an incredible show of natural, organic, and healthy food and beverage manufacturing, ingredients, and in many ways – the future of the food industry, given that healthier food has moved from trend to societal shift. The natural, organic and healthy products food industry is growing nearly three times higher than the food industry average, per Penton. I had the privilege of attending with 67,000 of my closest friends and 2,600 exhibitors. Expo West was an enlightening window to emerging food industry trends.

 1. Gluten-free continues to explode, up 20% versus last year, driven by perceived health benefits and better diagnosing of celiac disease. New brands, new food categories, and improved organoleptics were virtually everywhere. Per NPD, 30% of consumers want to reduce the amount of gluten they are eating, and gluten-free foods’ household penetration has leaped to 11%, more than doubling since 2010, per Nielsen. The tidal wave is projected to continue as the foodservice sector (restaurants and institutions) catches up with consumer demand at retail. Even Pillsbury has jumped into the space with gluten-free dough (et tu, Doughboy?) as has Columbus’ Donato’s with its gluten-free Donato’s and Sonoma Flatbreads brands. Gluten-free is projected to grow by 22% annually through 2016, per Mintel.

2.  Non-GMO (genetically modified organisms) verified food offerings have tripled since last year, in response to growing consumer demand, as well as organic manufacturers’  efforts. Regardless of where you stand on the contentious GMO discussion, consumers are responding. 93% of Americans said that foods that have been genetically modified or engineered should be identified, per a recent New York Times poll and non-GMO has recently surpassed ‘organic’ among consumers’ desired food claims. Whole Foods’ requirement of GMO labeling on all products in U.S. and Canada by 2018, will also drive non-GMO consumer awareness. Promising, except only 11% of consumers say they are willing to pay more.

Non-GMO food and beverages are projected to grow at a 13% compound annual growth rate for the next few years and account for 30% of retail sales by 2017, even without mandatory labeling, per Packaged Facts. General Mills, Smart Balance, Ben and Jerry’s, Chipotle, and Kashi have all taken proactive stances on GMOs by either eliminating them or pushing for increased labeling. To help manufacturers and consumers with product and ingredient sourcing, the verification body, the Non-GMO Project has established a centralized database. Buckeye brag: Marzetti launched Mamma Bella GMO free garlic breads, led by Fisher alum Adam Koenigsberg.

3. Proteins, Popcorn, Chia and Kale were prevalent in multiple categories. New protein-rich or enhanced products targeted to consumers who are reducing or eliminating red (or all) meat from their diets included yogurts (whey and soy proteins), snack bars (almond and pea protein isolate), and pancakes (oats, quinoa, and whey). Popcorn, with its better-for-you consumer perception, was featured by over 25 companies in every mainstream and exotic flavor. Most intriguing were Popcorn Indiana’s fit brand, positioned as a low-calorie option, and chip’ins, a popcorn-based extruded snack chip. Chia continues to be a hot omega-3 rich and filling superfood in many bars, yogurts, drinks, as well as seeds alone. And kale, which has grown four-fold since 2008, is the hot supergreen in raw snacks, chips, sauces, dressings, and disturbingly: macaroons.

4. More Funding, Investments and Acquisitions – The health and wellness segment’s rapid growth is attracting interest and investment from multiple sources. Major food companies are penetrating the segment via acquisition and joint ventures, such as Coca-Cola (Zico and Honest Tea). Heinz (Hain Celestial), and Campbell Soup (Plum Organics), and the sector has become a darling of private equity leaders such as Sherbrooke Capital (Angie’s Popcorn) and Alliance Consumer Growth (EVOL brand). There is also an explosion of funding available for smaller companies through food incubators and crowd-funding platforms, with over 25 new food and agriculture funding sources launched last year. This foretells both continued growth among increasingly well-capitalized companies, as well as improved product quality and rate of innovation.

5.  Local Participation –  Ohio was well represented by many of our friends at 19 companies. In addition to the aforementioned Marzetti and Donato’s, Almondina, Avitae, Bunker Hill Cheese (Heini’s), Eurochoc Americas Corp., Fit Organic, Fremont Authentic Brands, Garden of Flavor, Gaslamp Popcorn (Rudolph Foods), Graeter’s, Herbal Science, Jeni’s Splendid Ice Creams, 1-2-3 Gluten Free, R.A.W. Real and Wonderful, Swurves (Mike-Sells), Trophy Nut, Unistraw, and Wyandot Snacks exhibited, all of whom we expect are gearing up for the surge in new business… and hiring talented Buckeyes.”

Meet the Expert

Tammy Katz is an Adjunct Professor of Brand Management at the Fisher College of Business, The Ohio State University, and Chief Executive Officer of Katz Marketing Solutions, a marketing and brand management consulting firm. She is particularly interested in brand management, marketing strategy, commercialization, corporate outreach, and consumer-driven innovation.

by Tammy Katz

Samsung’s Strategic Apple Smackdown

Samsung continues to brilliantly challenge, and deposition, the Apple brand in its newest Galaxy S4 advertising campaign. Reminiscent of Apple‘s classic “I’m a Mac. I’m a PC” strategy, in which Apple strategically portrays IBM as inferior, old, and tired, Samsung contemporizes that idea by showing itself as the superior, younger, and cooler option. This continues Samsung’s successful strategy of demonstrating wins on brand performance and image vs. Apple that it has employed for several years.

It’s working beautifully, particularly at a time when Apple has finally shown some vulnerability. In fact, according to Interbrand‘s recent Best Global Brands report, Samsung was the biggest rising star in brand valuation – up 40% versus the prior year, now placing it as the world’s 9th most valuable brand. In addition, Samsung has grabbed the #1 market share position in smartphones, jumping ahead of Apple and Nokia. According to Ad Age, Samsung’s market share jumped to 30%, up 9 percentage points vs. the prior year, partly at Apple’s expense, who lost 2 share points. Beyond portraying Samsung’s users as far more savvy, bright, and aspirational, the campaign also persuasively communicates several of Samsung’s feature and performance advantages.

Samsung’s innovation and communication strategy beautifully position themselves as a leader, while strategically redefining the competitive brand as an inferior option.

Lessons learned:
1. Brand challengers can effectively surpass the leader by building brand performance and image superiority. The strategy works particularly well when you win on the primary benefits that drive brand selection and loyalty.
2. Exploit your competitors’ weaknesses and vulnerabilities. Even the most dominant brands have ‘chinks in the armor’ that you can exploit.
3. Innovate quickly and often. Market leaders often innovate and execute more slowly, deliberately, and have higher volume hurdles.

Marketing Innovation: How to be among the Successful 5%

Marketing innovation is a key source of revenue and profit growth, as well as a great opportunity to strengthen your brand and competitive advantage. Most companies’ annual plans rely on marketing innovation. According to Ernst & Young and BASES, only 5% of U.S. new products are successful. These are the seven Best Practices, including the avoidable common mistakes, among successful innovation companies:

1. Set Innovation Goals and Accountability – This is a simple idea, but it is often overlooked. Successful innovators consistently set clear innovation goals, specifically:

• Sales, profit, and payback goals for the entire Innovation effort (all products and services), typically for a one-year or five-year timeframe and
• Sales, profit and payback hurdles for each project to merit consideration
• Both Marketing and Product Development have inter-dependent accountability for delivering these goals

2. Demonstrate project viability before committing resources – Each potential new product should have demonstrable financial viability and market need before resources are allocated. This simple step is skipped with alarming consistency and is a major cause of downstream profitability problems and innovation failures. Answer these two questions at the Idea stage:
• Is the product financially viable? Insist on reviewing crude Year 1 and Ongoing (typically Year 3) Profit & Loss statements on each proposed project. This demonstrates whether the project is financially worthy of being considered, needs rework, or should be thrown out. The Year 1 P&L is important to understand the potential investment issues. The Ongoing P&L illustrates the ongoing business model.
• Is there a true consumer unmet need for the product? You must be able to answer: 1) who is the target; 2) what is the relevant consumer benefit? (Note that it must be an important, motivating benefit to consumers, not a “nice to have,’ lower value benefit) 3) how is it superior to competition? When you launch a new product or service, you are betting that consumers will change their existing purchasing behaviors and choose you. You must be superior to their current options and solve issues they care about. Be sure. Ask your target market.

2. Leverage True Core Competencies – The most successful innovators exploit what they can and do best. They wisely avoid areas where they lag competitors. Innovation winners have a deeper self-knowledge of core competencies than the superficial “leader in X industry.” The Management Team has rigorously evaluated and determined their best internal processes, to find what they do, or realistically can do, better than their competitors. For example, Frito-Lay fully understands and leverages its store-door delivery, manufacturing, and snack innovation core competencies. Conversely, even uber-performer Frito-Lay has made the costly error of presuming snack food brilliance would translate to success in the very different cookie industry. Play from strength. Know and stick to your core competencies.

3. Drive Collaboration to Optimize Outcomes – Extraordinary innovation results consistently occur when R&D, Marketing and Operations collaborate and continue to improve the idea throughout its evolution.

5 Ways to Maintain Brand Growth and Relevance: StarKist’s Revitalization Strategy

StarKist‘s marketing strategy is a rich example of maintaining brand relevance and accelerating profitable growth.    Despite having some significant brand challenges:  a mature category, a mature brand, dated brand equities, and pricing challenges, their strategy is spectacular and effective.

Here are the 5 brand revitalization best practices they’ve nailed:

1.   Maintain a clear, consistent, and relevant brand positioning  –  StarKist’s brand’s positioning is the best brand of high quality, nutritious tuna.   This has been a virtual constant for over 60 years.   Consistency is relatively easy, but maintaining relevance over time is more difficult and even treacherous, if you don’t do it.    They have brilliantly adapted, but not radically changed, the brand positioning to ‘the best brand of high quality satiating nutritious tuna.’     That transformative “tweak” moves pre-packaged tuna from dated and increasingly irrelevant, to a brand that is contemporary, appealing and compelling for today’s consumer.

  

The Chobani brand Yogurt Coup: Reinvent the Category

We applaud Chobani‘s explosion to +$900 million in annual sales since its 2007 startup by attacking the yogurt category with a truly differentiated and superior brand.    Not only have they catapulted to stardom, they’ve even beat the brilliant, entrenched competitors, like Yoplait (General Mills) and Dannon.    They’re among the elite brands, like WhiteStrips, Swiffer, Apple, and Dyson who invent and dominate new category segments by reinventing their category.   

First, Chobani designed a much better product.    Their CEO and founder, Hamdi Ulukaya, thought American yogurt was horrible and developed a premium, Greek-style yogurt, which is thicker, creamier, more protein, less sweet, and has a healthier perception.   They challenged many of the conventional approaches of what product design seemed to drive the category.

They also rethought pricing and price/value.  

The Ted Williams Phenomenon: Big Marketing Winners… so far

The world is temporarily fascinated with the Ted Williams homeless to celebrity voice internet star phenomenon.    At its core, it’s a heartwarming and inspiring story of second chance – and a little bit of refreshing, upbeat  news.      Of course, I’m fascinated with how  talent and instant celebrity translates to effective  brand marketing.    Here are the big winners, so far…

1.   Ted Williams, the man –  Clearly he has great talent and appears to know how to use it.   

Brand Authenticity: Tiger’s Tailspin

Brands must be authentic.    Great brands, like people, create positive enduring relationships based on their credibility and consistency.      While brands have always needed to continuously earn their esteem, social media now makes brand authenticity a mandate.     All eyes are watching your brand, and missteps are reported globally in an instant.    Keep it simple.    Make your brand authentic.

Lack of authenticity is what’s driving the unprecedented demise of the Tiger Woods brand.   His ‘brand truth’ is dramatically different from the carefully honed aspirational brand image.    And it was that faux brand image and esteem that made brand Tiger so ideal for corporate sponsorships.     Incessant media coverage and its exponential visibility in the blogosphere unearthed the size of brand Tiger’s lack of authenticity.     Post-media frenzy, his champion credentials will remain, but the ‘wonderful man’ imagery has been unveiled as a sham.      Brand Tiger’s demise is an extreme, but illustrative example, of the danger of lack of brand authenticity.     Last week, AT&T joined the growing list of multi-million dollar sponsors who really had no choice but to stop aligning their brand with Tiger Woods.    The financial value of the Tiger Woods brand is a fraction of what it was just a month ago.