Brands Create Customers

How is it that the Trader Joe’s brand can exert such a fresh, strong pull compared to traditional grocery brands like Safeway? As I’ve noted before here and here, a signal strength of the Trader Joe’s brand is that it’s developed and delivered in the context of the customer. Trader Joe’s is a friendly place, small and intimate, on a human scale with lots of human touches, as close to “home” as retail gets.

In other words, Trader Joe’s is super because it isn’t a supermarket.

How Trader Joe’s implements its brand

You can find a richly detailed account of how Trader Joe’s implements its brand in “Inside the Secret World of Trader Joe’s” in CNN Money/Fortune. The article explains why Trader Joe’s thrives even though it lacks many “features” of the modern supermarket. Yes, those “features” may be  illusions of conventional marketing practice. They’re often designed as platforms of advertising and promotion rather than an intimate stage of quality goods and produce.

Products that don’t shout from the shelves

If you’ve ever been to a Trader Joe’s you’ll notice that you aren’t assaulted by packaging pyrotechnics from the shelves, as is often the case in traditional supermarkets (which function as brand aggregators.) Packaging at Trader Joe’s is typically low key and informal, even whimsical. Most products are Trader Joe’s own brand. Since they don’t have to compete for attention they can be more laid back and conversational, witty or wry (try Trader Giotto’s meatballs), all of which produces a more engaging customer experience.

An invitation to discover new goods

At Trader Joe’s you feel like you’ve been invited in to discover new goods from artisans around the globe. The products engage you directly, on their own merits, scripted in humble magic marker. They represent Trader Joe’s. They’re not elements of the media campaigns that interrupt your TV viewing. In this regard the Trader Joe’s customer experience exists in sharp contrast to that of major supermarket chains, where the pitch is more profound than the product, and where customers are mostly confronted with shelves of advertising.

A brand goal: simplify choice, enhance trust

One shops at Trader Joe’s because one trusts Trader Joe’s for the unique selection, and the quality. The Trader Joe’s brand reigns supreme. It’s as if Trader Joe’s were a merchant-curator, hand picking everything from hummus to ham. You may have fewer choices, but that actually makes things better, not worse. Trader Joe’s has done the work for you. A trusted brand can greatly simplify the process of buying. And it tones down the advertising blare.

In brands, less is more

All this is no accident, of course. In brands, less is more. Own the context, and customers will follow. A brand (context) approach can make a decisive difference. For some recent research, check out “A Better Choosing Experience,” an enlightening article from strategy + business.

Photo credit: slgckgc — Flickr

Brands deliver the most value when they’re conceived and designed as brand applications. That is, when they’re an application of company vision and values to advance customers to richer realms of living. It’s that simple. Customers don’t need brand theatrics, ethereal C-suite promises or concocted brand fables. They want a brand that helps them move ahead, the more creative the context the better. Brand applications fill the bill. They’re the brand as enabler, not as static symbol or lifeless icon.

The application reaches beyond the product proper

The video below shows a creative brand application from Pilot Pen. The application enables people to send email in their personal handwriting. You create a font from your own letter forms. As a brand application it reaches beyond the product proper (the Pilot pens we use on paper) to help personalize something as routinely impersonal as email. In this small but significant way, a user can enrich his or her life (and the lives of one’s correspondents) through the Pilot Pen brand.

The application helps change the context of the Pilot Pen brand. Instead of being a “brand of pens” Pilot becomes a brand of personalization, a far richer platform for brand relationships.

Brand applications rise to the next level

As nice as this application is, however, it currently has some limitations. Yet, Pilot Pen is certainly on  to something, as evidenced by the review in Core77. There’s obvious headroom for this brand application. If Pilot Pen can’t take this app to a higher level, perhaps another brand will. The brand focus must be on advancing customers as far as possible, creatively and practically, not in tying them down.

Recent research from Google suggests that social media may become a double-edged sword for brands. While social media sites may be excellent platforms for promoting sales, they can also position a brand as a source of deals and discounts. This positioning can erode a brand’s pricing  power by conditioning customers to shop on price rather than intrinsic brand value.

In other words, unless a brand takes care in how it develops its social media community, it may lose in strategic pricing power what it gains in immediate promotional power. I say “may” because the data is far from complete at this time. But it’s data that points in a definite direction.

Retaining pricing power is crucial for brands

Social media provides enormous value to its users while offering low-cost and effective communications and promotional opportunities for brands. (For typical examples see here). For brands, the critical task is to develop a productive social media strategy that deepens brand engagement and experience while maintaining price premiums. I previously discussed this issue in a post on a Razorfish social media study conducted in 2009. Razorfish found that roughly 40% of brand “fans” and “followers” of Twitter and Facebook were looking for deals. My takeaway from the Razorfish study was that a brand may risk becoming a “brand of deals” if it is constantly linked to deals, or to the expectation of deals. The brand’s pricing power may be reduced accordingly.

Google finds that a brand’s “friends” on social media often want deals

Google released partial data from its research on Facebook, the 800-lb. gorilla of social media sites (and, we should note, a prime Google competitor). Google’s data indicates that the single largest segment (25%) of those who “friend” a brand on Facebook do so in order to receive discounts, deals and other types of special offers. In my view, this may perfectly acceptable if a brand needs constant promotions to attract customers. However, a brand that is not in the business of hot offers and blowout sales may find that this “deal ethos” on social media sites reduces its leverage as a brand of exclusive qualities. You cannot be a high-rent brand with a low-rent strategy.

A chart of Google’s findings

Below is a chart from the findings that Google presented:

For the consumers who do friend your brand, what are they looking for? Discounts!

A brand’s social media pages can become virtual coupons

Google’s data seems to confirm the Razorfish findings that a significant portion of a brand’s social media followers is shopping on price. These followers may treat a brand’s social media presence as a source of deals and discounts, as if the brand suddenly appeared in an outlet mall, offering an equivalent outlet mall experience. The brand may get more traffic and social graph referrals, but it’s traffic that can put price pressure on the brand if the prevailing ethos of fans is “let’s get a deal.” Fundamentally, brands are the deal; they don’t have to make deals. And once every competitor rolls out their social media shingle, deal shopping between brands will be easy. Strategically, the brand’s ability to command a price premium may be compromised.

Two causes of why this may be happening

I can envision two causes for why the deal ethos suggested by this data may be developing on social media sites. The first is that many companies envision social media as the ultimate advertising and PR platform–low cost, viral and high impact–and have consequently flooded their social media pages with sales pitches, deals and promotions. These companies want sales, not a strategic brand community. They gladly create a deal ethos, perhaps because their brands are little more than a sales ploy to begin with. They target fans and followers with pitches, and their “fans” target them with the expectation of deals.

The second reason is that the minimalist designs and capabilities of social media sites generally resemble bare-bones discount sites. The brand is a tenant on social media sites, with a cookie-cutter store front. In such formats, it’s hard for brands to create exclusive brand experiences. Brands that  lack strategic brand vision and a community sensibility (as many do) may adopt a social media default mode of persistent promotion—just to fill up the space.

Current social media sites may homogenize brands

A further thought: It seems to me that in their current formats social media sites can exert a significant power to homogenize brands. They can (inadvertently) reduce brands to a lowest common denominator (e.g., Facebook page or Twitter account) that fits the social media scene. We wind up with brands stripped down for the convenience of social media sites themselves. If you look at how the brands express themselves in a fixed social media format you can sometimes glimpse a frightening similarity, as if two very different brands in the real world behave virtually the same in the social media world. Is this what your brand wants?

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Coca-Cola is a great brand because it offers a worldwide, lifetime guarantee. You can buy it anywhere in the world for as long as you live.

Distribution is the unsung hero of brands.

Photo credit: Jonathan Assink — Flickr