“A leading brand should promote the category, not the brand.”
That statement is from the book, The 22 Immutable Laws of Branding by Al & Laura Ries. I riffed off this smart branding law in my book, TRIBAL KNOWLEDGE, and explained how Starbucks followed this law to become a leading brand. That riff from my book is below. Enjoy.
first published in September 2006
Creating Category Intrigue Builds Brand Intrigue
Starbucks did not create the specialty coffee category in the United States. But by 1996 Starbucks clearly emerged as the leading specialty coffee retailer. And it established this leadership position not by creating interest in the Starbucks brand, but rather by creating intrigue with the specialty coffee category.
It sounds counterintuitive to promote the category before the brand but, as marketing consultants Al and Laura Ries point out in The 22 Immutable Laws of Branding, “Customers don’t care about new brands, they care about new categories.” Customers looking to be part of the “new best thing” are looking for a totally new experience, not just a new product. In the ’80s and early ’90s the specialty coffee category was just that—totally new. But for customers to be attracted to the new experience, they had to know about it; for customers to appreciate the category’s leading brand, they first had to appreciate the category. Without widespread consumer acceptance of the specialty coffee category, there would be no Starbucks brand to promote.
We can laugh now, but twenty years ago the specialty coffee category was virtually unknown beyond a few coffee connoisseurs. Most of us had never sipped a cappuccino (much less pronounced it) or savored the rich, bold flavor of a single-origin coffee like Sumatra. Most of us drank canned coffee and we liked it (okay, at least we tolerated it).
Before Starbucks could get customers to appreciate and admire its unique brand of coffee, it had to educate them to first appreciate and admire the specialty coffee category. So Starbucks set forth on its mission to educate customers on 1) what the specialty coffee category is, 2) what specialty coffee does, and 3) what specialty coffee aspires to be.
Starbucks promoted what the specialty coffee category is through teaching customers the appreciable differences between canned coffee and specialty coffee. The defining difference, shown especially in early marketing materials and employee training tools, is in the bean itself. Starbucks coffee uses only 100 percent high-quality arabica beans, while canned coffee uses inferior, lower-quality robusta beans. Arabica beans only grow at higher elevations and flourish in the shade. Because they’re grown higher, they take longer to grow, which partly accounts for their full flavor. Arabica beans can be dark-roasted to bring out an array of fuller flavors. Robusta beans, on the other hand, can grow in low elevations in full sunlight. Partly because robusta coffee trees grow quickly, they produce uninteresting, milder tasting coffee than do arabica beans. Plus, robusta beans can’t be dark-roasted without becoming burnt and extremely bitter tasting. Fast-growing beans roasted lightly means that costs can be maximized but at the expense of flavor—and maximizing costs (not flavor) is what the canned coffee companies do best.
The specialty coffee category is all about arabica beans. While coffee brewed with arabica beans cost more, the payoff is all in the taste. Starbucks could educate its customers about the differences of their coffees, but only through taste could the customers really ever begin to appreciate specialty coffee and what it could do.
Starbucks promoted what specialty coffee does by having customers taste the difference through sampling. One sip of a freshly brewed cup of Arabian Mocha Sanani and customers immediately knew that this coffee was different from what they drank out of a can—this was coffee they actually liked. And after sipping the slightly sweet, roasted nuttiness from a handcrafted caffé latte, customers knew this was something they wanted to experience again and again.
Starbucks showed its customers that coffee could be good, downright enjoyable. It promoted that specialty coffee aspires to be the uncommonly good “everyday coffee.” Yes, its cappuccinos and lattes could be viewed as occasional treats, but it is the dark-roasted brew—the “regular” coffee—that could and should kick-start any morning and cap-off any evening.
Starbucks shared its pride in its product with customers willing to learn about the specialty coffee category. By promoting the category and creating customer preference for higher-quality, better-tasting coffee, Starbucks became the recognized category leader. After all, a business is not defined by its brand, it’s defined by the “category” company it keeps.
What leadership role could (and should) your company play in promoting the category it does business in?
What activities might your business do to build greater customer-appreciation through education?
A hallmark of the Brand Autopsy blog has been taking offbeat sources and connecting the dots back to business. In March of 2004 I connected the dots between the business practices of drug dealers to activities we in the legitimate game of business strive to do well.
My seven-part “Street Corner Selling Curriculum” series of posts were based off of Bruce Jacob’s classic book, DEALING CRACK, which shared field research he had done to better understand the ins and outs of selling crack cocaine.
This particular post shares quotes from drug dealers on how they develop enthusiastically satisfied customers.
first published on March 3, 2004
Today’s topic is:
Developing Enthusiastically Satisfied Customers
Businesses that focus on cultivating enthusiastically satisfied customers will typically generate a loyal customer base that will gladly refer that business to their friends and family. Drug dealers must also develop enthusiastically satisfied customers because nearly all of their sales growth is tied directly to customer referrals.
In the world of illicit street drugs, the mythic importance of a good connection cannot be overstated. Most people involved in the generic process of purchasing want the most and best product for the least amount of money, and crack buyers evaluate dealers by seeking out those who are perceived to offer the best deal.
A number of sellers attempted to target their market strategies accordingly. Selling the fattest stones, offering more product for the money than was customary, and giving credit were all geared to entice customers to seek them and them only.
Read these smart street-level quotes on how drug dealers develop enthusiastically satisfied customers:
Bo Joe — “The bigger ones [rocks] you serve, the more customers you get. You don’t gotta worry about no one else getting’ the sale because they [users] want you.”
Ice-D — “You give’em more than what you should because they look at their competitors and know that ain’t what so and so gave me [last time].”
Deuce Low — “Everybody try to keep they own clientele. Homie spoiled a customer so much last night, he don’t wanna deal with me – only him.”
K-Rock — “Providing fat stones may hook customers into buying from a particular seller, but smaller quantities – provided sometimes at reduced cost or free of charge – keeps the addiction going. Cultivation is arguably most effective (and most appreciated) when users are at their height of desperation, In the twilight of a binge, for example, even the most meager form of generosity can look colossal and reflect positively on the dealer who is ‘compassionate’ enough to offer a free or cut-rate nugget.”
K-Rock — “When a customer’s geekin’ … I’ll break off some pieces like give’em a fifteen for a ten, or a ten for a five, or just break off like two and three dollar pieces. I kinda feel guilty – know that they got kids. So I don’t be taxin’ like that. You’re gonna lose money, but you’re gonna keep your clientele. You know they get paid at the first of the month, and they gonna keep spendin’ with me [because I did that for them]. I’m true to the smokers. That why my clientele be so high.”
It’s Archeology Week on the Brand Autopsy blog so expect to read vintage posts that are just as relevant today as when they were when first published.
We start the blog archeology dig with a post from December of 2007 that shares smart product marketing wisdom from Dilbert. Yes, Dilbert.
first published on December 17, 2007
In STICK TO DRAWING COMICS MONKEY BRAIN, Dilbert creator, Scott Adams, shared the above sharp and snappy business advice on how to predict success. He continues by saying, “The only thing that predicts success is passion, even if only 10 percent of the consumers have it.“
When the Dilbert comic strip first started in late 80s, Adams remembers most people didn’t love it. However, about 10 percent of its readers did love it and many of them clipped-out the comic from the newspaper and shared it with their friends. These people were passionate about the humorous look at dysfunctional office life portrayed in Dilbert. They decorated their cubicles with Dilbert cartoons. Some even put together homemade books of Dilbert cartoons long before the first Dilbert book was sold. They loved Dilbert.
Scott Adams didn’t worry about trying to make the Dilbert cartoon successful by making the indifferent reader passionate about Dilbert. Instead, he relied on Dilbert succeeding by fueling the passions of those most passionate about all things Dilbert.
A greater predictor of successful product introductions is to gain a passionate and loyal customer base, no matter how small in numbers they are.
This isn’t an absolute predictor as the abandoned product graveyard is littered with products that failed despite attracting a small, passionate customer base. However, if your product only attracts indifferent customers and fails to attract passionate customers … chances are, that product will not succeed.
“There are two kinds of companies — those that work to raise prices and those that work to lower them.” — Jeff Bezos
Jeff Bezos is right, there are two kinds of companies: those that find ways to raise prices and those that work to lower prices. Both ways can fuel success but many times businesses look at raising prices as a last resort to drive sales. However, it’s probably smarter to follow the path of raising prices to find long-lasting year-over-year sales growth.
As marketers we know there are three and ONLY three strategies to drive sales: (1) Get New Customers to Buy, (2) Get Current Customers to Buy More, More Often, and (3) Raise Prices.
Getting new customers to buy is all about strategies involving newness. We’re talking about introducing new products, entering new markets, launching new advertising campaigns, etc. to gain new customers.
Getting current customers to buy more, more often involves ways to capitalize on the visitation and shopping habits of the customers you already have. Businesses can do this through add-on sales, upsell tactics, prompting visits at a different daypart, etc.
Raising prices is just that, raising the prices on the goods/services you sell.
When was the last time you raised your prices?
If it’s been more than two years, you’re falling behind. Payroll taxes have certainly increased in that time. Most likely the benefits you offer employees have also increased. Not to mention cost of goods sold is sure to have gone up. But your prices haven’t. That means your profit margins are shrinking. (Ouch.)
If it’s been more than five years since you raised your prices then good luck having your customers adjust to higher prices when they’ve become trained to accept a lower price.
Let me be clear, it’s not easy to raise your prices. It’s hard work. Not every company can do it. You have to first earn the right to raise your prices before you can do it.
Earning such a right means you must do some (or all) of the following:
Sell a unique product/service
Deliver excellent customer service
Maintain a market leadership position
Stand for a higher purpose (i.e. green business practices)
On Monday, Netflixannounced its first price increase in three years. New subscribers will be paying up to $2 more per month to stream movies and television shows. (According to Netflix, existing subscribers will continue to pay their current rate for a “generous time period.”)
Netflix has earned the right to raise their prices because the company sells a unique product (original programming like House of Cards and Orange is the New Black) and has exclusive rights to lots of movies and television shows. Netflix also commands a significant leadership position over other video streaming companies.
Chipotle recently said a price increase will go into effect later this year due to increasing food costs. Expect your Chipotle burrito to cost up to 10-cents more come fall. The last time Chipotle raised prices was three years ago… so yes, Chipotle was overdue for a price increase.
However, Chipotle has earned the right to raise their prices because they sell a unique product, maintain a market leadership position, and stand for using organic and natural ingredients.
Amazon has announced a price increase with its Amazon Prime service. Shocking, right? Amazon has built its business model following the strategy of working to lower prices, not raising prices, to drive sales. The next time a customer renews their Amazon Prime membership, they will be paying $99, up from the long-standing $79 yearly fee.
In many ways, Amazon has earned the right to raise its yearly Prime membership fee. It’s a highly unique service that began by giving customer free two-day shipping and now gives customers to ability to stream movies and television shows for free and to borrow Kindle books at no cost.
Starbucks is currently wrestling with raising prices to offset behind-the-scenes expenses associated with rising wholesale milk and green coffee prices. It’s been a few years since Starbucks last raised prices but Starbucks has routinely raised its prices even when not pressured but outside forces. Like Chipotle and Amazon, Starbucks has earned the right to raise prices through serving unique products, delivering great customer service and standing for a higher purpose.
How about your business?
What are you doing to earn the right to raise your prices? And, how would your customer react to a price increase?
My advice is to first earn the right to raise your prices and second, routinely your prices before you are pressured to do so because of shrinking profit margins.
Every year or two, increase your prices by 3% to 4%. If you sell a unique product/service, deliver excellent customer service, maintain a market leadership position, and/or stand for a higher purpose your customers will hardly blink an eye when you charge them a little more.
If you wait five years before raising prices and you hit your customers with an unexpected 18% to 20% price increase, then expect a backlash resulting in fewer customers and lower revenue.
Expect a far greater backlash if you attempt to raise your prices without first earning the right to do so. Pricing power is a privilege that has to be earned, dig?
Ekaterina Walter has social media chops. She spent years as a social media strategist with Intel and as a Word of Mouth Marketing Association board member. Currently Ekaterina is the CMO at Branderati, an agency that spends a lot of its time designing social media influencer programs.
She has strong views on social media but her view on what’s the best social media network is her strongest yet.
”Being known as an early adopter and practitioner of social media strategies and tactics usually means you constantly get asked this question: ‘What is your favorite social network?’
My answer never wavers: ‘A table and two chairs.’
Which is sometimes followed by: ‘A tableandtwochairs.com?’ No. A physical table with real chairs – a space where you can actually connect with human beings face-to-face – the only way to truly get to know each other and establish a meaningful connection.”
A few years ago I was on a panel at a conference where a social media expert asked us how businesses can get closer to customers. Everyone on the panel said something about leveraging Facebook and Twitter to engage with customers on a deeper, more meaningful level.
As I fought back the vomit ascending up my throat I interjected, “How about picking up the phone? How about actually talking with customers voice-to-voice and better yet, face-to-face?”
That’s why I love Ekaterina’s point of view when she says:
“We need to stop hoping that technologies will perform miracles for us! If you want to build your network, if you want to find people you have common passions with, if you want to grow your business – you HAVE to get out there and meet people! No more excuses! No more hopes that Twitter or Facebook or LinkedIn will do it for you!
So step away from the keyboard! Set up lunch with people you want to know better. Go see your current or prospective clients face-to-face on a regular basis.”
Late last year I stumbled upon a thought-provoking ebook from Michael Schrage that has upended how I look at business innovation.
Michael Schrage is a research fellow at the MIT Sloan School Center for Digital Business. His ebook attempts to redefine how companies should approach innovation by focusing on this question: Who do you want your customers to become?
He refers to this question as THE ASK and in the ebook, Who Do you Want your Customers to Become?, he makes the case for why this question is important to focus on because it “offers a lightweight but high-impact methodology for aligning strategic, marketing, brand, and innovation leadership around customer transformation.”
Look at any successful innovation from the Amana Microwave Oven to the Ford Model T to Microsoft Windows XP to the Southwest Airlines business model. These innovations didn’t just transform the companies that introduced them; they transformed the lives of customers who use them.
Schrage writes, “Customers don’t just adopt innovations; they alter them, adapt to them, and are changed by them. Like economic Charles Darwins, successful innovators strive to observe and understand how their customers evolve.”
The key idea behind Schrage’s thinking is: “Successful innovators don’t just ask customers and clients to do something different; they ask them to become someone different.”
It’s not easy building a great brand. Many businesses try. Few succeed.
Denise Lee Yohn has been part of the brand-building game for the past 25 years. Her experience began first with insider positions at great brands like Sony and Jack in the Box. Second, as a consultant with Frito-Lay, New Balance, Oakley and other well-known brands. And third, as a lifelong student of the brand-building game.
She’s finally written down the advice she has followed and given on how businesses can achieve rarified air in her first book, WHAT GREAT BRANDS DO.
This one line sums up Denise’s smart “brand as business” advice: “Your brand can’t just be a promise; it must be a promise delivered.”
Her book goes deeper by sharing seven principles that brands follow to become great. When businesses follow each of these principles they start to build a great brand because you cannot build a great brand before you build a great business—the process is simultaneous. It’s “brand as business.”
Here’s how Denise explains what “brand as business” means…
“Every great brand defines its brand as its business. It puts its brand at the core of its business and goes to great lengths to make sure there is no daylight between managing the brand and managing the business.”
In an email exchange with Denise I asked her to cite a brand that follows her “brand as business” approach. She cites Amazon.
DENISE: Amazon’s mission is “to build a place where people can come to find and discover anything they might want to buy online” and Bezos talks about its commitment to three things: the best selection, the lowest prices, and the cheapest and most convenient delivery.
Amazon really lives up to those ideals.
It’s the first place that most people go to look for products, read reviews, and check prices. It has set the standard by which other e-tailers are judged and its footprint continues to grow. At the same time, Amazon is clear about what it offers and doesn’t try to be what it’s not. The shopping experience is streamlined and straightforward, not particularly stylish or fancy. As such, people who are looking for the kind of experience Amazon offers are drawn to the brand and have developed a real sense of trust in it.
One of the more provocative brand-building principles Denise shares is great brands avoid selling products. Obviously, this begs the question if great brand don’t sell products, what do they sell? Denise has something to say about that…
DENISE: Great brands offer emotional connections by meeting emotional needs or through an identity that it helps its customers experience or express. They know that a product is merely a means to an end – a way of fulfilling a desire, doing a job, fixing a problem – and customers care mostly about the end.
Nike isn’t in the business of selling shoes – although it sells plenty of them. It’s in the business of inspiring and helping people feel like athletes. Its long-standing success as a business and a brand is due to the way it connects with people through aspiration and achievement.
Interested in learning more about Denise Lee Yohn’s book WHAT GREAT BRANDS DO? Visit these blogs, they’re part of the Post2Post Book Tour for Denise’s book:
Bruce Mau, a designer, thinker, articulator, and massive change provocateur, has a lot of ideas on a lot of things. His Incomplete Manifesto for Growth is a list, an incomplete one at that, of 43 ideas to get you beyond thinking differently but doing differently.
As 2013 turns to 2014, the message of doing differently is one we should all heed. The first incomplete ideal is featured below. Heed and enjoy.
I believe passion and a sense of purpose fuel successful marketing messages, whether delivered via a product, a service, an experience, or a presentation. My background includes a decade working deep inside the marketing departments at Starbucks Coffee and Whole Foods Market.